The Philippines now stands at the precipice of a historic transformation in its energy landscape. In fact, this would be the first time since 2008 that coal-fired electricity generation is projected to decrease. According to the Institute for Energy Economics & Financial Analysis (IEEFA), the nation is on track for at least a 5.2% drop in coal generation. This is planned for release in the first half of 2025. This transition signals where the future of energy policy and markets are headed – an accelerating push toward cleaner, renewable sources of energy.
Yet since 2017 the Philippines has not added any net new greenfield gas nor LNG-fired power capacity. The announcement represents a major watershed moment in the nation’s long-term energy policy. In 2020, the federal government also announced a moratorium on developing any new greenfield coal powered plants. This decision has had a far-reaching impact on the future of energy production across the entire country.
Outages and Market Dynamics
Extended outages hurt more than eight coal plants, notably in the first quarter of 2025. In addition, coal generation is projected to continue to fall. These expensive outages have caused energy planners across the country to reconsider their reliance on traditional fossil fuel resources. They are now actively considering alternative energy sources as a long-term, practical solution.
This is a notable growth figure for the previously fast-growing Philippines, where solar power penetrated at a rate of over 1 gigawatt (GW) just in 2024. Strong government policies, including centralized auctions to award contracts for developing renewable energy projects, have driven this growth. During the first months of 2025, behind hydropower and beleaguered but booming solar generation, gas slipped to third place. This trend is part of a growing momentum towards clean, renewable energy sources.
“Price trends indicate clearly that renewables are likely to limit the long-term role of LNG in the Philippines.” – IEEFA report
Economic Factors at Play
The rising competitiveness of diverse energy resources is the key factor that underlies the Philippines’ energy future. Right now, liquefied natural gas (LNG) is still pricier than renewables, making it a hard sell for investment. This is in spite of a natural gas generation rebound in 2024, which remains a significant 16% below its historical generation share.
Renewable energy thrives for a reason beyond environmental sensibilities. Economic factors are the huge determining factor in their success. As costs for solar and other renewables continue to decline, they’re ever more practical options for meeting the country’s growing energy demands.
Future Energy Outlook
Looking ahead, the Philippines’ energy sector is at a crossroads with many challenges and exciting possibilities. The decline in coal-fired electricity generation is a hopeful harbinger of an emerging, deeper commitment to clean energy sources. Keeping up this momentum will require further investment in renewable technologies and sustained support from the government.
This is critical data, and the Department of Energy should continue to be a focal point as these developments unfold to help stakeholders understand this rapidly evolving landscape. Smart, sustainable, cost-effective solutions are taking root in the Philippines. This approach places the country on a cleaner and more resilient energy future.
