Achieve some of the highest electricity prices in all of Southeast Asia. It has delivered big cuts to electricity prices over the next few years. In energy efficiency, the country is now tied with Singapore in first place. It has done well on one important front– reducing its dependence on coal-fired electricity. Experts expect the slated additions of renewable energy capacity to drive a dramatic reduction in electricity costs. They estimate this decrease will take place by 2029.
During the first half of 2025, variable-cost power prices on the Philippines spot market fell to a near-post-pandemic low. They fell to an incredible 4.14 pesos ($0.0731) per kilowatt-hour (kWh). This continued decline comes on the heels of an average price of 5.58 pesos per kWh in 2024, marking a significant win for consumers. Remember, just because spot market rates are declining doesn’t mean consumers’ electricity tariffs will follow. It’s a crucial difference to grasp.
Shifting Energy Sources
That’s why, historically, the Philippines has had one of the most coal-dependent grids in Southeast Asia. Recent developments suggest a pivotal change. Philippine coal production faces new troubles. For the first time since 2008, coal-fired electricity production in the Philippines is projected to decline year-on-year. This decrease is due primarily to the increase in generation powered by liquefied natural gas (LNG). Ensure LNG is moving quickly towards becoming a central pillar of the country’s energy diversity.
As LNG generation increases, it is slowly replacing more expensive coal plants. This transition increases the country’s energy security as well. It is in line with global trends that increasingly leave dirtier, fossil-fueled energy sources behind. The shift to LNG has played a huge role in the markedly lower spot power prices seen in recent months.
Expansion of Renewable Energy
The Philippine government has ambitious plans in place to rapidly expand its renewable energy capacity. According to estimates from analysts, these additions could increase downward pressure on electricity prices by 0.90-1.32 pesos per kWh. By 2029, these initiatives combined will have driven down the national average cost of electricity by a significant margin. Thankfully, their impact will be felt for decades to come.
The recent emergence of low-cost renewable generators has changed the energy landscape. These new sources are increasingly able to push the most expensive power plants off the grid. This is an approach that encourages environmental stewardship. It provides long awaited economic relief to those consumers who’ve been impacted negatively by rising electricity bills for decades.
Future Implications for Consumers
Those expected declines in spot power prices are a good harbinger. The impact of these changes on ultimately reducing the electricity tariff for consumers still remains to be seen. Spot market rates and consumer prices are often described as having an inverse relationship. Multiple other factors, such as state regulatory policies and market dynamics, have a large impact on this relationship.