Renewables growth in Philippines will cut power costs 24% by 2029

The Independent Electricity Market Operator of the Philippines (IEMOP) has reported that a surge in renewable energy usage could drive down average annual spot power prices by as much as 24% by 2029, as reported by Reuters.

Spot power prices in the country have already declined, reaching a post-pandemic low of 4.14 pesos ($0.0731) per kilowatt hour (kWh) in the first half of 2025, according to IEMOP data.

The introduction of more cost-effective renewable generators is credited with displacing higher-cost plants this year, contributing to lower spot market rates.

Planned additions to green energy capacity are expected to cut prices further – by between 0.90 pesos and 1.32 pesos per kWh by 2029. This contrasts with 2024’s spot electricity prices that averaged 5.58 pesos/kWh.

Natural gas-fired plants have also increased their output, which can be rapidly adjusted to balance fluctuations in renewable supply — another factor driving down current spot prices.

Despite being one of Southeast Asia’s most coal-dependent grids, the Philippines is witnessing its first annual decrease in coal-fired electricity production since 2008 due to an uptick in liquefied natural gas-powered generation.

Lower spot market rates do not automatically equate to decreased electricity tariffs for consumers, however. Filipino consumers currently face some of Southeast Asia’s highest electricity costs after Singapore.

Manila Electric, the nation’s leading power retailer, raised tariffs recently despite falling spot market rates because it is bound by expensive long-term contracts with generators.

Nonetheless, many retailers are now purchasing more from the cheaper spot market as they aim to minimise reliance on costly long-term agreements.

An analysis based on IEMOP data reveals that purchases from the spot market accounted for 21% of the overall supply over the two years ended in June 2025, compared with 12% during the two preceding years.