Renewables to outpace fossil fuels in a decade

The Philippines’ aggressive push for renewable energy (RE) is likely to bear fruit in a decade or so, with strong government support and foreign investor interest helping to scale up nonfossil fuel facilities, according to a Fitch Solutions study.

The think tank estimated that the country’s nonhydropower renewables sector would expand by 6.8 gigawatts (GW) and at an annual average rate of 10.4 percent from 2022 to 2031.

If this happens, this will eclipse the expected increase of 5.8 GW for conventional thermal projects during the same period.

Solar and wind sectors would headline the growth of nonconventional sources of energy for the 10-year period, with the solar photovoltaic (PV) sector contributing about 86 percent of the projected capacity and the other 10 percent coming from onshore wind farms, the study said.

Citing its database, Fitch Solutions said the country already has 127 nonhydropower renewable energy projects in development, with a total capacity of 21.4 GW. Of these, 78 are solar PV projects.

“Tailwinds for the sector’s growth will largely come from strong governmental support to meet its ambitious targets of 35 percent renewable electricity and 15.3 GW of renewable capacity by 2030,” the study said.

Over the past years, the Philippines has remained largely dependent on coal-fired power plants. Government data show coal power plants cornered nearly 60 percent of the energy mix in 2021.

“We expect the government to go through with its policy of allowing foreign companies full ownership of renewable power projects, attracting more foreign investment for the development of the sector,” it added.

Last week, the Department of Energy paved the way for the 100-percent entry of foreign investors in RE projects with the promulgation of the playbook governing investments in renewables.

Fitch Solutions expects this policy move to attract more foreign investments into the sector through consortia, single ownership or even cooperation with local companies.

“This will promote private sector involvement and foreign direct investments in the Philippines, further diversifying the competitive landscape,” it added.