Unlocking Solar Power, a Growing Business in the Philippines

Solar power, a growing business globally, is an ideal source of energy for the Philippines as well as the quickest answer to many of its energy problems. First, the country is located in the tropics and, as such, receives plenty of sunlight all year round. According to the US-based National Renewable Energy Laboratory (NREL), the Philippines’ solar radiation ranges from 128 to 203 watts per square meter. And based on NREL’s analysis, the country has the potential to generate electricity from solar power at the rate of 5.1 kilowatt-hour per square meter per day.

Second, the Philippines is an archipelago made up of over 7,000 islands. Connecting these islands to the national power grid through submarine cables is a massive undertaking that entails significant costs. Even the maintenance of the cables already laid out poses a constant challenge. For instance, in June 2021, one of the submarine cables of the National Grid Corporation of the Philippines (NGCP) that connect Cebu and Negros, two major islands in the Visayas, was damaged, causing power rates in the region to increase.

With solar power, all these challenges can be avoided. Solar panels, called photovoltaic (PV) cells, can be installed easily on the roofs of building and houses. Even big solar power plants can quickly be built to provide an immediate solution to the Philippines’ energy woes. According to the European Photovoltaic Industry Association (EPIA), a one-megawatt solar power plant can be installed in just six weeks, while smaller systems can only take a day to set up.

Solar Power, A Growing Business

Given these benefits, solar power generation is now a growing business in the Philippines. In 2018, Dutch consultancy firm Solarplaza ranked the country No. 1 among Asian developing countries in terms of using PV systems to generate electricity. The Philippines was also ranked fifth in the world, after Chile, South Africa, Brazil and Thailand. However, the country’s solar power sector is young and still has plenty of room for growth. And its growth is assured due to several factors. Two of these are the following:

Solving Energy Poverty

In the Philippines, energy poverty remains a major problem. According to the Department of Energy (DOE), 23.2 million households now have access to electricity. While this already represents 93% of the total number of Philippine households, this means 2.35 million Filipino households still do not have electricity. Thus, the DOE is targeting 100% electrification of all households with access to the NGCP grid within the next two years and 100% electrification of all off-grid households by 2040.

According to the National Renewable Energy Program (NREP), the Philippines’ RE base should reach 37.3% by 2030 and 55.8% by 2040. Of these values, 10% will come from solar power. The government is, therefore, encouraging power distribution utilities to source more of their supply from RE, a development that will help fuel the growth of the solar power industry

Ensuring Energy Security

Declining global crude supply and fluctuating oil prices are causing volatility in fuel prices which, in turn, disrupts economic growth. The situation in the Philippines is further exacerbated by the expected full depletion in 2027 of the Malampaya gas field which supplies about 30% of the country’s energy requirements. Reliance on imported fuel has made the Philippines’ electricity rates among the highest in Asia. Furthermore, troubling geo-political developments in the Middle East, the country’s major source of crude oil, will likely raise local fuel prices.

Solar power can help reduce the country’s dependence on imported fossil fuel. According to the World Wide Fund for Nature Philippines, replacing fossil fuel with RE can save every Filipino about USD 0.11 per kilowatt-hour consumed. It will also reduce the country’s carbon footprint. Thus, increasing solar power usage will greatly enhance the country’s energy security.

Additional Regulatory Support

Expected to give solar power a major boost is the net metering interconnection system that is now in effect in the Philippines. This system allows power users to generate their own electricity using PV cells and then export whatever energy they do not use to the grid. This enables solar-powered consumers to reduce their utility bills which explains why PV systems are increasingly becoming popular among households and industries.

To further accelerate RE development, the first Green Energy Auction will be scheduled soon. The DOE, in partnership with the United States Agency for International Development (USAID), is finalising the Green Energy Auction Program which will provide additional market options for RE developers and generators and promote more competitive rates for RE.

Join the Solar Power Boom

The Philippine solar power business is clearly set to grow big. We at Asian Insiders are prepared to help you become part of this growth in a way that best suits your plans. Our partner on the ground has been serving the country’s energy industry since 1995 by holding an annual platform for dialogue between the DOE and private business through POWERTRENDS, an international exhibition and business forum on energy.

Everyone involved with the Philippine energy sector attends this three-day event to join the high-level business forum and dialogue with the heads of the DOE as well as regulatory and legislative agencies.
Our on the ground partners can help you develop your market strategy, introduce you to the right commercial channels and/or local partners, assist you throughout the business and regulatory processes, and enable you to reap the benefits from solar power, a growing business in the Philippines.

Key Takeaways

  1. The Philippine solar energy market is anticipated to increase at a compound annual growth rate of 13.4 % during the forecast period 2020-2025.
  2. Demand is expected to grow due to increasing small-scale solar PV deployment during the period.
  3. More government support is expected.
  4. The cost of electricity from solar power is declining, thanks to new, more efficient technologies that generate a more stable supply at lower costs.
  5. Energy supply and security challenges have recently prompted a multi-sectoral call to shift from fossil fuel to RE, further giving the solar power business a boost.

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