Last week, preliminary results of the Philippines fourth Green Energy Auction (GEA-4) were released, and there was strong private sector interest albeit still just short of the government’s original capacity target. Last week, the preliminary results of the Philippines fourth Green Energy Auction (GEA-4) was released showing strong private sector interest even though it still fell short of the government’s original capacity target.

Last week the Philippines Department of Energy, or DOE, released its results from its fourth Green Energy Auction process, with a total of 9.4 gigawatts (GW) of renewable energy projects having been awarded.

There was strong private developer interest this auction process, with a total of 111 bids, however the auction process resulted in an awarded capacity of 9.4 GW, which is less than the pre-auction capacity target of 10.65 GW and represents an 88% subscription level.

The awarded projects are a mix of all types of renewable energy technologies, including ground -mounted, rooftop and floating solar; onshore wind; and integrated solar-storage systems (IRESS). The projects will begin providing electricity between 2026 and 2029, continuing to support the Philippines energy transition objectives.

01 Examination of Auction Results

Preliminary information about the GEA-4 auction results shared by the Philippine DOE shows that this auction contracted 9.423 GW of the 10.65 GW goal, with an 88% level of subscriptions.

The auction covered a wide range of technology types such as utility photovoltaic, rooftop photovoltaic, floating photovoltaic, onshore wind, and storage integrated photovoltaic projects.

The DOE mentioned that the unsubscribed capacity was largely floating photovoltaic, onshore wind, and integrated photovoltaic-storage projects. Unsubscribed capacity will be offered to other qualified bidders that made bids above their allocation.

This mechanism will help to ensure all unsubscribed capacity from the fourth auction is ultimately developed, thereby not missing an opportunity on any front for a renewable energy technology development.

02 Reserve Prices for Technologies

The Energy Regulatory Commission set reserve prices for technologies in this auction.

Rooftop solar had a reserve price of ₱4.4832/kWh (about $0.079/kWh), while the reserve price for solar on the ground was ₱5.6800/kWh. The reserve price for floating solar was ₱6.5258/kWh.

The reserve price for onshore wind was ₱6.0859/kWh, while solar with storage was ₱5.4028/kWh.

The reserve prices reflect the various costs of development and acceptance in the market of the different renewable technology types. That floating solar and storage have relatively high reserve prices may partly explain why they experienced undersubscription.

03 Mandatory Storage Requirements

This auction represented a key policy change for the Philippines. It was the first announced auction to require energy storage to be part of the integration.

For solar-storage (IRESS) projects, explicitly defined technical requirements were formalized: the storage inverter output must be at least 0.2 times the registered PV capacity; round-trip efficiency from storage must not be less than 85%; and the system must deliver at least four hours of storage duration.

These designed requirements serve to provide the most utility and backfilling possibilities for storage to ensure proper grid and energy reliability benefits.

The Philippines has quickly emerged as one of the most policy driven battery storage markets in all of Southeast Asia. By mandating storage as part of their large-scale renewable auction process, and where there is a well defined pipeline of gigawatt scale projects with commercial pathways.

04 Project Delivery and Distribution Timeline

Under the auction terms, winning developers will enter into 20-year power supply agreements with the government for projects in Luzon, Visayas, and Mindanao.

Commercial operation dates range from 2026 to 2029, with accents to need to be scheduled into the grid.

As the country’s predominately energy consumption area, Luzon attracted a significant number of investments. The other project planned in the Visayas and Mindanao will reflect a balance in renewable energy development across the country.

The phased delivery timetable also accommodates the gradual increase in supply for the grid in order to accommodate new capacity while supporting a steady operation of the power system.

05 National Energy Goals and Context

The government of the Philippines has set ambitious targets for renewable energy: a share of 35% of renewables in the power system by 2030, a share of 50% of renewables in the power system by 2040, and a share of more than 50% of renewables in the power system by 2050.

Currently, renewables provide about 22% of the energy mix.

The DOE has awarded more than 1,400 renewable energy service contracts to reach these targets. The Philippines expects to complete about 7,000 MW of power projects by 2025, with a focus in Luzon.

BloombergNEF projects that in 2025 the Philippines will add a record 2.2 GW of new wind and solar capacity, with utility-scale solar contributing 76% (1.7 GW). There will also be an increase in onshore wind for the first time since 2015.

06 Market Response and Future Outlook

According to Energy Secretary Sharon S. Garin, “The results of the fourth Green Energy Auction show a successful partnership between the government and the private sector in promoting renewable energy.”

The number of clean energy commitments made by the Philippines exceeded 9,000 MW and has made unsubscribed capacity available to other eligible bidders, ensuring the country’s energy transition is bold, inclusive and resilient.

The auction results show clear differences in the preferences of investors by technology, which suggests they have made a rational judgement about both technical feasibility/development costs and returns, rather than acting in a random manner in regard renewable energy investments.

With the Philippines having removed foreign ownership restrictions on renewable energy generation projects, we expect that there will be more participation by international investors in future auctions and, thereafter, the development of the renewable energy sector in the country will continue to accelerate.