Written by: Mary Grace C. Ladringan
The Philippines has substantial potential for renewable energy; however, it heavily relies on imported fossil fuels, constituting approximately 50% of its energy supply. This dependence has resulted in adverse environmental impact, escalated electricity expenditures, and susceptibility to supply. Consequently, the country contends with some of the highest electricity prices in Southeast Asia, imposing considerable financial strain on both residential and commercial consumers.
Electricity prices per kWh(USD) in Southeast Asia
The data is based on published prices as of January 2022
Source: Global Petrol Prices (2022)
Intermittent power supply, frequent outages, and elevated energy costs emphasize the critical necessity of an enduring, self-sufficient energy strategy. Addressing these issues through renewable energy promotes environmental sustainability and integrates with economic expansion and energy security.
Renewable Resources: A Beacon of Hope for the Philippines’ Energy Woes
Implementing renewable energy sources such as solar, wind, geothermal, and hydropower can fundamentally reshape the country’s energy landscape. This transition may reduce the nation’s dependence on imported fossil fuels, lowering electricity costs. The Department of Energy has outlined ambitious objectives to elevate the proportion of renewable energy in the overall energy portfolio to 35% by 2030 and 50% by 2040–2050. This strategic endeavor addresses concerns about energy security and aligns with global agreements focused on mitigating carbon emissions.
Philippine Energy Plan 2023-2050
Department of Energy
In line with a commitment to achieve a secure and sustainable energy future, the Department of Energy (DOE) has developed a comprehensive strategy to accelerate the deployment of renewable energy (RE). A key component of this approach is the implementation of Renewable Portfolio Standards (RPS), which necessitate that utilities elevate their proportion of renewable energy. RPS is a regulatory mandate that requires a certain percentage of a utility’s energy to come from renewable sources. The DOE has raised the annual incremental RE requirement for grid-connected areas from 1% to 2.52% commencing in 2023 and has also extended this requirement to encompass off-grid regions. This deliberate action ensures a gradual integration of renewable sources by a wider array of energy distributors.
The Department of Energy (DOE) has significantly modified the Implementing Rules of the Renewable Energy Act, allowing for up to 100% foreign ownership of renewable energy (RE) projects. This strategic reform aims to attract foreign investment. It has proven instrumental in securing capital inflows, particularly for large-scale ventures such as solar and wind farms, necessitating substantial financial backing. The recent introduction of the Green Energy Auction Program (GEAP) is a competitive bidding process that allows RE developers to participate in meeting the capacity targets. This program ensures the prompt execution of RE projects by providing a platform for developers to bid for the right to develop and operate renewable energy projects. This progressive approach has already stimulated hydropower, wind, and solar infrastructure investments.
In addition to mandates and programs, the Department of Energy (DOE) has introduced voluntary initiatives to promote the use of renewable energy. Consumers with small-scale renewable energy systems, such as rooftop solar panels, can sell excess power to the grid through programs like net metering. The Expanded Rooftop Solar Program encourages installing solar photovoltaic systems for homes and businesses, while the Green Energy Option Program allows consumers to purchase their electricity from renewable providers.
These policies and programs will help the Philippines meet its ambitious goals of having 35% renewable energy in its power mix by 2030 and 50% by 2040.
Investing in renewable energy presents substantial financial advantages alongside its contribution to sustainability. These benefits encompass enhanced public health resulting from lower pollution levels, the generation of employment opportunities in rural regions, and the upsurge of green capital and financing. This financial potential, coupled with the development of decentralized and hybrid energy systems, integrating renewable energy sources and storage technologies, holds the potential to fortify the stability and resilience of the Philippine energy grid. As a result, underserved and remote communities stand to gain improved access to a more consistent power supply.
Emerging Trends in the Philippine Renewable Energy Sector
The renewable energy sector is rapidly evolving, driven by trends such as decentralized energy systems. These systems enable consumers to generate electricity using rooftop solar panels. This shift minimizes transmission losses and reduces the burden on the national grid. Moreover, prominent corporations increasingly embrace renewable energy sources to mitigate their carbon footprints and support sustainability initiatives.
SM Prime Holdings, for instance, aims to elevate its renewable energy consumption to 50% across all business segments and has implemented 10.6 megawatts of solar rooftop capacity in its malls. The Department of Energy, as the government agency responsible for the country’s energy policies and programs, has set a target to increase the share of renewable energy in the nation to 35% by 2030, and this initiative is in line with that objective. To support tenants accessing clean power and reducing carbon emissions, SM Prime intends to incorporate renewable energy in more than 50 facilities under the Retail Competition and Open Access scheme.
Similarly, Ayala Land Inc. has effectively utilized power purchase agreements to secure renewable energy for its properties, significantly reducing approximately 164,000 metric tons of CO2 emissions. This achievement was made possible by transitioning 65 buildings, constituting 85% of the total gross leasable area, to renewable energy by 2021. Notably, Ayala Land’s commercial properties attained carbon neutrality in 2022, a year ahead of schedule. Furthermore, Ayala Corp., the parent company, has committed to achieving net-zero emissions by 2050, encompassing emissions from its tenants, suppliers, customers, and operations.
Robinsons Place Pangasinan
Robinsons Land is also a major player in the renewable energy transition. Twenty-four of its malls are equipped with solar power systems, collectively boasting a capacity of 30.79 megawatts. This initiative has resulted in a noteworthy reduction of 86,359 metric tons of greenhouse gas emissions. Similarly, Coca-Cola Beverages Philippines Inc. has made substantial strides by integrating 14,000 solar panels into its manufacturing facilities, with ongoing efforts to incorporate an additional 24,000 panels. Upon completion, this will elevate its total solar capacity to 9.4 megawatts. These efforts reflect the growing commitment of businesses to sustainability and renewable energy, inspiring others to join in the nation’s aspiration for a more environmentally responsible future.
The Impact of Renewable Energy on Philippine Real Estate
The expansion of renewable energy is expected to significantly influence the real estate industry in the country in numerous ways. The demand for land suitable for wind turbines, solar farms, and other renewable energy installations is poised to rise as the government invests in renewable energy infrastructure. This surge in demand may lead to an escalation in property values, particularly in areas designated as prime locations for developing renewable energy. These areas will likely become more coveted due to high solar irradiance, consistent wind currents, and proximity to power grids, driving up land prices and fueling economic activity in previously underdeveloped regions.
In addition to the projected impact on land values, there is the prospect of transforming the real estate sector towards sustainable development and adopting green building practices. Properties integrating renewable energy solutions, such as solar panels, wind energy, or geothermal systems, will become more attractive to buyers and investors who prioritize sustainability and energy efficiency. Real estate developers integrating renewable energy technologies into their projects distinguish themselves from the competition and experience heightened demand for their properties, mainly when environmental responsibility is a key consideration in global trends.
The economic advantages of renewable energy can also prove beneficial to developers. Implementing energy-efficient systems can lead to significant long-term cost reductions for tenants and property owners. Consequently, this can elevate their developments’ overall value and enhance their market competitiveness.
Furthermore, policymakers and local authorities may consider providing incentives, such as tax breaks, rebates, or subsidies, to developers who prioritize sustainable practices and integrate renewable energy installations. These incentives can accelerate the adoption of green technologies into real estate projects, contributing to the industry’s overall growth and aligning it with international sustainability goals. Consequently, the expanding renewable energy landscape in the country will present opportunities for the real estate market to adapt to and capitalize on.
Upcoming Developments in the Renewable Energy Sector
The Philippines is set to witness several significant renewable energy projects. The expansion of the Pagudpud Wind Farm in Ilocos Norte aims to add 150 MW of wind capacity by 2026, enhancing the country’s wind power potential. The Nueva Ecija Solar Farm, poised to become the largest solar farm in Southeast Asia, is expected to contribute 500 MW of solar power to the grid by 2025. Additionally, a new geothermal plant in Mindanao with a capacity of 100 MW is scheduled for completion by 2027, further diversifying the country’s renewable energy portfolio.
Seizing the Renewable Energy Opportunity in the Philippines
The renewable energy sector presents abundant opportunities for growth and investment within the nation. With supportive government policies, growing market demand, and a commitment to sustainable development, the country is strategically positioned to capitalize on its renewable energy potential. However, seizing these opportunities necessitates navigating a multifaceted terrain encompassing legal restrictions, financial complexities, and practical hurdles.
At Aviso Valuation and Advisory Corp., we are unwavering in our dedication to supporting renewable energy developers through our specialized services. Our property appraisal services are designed to deliver precise assessments of land and properties, enabling the determination of fair market value and evaluating potential project site viability. Our comprehensive site selection services go beyond location analysis, assessing factors such as resource availability, environmental impact, regulatory compliance, and infrastructure access. By leveraging our expertise, renewable energy developers can mitigate risks, optimize site selection, and maximize project success.
Aviso Valuation and Advisory Corp. is a real estate consultancy firm that offers valuation and business advisory services that are compliant with international standards such as the International Valuation Standards (IVS) and International Financial Reporting Standards (IFRS). To assure that we only produce high-quality deliverables, as needed, we do tasks beyond the usual appraisal process like verifying pertinent property documents (i.e. land titles, tax declarations, etc.) with the appropriate government agencies for due diligence purposes prior to the acquisition of the properties.
References:
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- Asian Development Bank. (2022). Renewable Energy: Market Entry and Challenges in the Philippines. Retrieved from https://www.adb.org
- Department of Energy, Philippines. (2023). Renewable Energy Policies and Regulation in the Philippines: An Overview. Retrieved from https://www.doe.gov.ph/renewable-energy
- International Energy Agency. (2023). Energy Prices and Market Trends in Southeast Asia. Retrieved from https://www.iea.org
- International Renewable Energy Agency. (2024). Renewable Energy Trends in the Philippines.
- Mordor Intelligence. (2023). Philippines Solar Photovoltaic (PV) Market – Growth, Trends, COVID-19 Impact, and Forecasts (2023 – 2028). Retrieved from https://www.mordorintelligence.com
- Renewable Energy Association of the Philippines. (2024). Top Renewable Energy Developers in the Philippines.
- https://www.gmanetwork.com/news/money/companies/788819/coca-cola-beverages-phl-completes-14k-solar-panel-project-in-manufacturing-plants/story/
- https://business.inquirer.net/359917/the-greening-of-corporate-philippines
