Energy storage redefining clean power shift

MANILA, Philippines — Energy storage is stepping into the spotlight of the country’s green transition, with more companies making bold investments to unlock its game-changing potential.

In a historic first, the Marcos administration is integrating energy storage system (ESS) components into the fourth round of the green energy auction or GEA-4.

Based on its terms of reference, GEA consists of 9,378 megawatts (MW) of capacity from ground-mounted solar, roof-mounted solar, floating solar and onshore wind projects.

Significantly, the Department of Energy (DOE) is also set to offer an additional 1,100 MW of solar power capacity paired with ESS.

An ESS facility stores excess electricity generated during low-demand periods and supplies it back to the grid during peak demand, ensuring the stability and reliability of the power transmission network.

“By ensuring a transparent and competitive selection process for renewable energy (RE) projects, we are accelerating the shift toward a more sustainable, secure and resilient energy system,” Energy Undersecretary Rowena Cristina Guevara said.

GEA is designed to trigger investments in the country’s RE sector in a bid to scale up the share of renewables in the energy mix to 35 percent by 2030 and 50 percent by 2040 fro

m the current 22 percent.

Battery storage auction

While GEA-4 is a welcome move, Ayala-led ACEN Corp. has said the government should consider holding a separate auction for battery storage capacity to support the development of variable renewable sources.

ACEN president and CEO Eric Francia said many grid-connected projects are not generating a full output due to constraints in the country’s electrical superhighway.

In the case of solar projects, power is generated only when the sun is shining, resulting in overproduction during the day and capacity shortfall at night.

However, a government policy on standalone battery storage can be a game-changer given the technology’s potential to mitigate grid constraints and production imbalances, Francia said.

“If you have a standalone battery near a substation that is limited in terms of transmission capacity because of excess solar generation, you can absorb it (power) during the day and then release it at night,” he said.

Francia estimates that the ideal amount of storage capacity to complement each unit of solar capacity is around 30 to 40 percent. This means that for every gigawatt of solar installations, at least 300 to 400 MW should be devoted to batteries.

CBK privatization

Aside from GEA-4, some of the country’s energy giants are also setting their sights on seizing control of a 797-MW Caliraya-Botocan-Kalayaan (CBK) hydropower complex in Laguna.

CBK, the country’s only operating pumped-storage hydro (PSH) facility, is being privatized by state-run Power Sector Assets and Liabilities Management Corp. (PSALM) on an “as is, where is” basis.

This means the buyer must accept the property in its current condition and at its present location.

PSH is a type of ESS technology that “uses electric energy to pump water from a lower elevation reservoir to a higher elevation reservoir,” the DOE said.

When needed, the water flows back from the upper to the lower reservoir, enabling a turbine with a generator to produce electricity.

PSH facilities are regarded as a grid-balancing solution for their role as energy storage systems that complement variable renewable generation while also injecting power into the grid to augment supply.

For the CBK complex, First Gen Prime Energy Corp., a subsidiary of First Gen Corp. of the Lopez Group, is among the prospective bidders.

“CBK, obviously, is a pumped storage, and it will enable more renewable energy to come online,” First Gen president and COO Francis Giles Puno said in July 2024.

Last March, representatives from the First Gen Group attended the pre-proposal conference, which provided an overview of the project, the bidding process and the agreements involved in the CBK sale.

“We aim to inform interested companies ahead of time of the documentary requirements to successfully participate in the bidding process for the CBK power plants,” PSALM vice president for privatization and asset management Arnold Francisco said.

PSALM announced the reopening of the bidding for the CBK complex in February following a previous failed attempt to privatize the asset.

The project was supposed to be the major privatization of PSALM last year, but the previous auction was scrapped in an effort to optimize the value of the assets.

Pangilinan-led Meralco PowerGen Corp. (MGen), which stepped back from the original auction, has expressed interest in joining the bidding war.

“It depends on how PSALM would package CBK,” MGen president and CEO Emmanuel Rubio said. “CBK apparently is not going to be an IPPA (independent power producer administrator); it’s an asset sale.”

Currently, CBK is contracted to independent power producer CBK Power Co. Ltd. under a 25-year build-rehabilitate-operate-transfer agreement set to expire in February 2026.

Finance Secretary Ralph Recto, who chairs the PSALM Board, was expecting to generate up to P100 billion from the CBK privatization.

Upcoming ESS projects

As the Philippines gears up for the entry of more renewables into the grid, the government anticipates close to 2,000 MW of battery storage capacity to complement them.

According to DOE data as of end-March, ESS projects with a combined capacity of 594 MW are committed to come online over the next three years.

Around 1,340 MW of new storage capacity, meanwhile, still does not have a definite commercial operations date.

The construction of these facilities is expected to augment the country’s power supply amid growing energy demand.

Under the Philippine energy scenario, peak demand is seen growing by 5.3 percent annually until 2028.