DOE targets 50¢/kwh power cost by 2050

MANILA, Philippines — With new power projects lighting up the grid, the Department of Energy (DOE) is seeing a future where electricity costs less than P0.50 per kilowatt-hour (kWh), though not for over two decades.

Energy Undersecretary Rowena Cristina Guevara said the DOE has asked the power spot market operator to simulate electricity rates until 2050, assuming all green energy auction (GEA) projects come online.

“This is the number that we got. From 2026, Luzon, on average, will be P4.95 per kWh. By 2050, it will be P0.28 per kWh,” Guevara said yesterday at a media event hosted by the Institute for Climate and Sustainable Cities.

“Visayas will go from about P5.28 per kWh in 2026 to P0.48 per kWh by 2050. And lastly, Mindanao is at P4.06, and it will go down to P0.36 per kWh by 2050,” she said.

Guevara pointed to the United Kingdom, where, she said, offshore wind projects are set to slash power prices to just £42 per megawatt (MW)-hour from £120 within four years.

“So the initial investment for new technologies might sound very high, but eventually it goes down. And we already asked for IEMOP to do the simulation because we want to make sure that our consumers are protected,” she said.

IEMOP or the Independent Electricity Market Operator of the Philippines operates the country’s Wholesale Electricity Spot Market, the centralized venue for power trading.

To reinforce the country’s supply and further trigger RE investments, the DOE has launched three GEA rounds this year.

For GEA-3, a total capacity of 6,677.22 is expected to be delivered between 2025 and 2035.The committed capacity will come from impounding hydro, pumped storage hydro and geothermal facilities.

The winning bidders under GEA-3 include the energy companies controlled by tycoons Enrique Razon Jr., Ramon Ang and Federico Lopez.

Under GEA-4, the DOE is offering 9,378 MW of capacity from ground-mounted solar, roof-mounted solar, floating solar and onshore wind projects, along with an additional 1,100 MW of solar capacity paired with battery storage.

These projects are expected to be completed between 2026 and 2029.

GEA-4 marks the first auction round to integrate energy storage systems, enabling greater integration of variable RE technologies.

For GEA-5, meanwhile, the DOE is poised to offer 3,300 MW of offshore wind capacity in a bid to deliver the first kW before the end of President Marcos’ term.

GEA is a program designed to boost the share of renewables in the energy mix to 35 percent by 2030 and 50 percent by 2040 from the current 22 percent.

The first GEA round took place in June 2022, attracting a total of 1,996.3 MW of RE projects. This comprised of ground-mounted solar (1,490.38 MW), onshore wind (374 MW), hydro (99.15 MW) and biomass (3.4 MW).

GEA-2, on the other hand, generated a total of 3,440.756 MW of RE capacities that have been committed for development and installation from 2024 to 2026.