ACEN warns Philippines renewable buildout risks power market oversupply

Traders Union
All News
Financial News
Philippines renewables oversupply risk

Highlights

ACEN warns that the Philippines' plan to add 20 GW of renewable capacity via auctions could lead to market oversupply and discourage investment.
Since 2022, four Department of Energy auctions expect to deliver about 21 GW by 2035, targeting at least 25 GW between 2027 and 2035 to reach 35% renewables by 2030.
In the Philippines' open electricity market, oversupply risks lower prices and weaker project economics, with ongoing project delays due to land acquisition and permitting issues.

Renewable auction pipeline raises supply concerns

As reported by BusinessWorld Online, ACEN Corp. says the Philippines' plan to add large volumes of renewable capacity through green energy auctions risks creating an oversupplied market that could discourage investment. Eric T. Francia, ACEN president and chief executive officer, says regulators need better policy harmonization to give developers enough stability to convert targets into operating power assets.

Speaking at the ASEAN Energy Business Forum last week, Mr. Francia says the country currently relies on about 10 GW of clean energy, and the possible addition of another 20 GW could create complications for private investors. He says companies serving both the auction market and retail customers may hesitate to build if excess supply depresses electricity prices.

Since the first green energy auction round was launched in 2022, the Department of Energy has completed four auctions that are expected to deliver about 21 GW of capacity through 2035. The department's 10-year auction program targets at least 25 GW of renewable capacity for deployment from 2027 to 2035, supporting government goals to lift renewable energy's share of the power mix to 35% by 2030 and 50% by 2040.

Open market structure adds pressure on investment returns

Unlike some neighboring countries with state-run power monopolies, the Philippines operates an open and competitive electricity market where private companies sell to utilities, retail customers and the spot market. In that structure, weaker pricing caused by oversupply could directly affect project economics and the willingness of companies to commit capital.

Mr. Francia says the better course is refinement, enhancement and harmonization of policy, adding that closer collaboration and alignment can help address the risk. His comments point to a broader industry concern that capacity targets alone may not be enough to ensure bankable project development.

Dennis Jordan, president and CEO of MGEN Renewable Energy, Inc., says that despite major projects such as the P200-billion Terra Solar development, many renewable projects are stalling or facing cancellation because of land acquisition delays and permitting issues. Guillaume Lucci, president and CEO of Prime Infrastructure Capital, Inc., says developing countries need to prioritize energy abundance, arguing that the power sector must be viewed as an integrated system as the Philippines and other ASEAN economies grow.

Our earlier article on ASEAN’s push to translate regional clean-energy commitments into national action explained how ministers and industry leaders are trying to turn 2030 renewable targets into investable projects through stronger policy coordination, grid expansion, and storage and electrification plans. It also highlighted the scale of the buildout needed—alongside the role of the ASEAN Power Grid—underscoring why implementation details, not just capacity goals, will shape investment outcomes.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.