As the US-Israel-Iran war pushes global fuel prices to new extremes, the massive oil shock hitting the Philippines raises a pressing question: If imported fossil fuels are bleeding our wallets dry, why is the country still slow to shift to cleaner, homegrown energy?
Inflation surged to 4.1% in March 2026 from 2.4% the previous month, driven largely by rising transport and fuel costs linked to the conflict, the Philippine Statistics Authority noted.
The latest oil shock is exposing a deeper structural problem. Despite vast renewable energy potential, the Philippines remains locked into an import-dependent energy system. While cleaner technologies are becoming cheaper, policy choices, infrastructure gaps, and transitional strategies continue to slow the shift to renewables.
The result is an economy that remains highly exposed to global crises and households that bear the cost each time.
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Now, energy independence is a matter of economic survival. Harnessing the country’s massive renewable energy (RE) potential is the only viable route to stabilize prices for the long haul.
Despite the push for green energy, coal remains king. In 2024, coal-fired power plants composed 43.8% of the country’s 29,706-megawatt (MW) total installed capacity. Renewable energy accounted for 32%, or about 9,520 MW the Department of Energy (DOE) said.
The regional picture is similarly lopsided. While the Visayas grid runs on more than 50% renewables, Luzon and Mindanao remain heavily reliant on fossil fuels, with coal accounting for 44.2% and 49.1% of their respective capacities.
But installed capacity only tells half the story. Actual electricity generation reveals a deeper dependence on fossil fuels. In 2024 coal generated 62.5% of the total 126,941 gigawatt-hours of electricity nationwide. Renewables contributed just 22.2% to the actual power grid.
This gap highlights the intermittency of renewables. Since solar and wind plants only generate power when the sun shines and the wind blows, their actual output is naturally lower than their maximum potential.
Still, the economic case for renewables is increasingly difficult to ignore. Utility-scale solar is now the cheapest source of new power in the Philippines, with costs ranging from US$35 to US$72 per megawatt-hour, a June 2025 BloombergNEF report read.
Globally, around 91% of newly commissioned renewable projects already generate electricity more cheaply than fossil fuels.
Battery energy storage systems (BESS), which help address intermittency by storing excess energy, are also becoming more affordable. Costs have already fallen sharply over the past decade and are expected to continue declining, alongside solar and wind technologies.
While RE prices drop, the government continues to rely on natural gas as a bridge to a greener future.
The Philippine Energy Plan for 2023-2050 positions liquefied natural gas (LNG) as a “transition fuel.”
With the Malampaya deepwater gas project depleting, the country is pivoting heavily toward imported LNG. Analysts take a critical angle on this move, as importing LNG keeps the country shackled to a volatile global fossil fuel market.
In the Philippines, fuel costs are largely passed on to consumers. When global supply chains face bottlenecks, imported LNG prices surge, reflecting directly on the monthly electric bills of regular households.
The energy plan also considers “co-firing” ammonia with coal and blending hydrogen with natural gas to “decarbonize” and retrofit coal power plants. which BloombergNEF deems as not cost-effective.
To achieve tangible emission reductions, a plant must co-fire ammonia at energy ratios above 50%, making generation costs far higher than renewable options.
Using green hydrogen for power generation is also considered wasteful. More than two-thirds of the energy input is lost when converting renewable electricity to hydrogen and back to electricity.
The country’s grid infrastructure remains a major bottleneck, Northwestern Mindanao State College of Science and Technology researchers wrote in a May 2025 study.
The intermittent nature of renewables demands a resilient grid capable of absorbing fluctuating power loads. This requires heavy investments in smart grid technologies and energy storage solutions.
Currently, battery storage deployment is still in its infancy. As of 2024, the DOE recorded only 634 MW of installed battery energy storage capacity nationwide.
Building transmission lines to connect remote renewable farms to the main grid also takes years. This has left many RE projects stranded.
Biomass energy sees minimal growth due to the logistical nightmare of collecting, transporting, and processing biomass feedstocks, the study stated.
Geothermal energy also faces stagnation due to high drilling risks and upfront costs. Robust policy interventions are necessary to de-risk these capital-intensive investments, an Asian Development Bank report stated.
Transitioning to a low-carbon economy requires structural shifts in national financing, an International Monetary Fund paper said.
Lifting foreign ownership restrictions on RE ventures changed the game for capital-intensive offshore wind projects by bringing in foreign capital and technical expertise.
For the Philippines, the government’s goal of 35% RE by 2030 seems ambitious but necessary. Shifting to renewables provides lower costs and big gains for businesses, the Department of Science and Technology said.
Current trends point toward a rapid expansion of solar and wind projects, lawyers from Cruz Marcelo & Tenefrancia stated in an industry note.
But hitting these targets requires abandoning halfway measures. Energy groups argue that relying on imported LNG as a crutch delays energy sovereignty, and investing heavily in co-firing technologies diverts funds away from cheaper, proven renewables.
Every global conflict that spikes fuel prices proves that importing fossil fuels is an economic liability. As renewables are not subject to geopolitical embargoes, harnessing them is a viable path to keeping the lights on without draining the masses’ pockets. – fyt.ph
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