The Philippines may fail to meet its ambitious renewable energy targets under its clean energy scenario by 2050 due to persistent permitting delays and transmission infrastructure hurdles, a global research firm said Thursday.
S&P Global Commodity Insights APAC power and renewables director Vince Heo said during the Energyear Philippines 2026 forum that systemic challenges, particularly grid limitations, are likely to cause the country to miss the government’s highest benchmarks.
“I think the major one is the grid issue. There’s a big gap between the government target and the Green Energy Auction. They always have a very big number, but when GEA-4 was announced, we discounted the actual capacity to be installed, knowing there will be challenges in meeting all these targets,” he said.
Under the government’s 2023-2050 Philippine Energy Plan (PEP), the clean energy scenario aims for a renewable energy share of 56.92 percent by 2040 and 64.86 percent by 2050.
“We are running software to see whether the system balance could be met, and it’s clearly not in the Philippines. You don’t have good grid planning here. Based on our forecast, the Philippines has to rely more on firm capacity, which is still coal and gas,” Heo said.
S&P Global’s forecast suggests the country will more likely reach a 27 percent share by 2030 and 50 percent by 2050, aligning only with the government’s less aggressive base case scenario.
Heo said the lack of energy storage within the power grid remains a critical weakness. Even with a projected 7 gigawatts of solar projects becoming operational, the system cannot yet handle the intermittency of solar power.
He said the Philippines has poor grid planning and will have to continue relying on firm capacity from coal and gas to maintain system balance.
Financial barriers also complicate the transition. S&P Global estimated the weighted average cost of capital (WACC) for Philippine solar projects at 10 to 11 percent, which is 3 to 4 percent higher than in other markets.
Heo attributed these high financing costs to a higher country risk premium, which makes it difficult for international banks to lend to local projects.
Despite the headwinds, Heo lauded the government for lifting foreign ownership restrictions, describing the move as a “gold trigger” that has successfully attracted international developers.
He also commended the Renewable Portfolio Standard (RPS) but warned that local renewable energy certificates should align with international standards to satisfy the requirements of major data centers and hyperscalers.
To reach its goals, the government must prioritize the streamlining of the permitting process and the expansion of transmission infrastructure, Heo said.
