Electricity prices in the Philippines are the highest in South East Asia and utilities rely excessively on imported coal and diesel. This report attributes the country’s lack of ability to attract large investments in renewables to purchase agreements that protect fossil fuel interests in imported coal and diesel.
The report finds the that switching to renewables in island grids could save the public more than US$ 200 million per year in diesel subsidies. Moreover, coal projects in 2019 have the potential of US$ 9.5 billion in stranded asset risk with a broader risk beyond 2019 equivalent to US$20.9 billion – the costs will be covered by households, industry, or investors, including local Philippine banks.
To encourage a transition to less costly and cleaner energy generation, the report recommends removing fossil fuel subsidies, introducing transparent, competitive auctions for a variety of renewables producers and investing in infrastructure, such as ancillary storage services and other grid supports.