The Philippines – an Energy Snapshot

The Philippines economy continues to grow rapidly with GDP growing more than 7.5% in 2022 and expected to continue expanding faster than 5% per annum.  Domestic energy consumption is growing, driven by significant public infrastructure development and the private sector investing in manufacturing and services. Because of this, the demand for power is growing and how to meet that demand is the subject of much political debate.

The Philippines has become heavily reliant on coal-fired power generation. The Malampaya gas field is the only significant indigenous gas resource, with production providing the bulk of gas-fired power generation in the country. Malampaya is expected to be depleted by  2024, and how to manage that has driven much of the debate around the future of the gas sector.

The Philippines has been a potential new market for imported LNG for many years, with production from Malampaya starting to decline and limited economic potential for new production.  Gas is used exclusively to supply 3.2 GW of generation on Luzon, which is equivalent to 21% of national generation.  Nationwide generation is dominated by coal with 46%, with 22% provided by renewables, predominantly geothermal and hydro.  The country also has geographical challenges with many isolated island power grids of limited size slowing the development of robust national power grids.

Historically, a barrier to LNG was cost competitiveness versus coal generation but recently government policy has switched to mandating a lower carbon generation mix in future.  The Department of Energy Philippine Energy Plan 2018 – 2040, focuses on the following objectives:

• Increase the production of clean and indigenous sources of energy to meet the growing economic development of the country.
• Decrease the wasteful use of energy through energy efficiency tools and strategies.
• Ensure a balance between reliable and reasonably priced energy services, support for economic growth, and environmental protection.

The plan focuses on energy security, affordability and access, lower carbon, improved government agency collaboration, development of new technologies, clarification of regulations and stronger international partnerships.  Subsequently, it issued a moratorium on adding greenfield coal capacity that is not approved or significantly advanced, although this still leaves new coal projects in place that will add 11 GW.

The Department of Energy has also set targets of bringing the renewable energy share in the power generation mix to 35 percent by 2030 and 50 percent by 2040 (from the current 22 percent), which it says translates to a greenhouse gas emissions reduction of 35 percent or around 119 million tons of CO2 equivalent by 2040.

The potential for increased natural gas demand for power generation in the Philippines is significant and the complementary nature of gas to renewables will be a critical success factor in the development of that demand.

There are encouraging signs. Early in 2023, the Department of Energy provided approval for an LNG terminal in Bataan province north of Manila, which would become the seventh such facility under development in the Philippines. The Lopez Group conglomerate – one of the country’s most significant companies – has since announced that it is looking to expand its mainstay energy business by investing in LNG import capabilities.

ANGEA member company JERA is also working with one of the Philippines’ leading power providers, Aboitiz Power, on a trial of ammonia co-firing in coal-fired electricity generation.

ANGEA is an industry association representing LNG and natural gas producers, energy buyers, suppliers and companies in APAC. Based in Singapore, it works in partnership with governments and societies across the region to deliver reliable and secure energy solutions that achieve national economic, energy security, social and environmental objectives and meet global climate goals.

Photo of Manila by Alexes Gerard on Unsplash