September 18, 2019 (IEEFA Asia) – The Philippine energy sector is grappling with changes at the national and global levels generated by increased demands for transparency in bidding and pricing while reducing climate risk and avoiding stranded assets, according to a report released today by the Institute for Energy Economics and Financial Analysis (IEEFA).
The report – Prospects Improve for Energy Transition in the Philippines – provides an overview of current trends and gives a detailed breakdown of the country’s energy outlook and the barriers that are slowing uptake of renewables.
Redesigned energy policies would attract lower prices and more investment
“Today, there is an unprecedented opportunity to redesign the market to attract lower prices and more investment,” said IEEFA financial analyst Sara Jane Ahmed, author of the report.
The analysis found three major trends that will play important roles in determining which direction the country is headed.
Recent Supreme Court rulings make it difficult to pass along costs and risks to consumers
The report details recent rulings by the Philippine Supreme Court that make it difficult if not impossible for energy companies to continue to pass along increased costs and risks. In addition, the improved technology and affordability of renewables puts further pressure on the sector to adapt or perish.
“Wholesale power prices in the Philippines, currently amongst the highest in Southeast Asian countries, can be cut by 30%, and consequently attract more foreign investments,” said Ahmed.
The role of China, a major investor in the Philippines, will also determine how quickly the energy sector is able to adapt to the changing market and regulatory environment. Both countries need to act to reduce the size and nature of their future coal and other fossil fuel assets and obligations that are exposed to stranded asset risk or face the consequences on national balance sheets, according to the report.
Sara Jane Ahmed ([email protected]) is an IEEFA energy finance analyst.
Vivienne Heston (U.S.) [email protected] +1 (914) 439-8921
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) conducts global research and analyses on financial and economic issues related to energy and the environment. The institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.