By Sudarshan Varadhan
SINGAPORE (Reuters) -Increasing adoption of renewable energy in the Philippines could push average annual spot power prices as much as 24% lower by 2029, its power market operator said on Thursday.
Spot power prices in the Philippines have fallen to a post-pandemic low of 4.14 Philippine pesos ($0.0731) per kilowatt-hour (kWh) in the first half of 2025, data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed.
Increased output from cheaper renewable generators have helped displace higher-priced plants this year, the IEMOP said, estimating planned green energy capacity additions to slash prices by 0.90–1.32 pesos per kWh by 2029.
Spot electricity prices averaged 5.58 pesos/kWh last year.
Natural gas-fired power plants – which can quickly adjust generation to offset renewable supply volatility – also output this year, IEMOP said, helping bring spot prices down.
The Philippines, which has the most coal-dependent grid in the region, is on track for an annual decline in coal-fired electricity output for the first time since 2008 due to rising liquefied natural gas-fired power generation.
Lower prices on the spot power market don’t necessarily translate into reduced electricity tariffs for Philippine residents, who pay the second highest electricity tariffs in southeast Asia behind Singapore.
The country’s top power retailer Manila Electric Co (MERALCO) increased tariffs this month despite lower spot prices, citing higher charges from power generators with whom it has expensive supply deals.
However, most retailers have increased buying on the spot market, as they seek to cut costs by reducing dependence on pricey long-term supplies.
The share of spot market purchases rose to 21% of overall supply in the 24 months ended June, compared with 12% in the preceding two years, an analysis of IEMOP data showed.
($1 = 56.6450 Philippine pesos)
(Reporting by Sudarshan Varadhan; Editing by Leroy Leo)
