The Philippines looks set to significantly ramp up its solar deployment, according to Fitch Solutions, which has revised up its forecasts for the country’s non-hydro renewables sector in line with a rapidly-expanding project pipeline and growing regulatory support.
Fitch Solutions, which has also revised down its coal forecast for the Philippines amid domestic opposition, said the market’s project pipeline for large-scale solar has grown significantly over the past year, with total solar capacity in the country’s pipeline growing more than ten fold from March 2021.
As of March this year, the Philippines had around 13GW of solar in its project pipeline, up from a paltry 1.3GW in March 2021, with wind power also growing substantially.
“We believe the growing investor interests in the renewables sector is largely underpinned by the improving regulatory environment for the sector,” said Fitch Solutions.
Indeed, the Philippines’ Department of Energy (DoE) has been developing two important renewable policies – the Renewable Portfolio Standard and the Green Energy Option – to encourage market development and is also launching a Green Energy Pricing Programme that will set a ceiling price for renewable energy, helping generators secure favourable power supply agreements.
Moreover, it has also set new renewable energy targets in its latest version of the National Renewable Energy Program, with renewables expected to account for 35% of the country’s power mix by 2030 and 50% by 2040.
Fitch Solutions now forecasts non-hydro renewables capacity to total 10.2GW by 2031, from an estimated 4GW at the end of 2021, driven largely by wind and solar projects. “This is subject to further upside risks, although we will await the establishment of concrete policy and incentives to achieve growth first,” said Fitch Solutions.
Meanwhile, it has also revised down its coal generation forecasts somewhat amid strong opposition and ongoing efforts to reduce the country’s dependence on coal for power generation. Coal generation will continue to grow strongly over the coming years in absolute terms, however, as projects in the current pipeline continue to progress, Fitch Solutions noted.