Philippines to launch green energy auction for off-grid islands in 2027

Programme will deploy solar and battery storage systems.

The Department of Energy (DOE) will launch a dedicated Green Energy Auction (GEA) next year for off-grid islands served by state-owned National Power Corporation (NAPOCOR), replacing diesel generation with renewable energy and battery energy storage systems (BESS).

The programme aims to lower electricity generation costs, improve energy security in island communities, and reduce the Universal Charge for Missionary Electrification (UCME), a subsidy collected from electricity consumers nationwide to support power generation in off-grid areas.

DOE Undersecretary Rowena Cristina Guevara said many off-grid islands still rely on diesel-fired power plants, with generation costs averaging ₱18 ($0.29) per kilowatt-hour and reaching as high as ₱62 ($1.01) per kilowatt-hour in some remote areas due to fuel transport costs.

The difference between regulated electricity tariffs and the actual cost of generation is covered through the UCME subsidy.

The initial auction will cover 20 of the country's larger NAPOCOR-served islands. The DOE has already conducted focus group discussions with renewable energy developers, local government units, and other stakeholders to refine the auction design and implementation.

Unlike previous renewable energy auctions, the off-grid GEA will be tailored to the operating conditions of island communities. NAPOCOR will continue providing uninterrupted electricity service during the transition whilst winning developers build and commission their renewable energy facilities.

The DOE said it is finalising the list of eligible islands and auction parameters ahead of the programme's rollout next year.