The country remains heavily reliant on conventional fossil fuels, primarily coal, to generate electricity, and studies made on the energy sector indicate that the situation is not expected to change in the near future.

Coal is the source of about 50 percent of baseload power and is a reliable producer of electricity throughout the day. Natural gas provides from 16 to 17 percent of energy generation and geothermal about 10 percent.

An energy insider said that, despite a moratorium on new coal projects, existing contracts must be honored, as the country’s image would suffer with regard to the integrity of business deals.

The seeming policy at the moment is for the country to take it slow in the shift to renewable energy (RE) to prevent the economy from sudden displacement.

With the economy growing strongly despite headwinds from local and geopolitical factors, it would be the worst time to tamper with existing coal contracts.

With a gross domestic product (GDP) growth projection of 5.6 percent for 2025, driven by strong domestic consumption, infrastructure investments, and a stable labor market, the country cannot afford significant disruptions to its electricity supply.

The government indicated it will maintain healthy competition to bring down the price of electricity,

The energy landscape should be seen in a pragmatic perspective amid robust economic expansion and persistent global uncertainties. In such a highly volatile situation, coal remains a cornerstone of the nation’s power generation strategy.

The heavy reliance on carbon-based fuels is a testament to their proven reliability, abundance, and alignment with the archipelagic geography and economic imperatives.

In the 12 months ending August 2025, coal generated nearly 60 percent of the country’s electricity, up slightly from 59 percent in 2022, making the Philippines one of the world’s top ten most coal-dependent economies, surpassing even Indonesia and China in relative terms based on Independent Electricity Market Operator of the Philippines data.

Studies by the International Energy Agency (IEA) project coal’s growth to moderate to 4 percent annually through 2027, down from 7 percent in prior years, but still outpacing RE additions.

Demand in the country rose 5 percent in 2024 and is expected to average over 5 percent growth from 2025 to 2027, driven by population expansion, projected to reach 115 million by 2030, and urbanization.

The Philippine Energy Plan (PEP) 2023 to 2050 targets 35 percent RE in the power mix by 2030 (up from 22-32 percent currently). Coal is projected to remain key for baseload/peak due to RE intermittency.

The RE target mix is to reach 50 percent by 2040, which is ambitious because deployment is not keeping up with the target. As of mid-2025, only 22 to 24 percent of power comes from renewables, with solar and wind additions hampered by grid constraints and typhoon vulnerabilities.

Abrupt RE scaling increases risks of blackouts, as seen in last year’s unplanned outages at fossil plants that spiked prices 20 to 30 percent.

A gradual RE shift would be the answer to the current energy security dilemma.

The Department of Energy’s unofficial “take it slow” policy, echoed in the PEP, prioritizes a “balanced mix” to avoid shocks, with RE growth capped at 1 to 2 percent annual share gains through 2027.

The development of the energy sector must not sacrifice the country’s economic momentum, but instead support far stronger growth.