Philippines: Renewable energy policies and rural electrification drive battery storage push

We brought you a write-up of the panel, ‘Growing the Japanese storage market,’ just over a week ago. Now, it’s the turn of ‘Building BESS in the Philippines,’ which brought up just as many interesting talking points about a very different but equally important market.

The afternoon panel followed the keynote address by Philippines Department of Energy (DOE) Assistant Secretary Mario C. Marasigan. During his speech in the morning, Marasigan announced that the next round of the government Green Energy Auction Program (GEAP) would be for renewable energy systems with integrated energy storage.

More details emerged on that round, GEA-4, last week. Alongside, Marasigan, representatives of leading private sector names in the Philippines renewables, storage and power industry gave their thoughts on renewables integration with storage, off-grid electrification and much more.

Speakers:

• Hon. Mario C. Marasigan, Assistant Secretary, Philippine DOE
• Jason Soberano, VP and chief business development officer, SNAP (SN Aboitiz)
• Joanna Mae Millares, project execution manager, Aboitiz Power
• Colin Steley, VP for storage and board of trustees
• Dr Ruth Briones, chairman and CEO, Greenergy Solutions

Moderator:

• Eric San Pedro, business development, Entoria Energy

Policy questions DOE is handling

Moderator Eric San Pedro at renewable energy developer, investor and asset owner Entoria Energy kicked off by asking DOE Assistant Secretary Marasigan about the policies and incentives in place to support the integration of battery energy storage system (BESS) technology in the power sector, and specifically with renewables.

The government sees energy storage as a vital enabler for the Philippines’ “ambitious targets” for renewable energy, Marasigan said, aiming for 35% renewables in the energy mix by 2030, 50% by 2040 and continuing to rise from there.

“We have to integrate everything that we can make use of to ensure that those targets will be met,” he said, including, of course, energy storage, but specifically BESS as the most suitable mature technology for near-term deployment.

As has been seen in markets across the world, and the governments and regulators that oversee them, the Philippines has questions to answer on the classification of storage systems for the grid.

“We have to classify whether these energy storage systems will be considered as generators, we have to classify them as well whether these are providers of ancillary services, and lastly, what if we integrate these energy storage systems with renewable energy that serves as a component [of that renewable energy asset] rather than a separate one?”

In the last instance, incentives available to renewable energy generators would also be accorded to energy storage, Marasigan said, with every kilowatt-hour produced by renewables and stored in batteries considered renewables by regulators.

Upcoming Green Energy Auction for integrated renewables and storage

The Assistant Secretary noted that for the upcoming GEA-4 renewables-plus-storage solicitation, winning projects would maintain the must-run or priority dispatch status that renewables.

The auction will aim to accelerate the development of the Philippines’ renewable energy resources and get projects commissioned on time and align power sector investments with policy targets

Moderator Eric San Pedro said that the first two GEA tenders for variable renewable energy (VRE) had encountered some issues, primarily, he said, because low prices bid “were somewhat difficult to achieve”.

Marasigan acknowledged these challenges for developers in arriving at the right bid price. DOE is working with the Energy Regulatory Commission (ERC) to come up with different pricing mechanisms for energy storage systems.

Dr Ruth Briones of Greenergy Solutions, a Philippines-headquartered developer of renewable energy specialised in utility-scale projects, said that Greenergy successfully bid for GEA-1 and GEA-2 project that are going ahead to commissioning and commercial operation.

For GEA-4, however, the DOE and industry need to figure out a more complex set of financial equations, Briones said, as well as conquer some unique technical challenges and understand policy frameworks that themselves are a work in progress.

Energy storage is a technology that can not only drive the modernisation of power infrastructure in the Philippines, but also attractor investors in the country’s economy.

“However, as a utility developer, we are looking at challenges in the implementation of the policy framework, and at technology challenges,” Briones said.

For example, permitting complexities as well as environmental factors such as scarcity of land mean that Greenergy is tending to go work on smaller utility-scale solar-plus-storage projects rather than larger ones in the Philippines.

“How do we respond to this? There will be a lot of feasibility studies to be done, especially to help the system operator respond to the issues, and also, the permitting process is not easy if you have co-located projects. Permitting in solar PV alone is challenging and even more if we’re going to co-locate the BESS project,” Briones said.

At the same time, it is difficult to attract investors to finance solar-plus-storage projects with uncertainties over the business case. The optimal price per kilowatt-hour, the Internal Rate of Return (IRR), how to sell the stored energy are all questions that need to be answered.

At this stage in the market, feasibility studies are “trial and error,” the Greenergy CEO said.

Big power players leveraging existing generation sites

The Philippines’ power generation sector is dominated by a handful of big power producers, backed by the country’s major industrial conglomerates.

These have largely taken the lead in deploying grid-scale BESS, including Aboitiz Power, subsidiary of holding company Aboitiz Equity Ventures. As part of a rollout of 248MW of BESS, Aboitiz Power (AP) has completed a 49MW project on a floating power barge on Mindanao Island.

AP project execution manager Joanne Mae Millares said that the floating BESS, paired with an existing 100MW diesel plant to reduce its ramping time from 15 minutes to just three, is a “very unique innovation” and, as such, faced some of those challenges Briones referred to.

There were no “firmed up regulations for BESS at that time,” Mae Millares said, and AP had to help come up with a protocol for the “hybrid diesel generator (DG)-BESS,” and in terms of permitting essentially followed whatever the local government asked the company to do, “in order to finish the project if not on time, then as early as possible”.  

What is also notable is that projects by power companies like Aboitiz Power or San Miguel Power Corporation (SMPC) are being installed, like the Mindanao barge, at existing power plant facilities. As regular readers of Energy-Storage.news might be aware, battery storage can greatly increase the efficiency of power plants, behind which lies the business case and what one expert described as a race between power companies to add those BESS enhancements.

In addition, AP already has existing land available for BESS additions at its thermal plants.

“We will continue to do that, to integrate BESS with our thermal plants, and at the same time, we will be starting to integrate BESS with our renewable portfolio,” Mae Millares said.

At the moment, AP’s BESS assets perform frequency regulation ancillary services, because its thermal plants have contracts in place to do so in the Philippines’ highly regulated electricity market. However, in addition to capacity-based ancillary service markets, BESS could also participate in reserve markets, which are energy plays.

By contrast, SN Aboitiz Power Group (SNAP), which is a joint venture (JV) between Aboitiz Power and Norwegian state-owned renewables developer Scatec, made its first BESS project a standalone one that provides ancillary services through participation in the reserve market.

The project, which operates separately but is co-located with an existing hydroelectric plant, went into operation in January. SNAP intends to ramp up its 24MW/36MWh output and capacity to 240MW and is currently running a tender.

However, as SNAP VP Jason Soberano noted, the reserve market has been closed since February.

This was to allow for adjustments to the Wholesale Electricity Spot Market (WESM) design, to align the reserve market’s 1-hour dispatch interval with 5-minute intervals for trading in the energy market.

While it had been expected to reopen in late July, shortly after Energy Storage Summit Asia took place, this did not happen. A few days ago (2 August), the DOE said it targeted the resumption of the market “early this month”.

Despite this, Soberano said SNAP was “excited for incentives and how the market would move,” looking forward to seeing how batteries could be integrated with renewables in behind-the-meter (BTM) projects, and regulations being drafted by the DOE and ERC.

“We can’t just pump in more renewable energy and not take care of the grid itself,” Soberano said.

Off-grid: renewables, BESS with diesel backup

As Eric San Pedro pointed out, it’s also important to remember that the Philippines is an archipelago with more than 7,000 islands.

The moderator asked Assistant Secretary Marasigan about specific policies and frameworks for battery storage as part of off-grid systems in many of the outlying island regions.

The DOE is preparing to launch its second competitive solicitation for implementing microgrid systems in rural areas, he said, targeting deployments in around 48 different locations the department has identified.

Those microgrid systems will comprise renewable energy, energy storage, and backup facilities, typically diesel generators.

Marasigan noted that the first round, held last year, “was not that successful,” with projects awarded to private sector bidders in just eight identified locations out of 41, but said lessons have been learned from that experience.

“We have identified the challenges of the developers, and we hope that by addressing those challenges, there will be more participants,” Marasigan said.

In addition to that procurement, there will be programmes to incentivise the retrofit of renewables and storage at existing off-grid diesel microgrids, hosted via the National Power Corporation coordinating with the country’s Small Power Utilities Group (SPUG).

Longer durations ‘would be beneficial’

An audience member asked if the panel envisaged the Philippines BESS market moving toward 2-hour or even 4-hour duration systems.

“Definitely,” said DOE Assistant Secretary Marasigan.

“We are hoping that the improvement and enhancement of energy storage systems, particularly the batteries, will be one of the drivers for us to attain our targets in renewable energy,” he said.

The DOE is looking to use every tool in its disposal to ensure that “every kilowatt-hour generated” is useful for the nation’s consumers, and that includes transition fuels too. The DOE has said that alongside integrated renewables and storage, it is considering liquid natural gas (LNG) procurements through the GEA-4 mechanism.

It is a matter of practicality, Marasigan said.

The renewable targets “will be met by looking at all possible solutions,” and batteries are in the front running of that assessment right now.

“What we have readily at hand would be the batteries, because even if we consider that pumped storage hydro will be one of those better solutions, it will take us at least seven years before we can come up with the pumped storage hydros in realisation.”

That said, the DOE’s ongoing GEA-3 auction is open to pumped hydro, and other non-battery-based storage technologies.

SNAP is developing PHES plants as well as BESS and Jason Soberano said that the mechanical storage technology may be more viable for long-duration energy storage (LDES) projects of 8-hour duration than lithium-ion (Li-ion) batteries.

Even so, 4-hour duration Li-ion plants would be beneficial, Soberano argued, helping to provide mid-merit power generation—filling some of the gap between peaking power and baseload—until longer duration storage can help renewables replace the thermal generation baseload too.

The Energy Storage Summit Asia, hosted by our publisher Solar Media, returns to Singapore in July 2025. Energy-Storage.news Premium subscribers can benefit from exclusive discounts on tickets to this and other events in the Summit series.