Leveraging our new analysis of the Philippine market, we delve into the key regions and assess the future of its power sector
The Philippine power sector is generating significant investor interest in South East Asia. The economy is growing rapidly, the market is open and power demand is outstripping supply with consumers paying premium prices.
With domestic demand forecast to grow at 4% a year, generating capacity is expected to double from around 15 GW to 30 GW by 2035 and the country will require US$16 billion of investment into the power sector by 2025.
However, new energy infrastructure is being outpaced by demand growth. In recent years, project delays and unplanned outages of large generating units have aggravated shortages and rolling blackouts have already begun.
Going forward, we believe coal will play the critical role in the Philippine power sector and anticipate a significant growth in coal imports. On the other hand, gas generation will stagnate unless supported by policy changes and incentives.
In Mindanao, the country's least developed region there is currently insufficient power capacity. Here, coal plants are on track to provide the base load needed to stabilise the power grid by 2016, when the utilisation of oil plants will simultaneously decline.
However, given the market's diverse nature and island geography, there are also opportunities for LNG in specific locations.
In Luzon, LNG is expected at the Pagbilao terminal from 2018, with jetty piling works and the construction of storage tanks having already started. An import terminal is also necessary in Batangas to replace the region's piped gas supply as it begins to drop from 2022.
Several additional terminals have also been proposed, however it remains to be seen whether these go ahead and are encouraged by supportive government policy.
Philippines power markets long-term summary H2 2014 [subscription required]
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