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Philippine coal power generation sees rare decline, share drops below 60%. (Photo: iStock)
Coal-fired power in the Philippines has dropped for the first time in nearly two decades, according to the Independent Electricity Market Operator of the Philippines (IEMOP).
The decline comes as gas and renewable energy generation continue to rise, reducing coal’s share of the energy mix and driving wholesale electricity spot market prices to their lowest level since the end of the COVID-19 pandemic.
Falling LNG prices accelerate coal phase-out
IEMOP data shows that coal-fired generation reached 33.8 TWh in the first half of 2025, a 5.5% decrease year-on-year. Coal’s share in the power mix fell to 57.2%, down 4.7 percentage points from 2024.
In contrast, gas-fired generation rose by 5.2% to 10.36 TWh over the same period, increasing its share to 17.5%, up 3.6 percentage points from its record low in 2023. Hydropower also gained a larger share of the power mix during the first half.
The Philippine government’s 2020 ban on new coal plants had already signaled a gradual decline in coal use. However, the recent 13% drop in global LNG prices, driven by sluggish demand, has accelerated coal’s phase-out by boosting gas consumption.
The liberalization of the Philippine power market allows electricity retailers to shift their supply sources based on market conditions. According to James Ha, head of research for Asia-Pacific at UK-based Aurora Energy Research, the country’s power demand is projected to grow by 5% annually over the next decade, with LNG expected to fill the supply gap left by coal.
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ACEN's onshore wind turbines in the Philippines. (Photo: ACEN)
Renewables expand as spot power prices hit post-pandemic low
Beyond structural shifts in generation, electricity prices in the spot market have also declined. IEMOP reports that average spot prices fell to PHP 4.14/kWh (about USD 0.073) in the first half of 2025, marking the lowest level since the pandemic, and may drop further.
IEMOP attributes this to the growing output and falling costs of renewable energy, which is gradually displacing coal in the generation mix. If low-carbon power generation grows according to government targets, IEMOP estimates spot market prices could fall by another PHP 0.90 to 1.32/kWh (about USD 0.016–0.023) by 2029. The average spot price in 2024 was PHP 5.58/kWh (about USD 0.098).
The rapid growth of renewables, driven by supportive government policies, has played a key role in lowering wholesale prices. IEMOP notes that stronger collaboration between government and industry, improvements in grid infrastructure, and greater supply chain efficiency are also contributing to downward pressure on spot prices.
IEMOP data shows most electricity retailers have increased their purchases from the spot market, seeking to cut costs by reducing their reliance on long-term contracts. However, falling wholesale prices do not necessarily translate to lower bills for consumers. For instance, in July, Manila Electric Co. (Meralco), the country’s largest power distributor, raised rates due to the high costs of its long-term supply agreements with generators.
Source: Reuters(1), (2), Power Philippines
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