Data from the Independent Electricity Market Operator of the Philippines (IEMOP) show coal-fired generation fell 5.5 percent year-on-year to 33.8 terawatt-hours (TWh) in the first half of 2025.
Coal-fired electricity generation in the Philippines declined for the first time in 17 years during the first half of 2025, as rising natural gas and renewable output reshapes the energy mix and drives wholesale spot prices to their lowest levels since the COVID-19 pandemic.
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Coal Generation Declines After 17 Years
Data from the Independent Electricity Market Operator of the Philippines (IEMOP) show coal-fired generation fell 5.5 percent year-on-year to 33.8 terawatt-hours (TWh) in the first half of 2025. Coal’s share of the power mix dropped to 57.2 percent, down 4.7 percentage points from 2024, ending a run of annual growth that stretched back to 2008.
With global liquefied natural gas (LNG) prices down 13 percent on sluggish demand, gas-fired generation rose 5.2 percent to 10.36 TWh, lifting its share to 17.5 percent—a 3.6-point gain from its record low in 2023. The 2020 ban on new coal plants had already signaled a gradual coal phase-out, but cheaper LNG has fast-tracked the transition. Electricity retailers, thanks to market liberalization, are increasingly switching from long-term coal contracts to spot-market gas purchases.
Renewables Expansion Lowers Spot Market Prices
The growth of solar, wind and hydropower has further chipped away at coal’s prominence and compressed spot prices. Average wholesale rates plunged to PHP 4.14 per kWh (about US $0.0731) in the first half of 2025—their lowest post-pandemic level—down from PHP 5.58 per kWh (US $0.098) in 2024. IEMOP credits the decline to both expanding low-carbon output and improved grid infrastructure and supply-chain efficiencies.
Most electricity retailers have boosted their spot-market buys—from 12 percent of total supply in the two years through June 2023 to 21 percent in the following 24 months—to capitalize on lower wholesale prices. Yet falling spot rates have not uniformly translated into consumer savings. Manila Electric Co. (Meralco), the country’s largest distributor, raised tariffs in July citing expensive long-term supply agreements with generators.
Looking ahead, IEMOP projects that planned renewables capacity additions—and continued cost declines—could cut average spot rates by another PHP 0.90–1.32 per kWh (US $0.016–0.023) by 2029, amounting to as much as 24 percent below current levels. With power demand forecast to climb 5 percent annually over the next decade, gas and green energy are poised to fill the gap left by coal, ushering in a cleaner, more competitive electricity market.
Lead image courtesy of DaveAlan from Getty Images Signature(coal fired power plant)
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