A recent report by the International Energy Agency (IEA) found that global electricity demand is accelerating, especially in the Asia Pacific, with projected annual growth of 3.6 percent through 2030.
Rising air-conditioning use in buildings, expanding services and commercial loads, and electrification are key contributors to demand growth and, in hot-weather contexts, to peak demand pressures.
The implication for the Philippines is that the country will not only experience higher total electricity consumption (MWh) but also steeper growth in peak demand (MW).
Rising peak pressure
This will occur particularly as cooling loads and building-sector consumption expand and electrification progresses. This means the Philippines will increasingly rely on technologies that can quickly ramp up electricity production to meet peak demand.
The report noted that energy supply is increasingly shifting to renewables, led by solar PV.
By 2030, renewables and nuclear power are expected to supply about 50 percent of global electricity.
In the Philippines, while solar is the fastest-growing source, rising peak demand will require balancing capacity from fossil-fuel-based plants, such as gas-fired facilities.
Balancing supply needs
Intermittent renewables like solar and wind, unless paired with battery energy storage systems (BESS), cannot reliably meet peak demand. Gas-fired or diesel plants remain designed for such flexibility requirements.
Grid infrastructure is also a critical constraint, as investment continues to lag behind generation capacity.
Globally, grid investment must rise by 50 percent to meet projected demand—a challenge mirrored in the Philippines, where interconnection approvals and system strength are greater bottlenecks than project financing.
Solutions include queue reform, flexible connection agreements, co-located assets such as solar-plus-storage, and grid-enhancing technologies. The Department of Energy (DOE) is exploring such mechanisms.
Reforming the system
Flexibility, particularly through demand response (DR), is crucial. DR can reduce peak requirements, delay grid investments, and lower overall system costs.
The Philippines already has a mechanism requiring large electricity users to curtail consumption when supply is tight. Over the long term, these loads could be integrated into the Wholesale Electricity Spot Market (WESM) or the Reserve Market to ensure proper pricing and compensation.
Affordability is another growing concern as non-energy components—network charges, taxes, and levies—continue to rise. Reforms should focus on consumer protection and tariff structures that reward off-peak, flexible usage rather than solely prioritizing low generation costs.
The increasing “financialization” of the regulatory regime also contributes to elevated power costs.
Strengthening grid resilience
Reliability and resilience have become strategic priorities amid aging infrastructure, extreme weather events, and system instability.
For the Philippines, this means prioritizing voltage support, hardening critical facilities, and strengthening cybersecurity as inverter-based renewable resources are integrated into the grid.
Lessons for the Philippines: Consider developing microgrids with distributed energy, even in urban areas. This will remove the strain on the transmission grid and enhance reliability and resiliency.
By moving generation assets closer to consumers, the country can improve technical efficiency while lowering costs in the long run.
A power industry expert with over 40 years in experience as chief executive officer in firms ranging from banking, power, and advisory services.
