EnergyOMNI's Perspectives I Philippines ERC Announces Preliminary Ceiling Price for Offshore Wind Auction

Edited by EnergyOMNI

The Philippine government is expected to launch the Fifth Green Energy Auction (GEA-5) this year. The Department of Energy (DOE) released a draft in June and formally issued a notice of auction and terms of reference on November 25. GEA-5 marks the country's first-ever offshore wind auction, focusing on fixed-bottom technology, with an auctioned capacity of 3,300 MW that will be offered for delivery between 2028 and 2030.

According to the notice, the Energy Regulatory Commission (ERC) must announce the Green Energy Auction Reserve (GEAR) price ceiling within 30 days. On December 11, the ERC released the preliminary GEAR at Php 10.3859 per kWh (around NTD 5.50/kWh). Stakeholders are invited to submit comments on the preliminary price by December 19, and public consultations are expected to take place in early January. Once the auction proceeds, winning bidders will sell power under a 20-year Green Energy Tariff (GET).

The auction notice designates Pambujan Port in Camarines Norte and Sta. Clara Port in Batangas as the official ports for GEA-5. The DOE and the Philippine Ports Authority(PPA) noted that these ports will open for developer bids this month, with a 15-month construction period, and are expected to be operational by Q1 2027. That would be in time for the government's target to begin offshore wind generation by 2028.

Domestically, critics argue that marine spatial planning is still incomplete and that port infrastructure remains unprepared, questioning whether the Philippines is truly ready for offshore wind development. Developers and investors must carefully assess these high risks when engaging in offshore wind projects in the country.

Second, with only two designated ports, GEA-5 effectively limits eligible project sites to areas that can be served by these ports, in addition to requiring project readiness for grid connection between 2028 and 2030. Under these constraints, it remains uncertain whether there will be sufficient bidders to ensure competition.

Third, the Asian Development Bank (ADB), using 2023 data, previously estimated that the appropriate GEAR for fixed-bottom offshore wind deliverable by 2030 should fall between Php 11 and Php 15 per kWh. However, the ERC's currently announced preliminary ceiling price is below Php 11. Whether this provides adequate investment incentives is debatable. The readiness of infrastructure, the optimism of the commissioning timeline, and whether the ceiling price is attractive enough all pose challenges as the Philippines enters the offshore wind development stage.