Market Trends of Philippines Solar Energy Industry
Solar Photovoltaic (PV) to Register Significant Growth
- Solar energy provides an immediate solution to the country's growing energy needs. With steadily falling solar power equipment costs and the short time needed to install and commission solar power projects, solar photovoltaic systems are increasingly becoming popular among consumers and industries across the Philippines.
- With the increased solar PV installations across the country, the solar PV segment is expected to grow significantly due to increasing small-scale solar PV deployment during the forecast period. The Department of Energy (DOE) released the Philippine Energy Plan 2020-2040, establishing the country's goal for renewable energy to reach 35% of its power generation mix by 2030 and 50% by 2040. This development, in turn, will culminate in the increasing deployment of solar PV across the country.
- According to International Renewable Energy Agency, as of 2022, the country witnessed 1,625 MW of solar PV installations with an annual growth rate of 18% compared to the previous year. It is observing growing demand for solar PV from industrial and commercial segments, which may positively impact the growth of the solar energy market in the Philippines.
- Small-scale solar photovoltaic (PV) has been widely adopted by the residential sector in the Philippines, mainly due to the declining cost of PV technology and the introduction of net metering.
- However, despite the net metering policy, the residential and commercial sector has witnessed limited growth for PV installation of up to 100 kW in size since 2013. The slow growth has been mainly due to administrative, financial, and regulatory hurdles, preventing small owners and medium-sized enterprises from installing rooftop solar.
- Hence, due to the increasing solar photovoltaic installations across the country, the solar PV segment will likely dominate the Philippine solar energy market during the forecast period.
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Declining Costs of Solar PV to Drive the Market
- The solar industry has cut costs dramatically through economies of scale in the past six years. As the market was flooded with equipment, prices plummeted. In 2011, the price of solar panels declined by 48.4%, while the PV system costs dropped by more than 30% since 2008. As of 2022, solar photovoltaic (PV) modules were more than 80% cheaper than in 2011, culminating in an increase in solar installations across the country and favoring the market's growth.
- The cost of electricity from solar PV declined by almost three-fourths during 2010-2022 and continues to decline. Continuous technological improvements, including higher solar PV module efficiencies, drive cost reductions. The industrialization of these highly modular technologies yielded impressive benefits from economies of scale and greater competition to improved manufacturing processes and competitive supply chains.
- As of 2021, global module prices dipped as low as USD 0.24/W. As the prices of solar panels are declining, consumers are showing interest in installing solar panels to incur tax benefits and low electricity bills, which impacts the growth of the solar energy market in the Philippines.
- Thus, the declining photovoltaic system prices are expected to increase the adoption of solar power in the Philippines and drive the market during the forecast period.
