Philippines Doubles Down on Thermal Power Amid Energy Security Push

Utilities Chart Thermal Course

Philippine power generators are doubling down on coal and gas infrastructure, rejecting pressure to rapidly phase out fossil fuel capacity in favor of what industry leaders describe as energy security and grid reliability. The strategy positions the nation against the global net-zero narrative, prioritizing what executives call a transition from energy poverty to energy abundance rather than from thermal to intermittent renewable sources.

Energy Secretary Sharon Garin and Senator Erwin Tulfo headlined the American Chamber of Commerce Philippines 9th Annual Energy Forum, where senior executives from Aboitiz Power, Meralco PowerGen, and Prime CoreGen outlined plans to maintain and expand thermal generation capacity. Don Paulino, chief of engineering and projects at Aboitiz Power's thermal division, told the forum that conventional power provides the stability and flexibility necessary for emerging technologies to scale without risking supply imbalances.

Arnel Santos, president and CEO of Meralco PowerGen Thermal Energy Inc., said the Philippines requires substantially more energy to support industrialization, infrastructure development, and rising living standards. Santos, who spent three decades in oil and gas operations spanning Malaysia, Singapore, the Netherlands, and Canada, emphasized that thermal generation will continue playing a central role in meeting round-the-clock power demand for many years. MGEN Thermal intends to invest in reliable and efficient generation to build the dependable energy foundation needed for long-term economic and industrial development, according to Santos.

Asia's Thermal Reality

Data from the Energy Institute's Statistical Review of World Energy 2026 reveals that thermal power remains dominant across Asia's largest economies despite decades of anti-fossil fuel advocacy. China generated 10,575 terawatt-hours in 2025, representing 33 percent of global electricity production, with coal accounting for 54 percent of its domestic mix. India's coal share stood at 71 percent, while Indonesia's reached 61 percent. Vietnam and Taiwan recorded coal shares of 48 percent and 35 percent respectively.

When combined with natural gas, thermal sources supplied 83 percent of Taiwan's electricity in 2025, up from 76 percent in 2015. Indonesia's thermal share rose from 76 percent to 79 percent over the same decade. Japan, South Korea, and the United States each derived 58 percent of their power from coal and gas in 2025. The global average thermal share declined modestly from 62 percent in 2015 to 55 percent in 2025, reflecting additions of renewable capacity rather than wholesale retirement of conventional plants.

Germany and the United Kingdom present contrasting outcomes. Germany's total electricity generation fell from 649 terawatt-hours in 2015 to 508 terawatt-hours in 2025 as the nation reduced thermal and nuclear capacity in favor of solar and wind. The UK saw generation drop from 339 terawatt-hours to 291 terawatt-hours over the same period. Both nations have avoided widespread blackouts through electricity imports, particularly from France, which maintained 68 percent nuclear generation through 2025.

Grid Stability Economics

Philippine grid operator National Grid Corporation of the Philippines faces mounting costs for ancillary services as intermittent renewable capacity increases. Battery energy storage systems and pumped hydro storage are required to stabilize frequency and voltage fluctuations introduced by solar and wind farms. These ancillary service charges appear as separate line items on monthly electricity bills, adding to consumer costs without generating revenue for the grid operator itself.

Industry executives argue that maintaining a higher share of thermal baseload generation reduces the need for expensive grid-balancing infrastructure. Coal and gas plants provide dispatchable power that can ramp up or down on demand, a capability that solar and wind installations cannot replicate without costly storage systems. The economic case for thermal expansion hinges on total system costs rather than levelized cost of energy comparisons that exclude grid integration expenses.

The forum's focus on energy recovery references the impact of elevated oil, gas, and petrochemical product prices stemming from Middle East conflicts. Energy resilience planning anticipates future supply disruptions from geopolitical instability in resource-rich regions. Philippine utilities are positioning thermal capacity as a buffer against price volatility and import dependency, particularly for liquefied natural gas.

Policy Crossroads

The Philippine energy strategy diverges from commitments made by regional peers at international climate forums. Indonesia and Vietnam have both signed joint energy transition partnership agreements with multilateral lenders and developed economies, securing billions in concessional finance to accelerate coal phase-outs. The Philippines has pursued no comparable framework, instead allowing market economics and utility investment decisions to shape the generation mix.

Executives at the forum framed thermal expansion as essential to meeting rising electricity demand from data centers, manufacturing facilities, and infrastructure projects. The nation's per capita electricity consumption remains below regional averages, leaving substantial room for load growth as incomes rise and urbanization continues. Whether thermal capacity additions will crowd out renewable investment or coexist within a diversified portfolio remains an open question as developers submit connection applications to the grid operator.