What could dampen natural gas uptake in the Philippines

The country seeks to increase gas-fired generation capacity to 24.3 GW under the reference scenario.

The Philippine government’s policies are supportive of increasing gas-fired power generation but natural gas consumption could face risks as authorities also push for power generation from renewables, according to a report by Fitch Solutions.

Under the Philippine Energy Plan (2020-2040), the government aims to increase gas-fired power generating capacity to 24.3 gigawatts (GW) from the current 3.45GW in the reference scenario, and reach 18.9GW in the clean energy scenario.

On the other hand, the country also aims to ramp up its renewables capacity to 53.2GW in the reference scenario from 7.6GW in 2022, and 81.5GW in the clean energy scenario (CES).

Fitch added the energy department has given the green light to seven gas-fired power plants with  7.1GW capacity combined, with 10 more plants with 8.8GW capacity have been proposed.

The country’s demand for liquified natural gas from the power sector could reach up to six million tonnes per annum (mtpa) if all the newly approved projects go online by 2027, excluding the existing five plants. Nearly 9mtpa will also be needed to supply 12 gas-fired plants when Malampaya is depleted.

“The Philippines will become reliant on LNG imports for power generation by 2025. The outlook for gas consumption remains bullish in both reference and CES scenarios, but there are downside risks to gas consumption if the government chooses to pursue renewables under the CES scenario rather than natural gas,” it said.

It added that power producers in the natural gas and renewables industries would benefit if the current administration keeps the moratorium on coal power projects.