Coal Plant Insurance Costs Surge Amid Energy Shift

Coal-fired power plant operators in the Philippines are facing mounting financial pressure as insurance premiums spike and providers grow increasingly hesitant to cover fossil fuel projects, according to the Department of Energy (DOE).

“Premiums for insurance have increased, especially for the coal-fired power plants,” Energy Secretary Raphael P.M. Lotilla said during a recent briefing.

Lotilla emphasized that while coal remains a crucial part of the country’s power mix, evolving global insurance practices—particularly among foreign insurers—are treating the sector as increasingly high-risk.

“The general observation is that the insurance premiums have significantly increased since several years ago,” he said. “And not only that they have increased, but that insurers are reluctant to renew when it is a coal-fired power plant.”

The trend stems in part from the adherence of global insurers to environmental, social, and governance (ESG) standards that discourage backing of carbon-intensive industries.

Lotilla noted that even operational coal plants not covered by the 2020 moratorium on new coal development are struggling to secure or renew insurance policies.

“We still have coal-fired power plants that are not covered by the coal moratorium,” he said. “And we have the challenge of getting not only financing for those that are still to be built, but also the insurance premiums that are being charged especially for these power plants.”

The DOE estimates that about 7,000 megawatts of coal-fired capacity in the Philippines comes from plants less than 10 years old, representing a significant portion of the country’s existing baseload supply.

Lotilla recently met with insurance industry representatives in an effort to negotiate more reasonable terms.

“We want to make sure (we can) convince them that the risks that they associate with the Philippines are actually much less than what they are (pricing into) their premiums,” he said.

The meeting is part of the government’s broader push to preserve energy security during the country’s transition to cleaner sources.

The administration is targeting 35% renewable energy in the national power mix by 2030, and 50% by 2040.

As of 2023, coal accounted for 63% of the country’s electricity generation, while renewables made up 22%.

Despite the transition roadmap, coal remains vital in ensuring baseload capacity and grid stability, particularly during peak demand or supply disruptions.

“Since coal-fired power plants in the Philippines are part of the transition story… we still have coal financing for those that are still to be built,” Lotilla said.

The DOE insists that a balanced approach—one that includes both renewable and non-renewable energy sources—is necessary to manage affordability and reliability.

“We want them to realize that in our desire to have more balance… we have to take this into account,” Lotilla added.

The rise in insurance costs may, however, serve as a market-based mechanism accelerating the shift to cleaner energy, with financial risks increasingly weighing against coal investments.

In contrast, renewables such as solar, wind, hydro, and battery storage are drawing growing investor and policy interest, thanks to declining costs and easier access to insurance and funding.