In Iloilo City, residents turn to renewable energy – but at a cost  (Part 1)

By Rjay Zuriaga Castor and Joshua Mendoza

Iloilo City is witnessing a growing shift toward renewable energy (RE), particularly solar power. The transition, however, comes with a significant financial hurdle, as the upfront cost of solar panel installation remains a challenge for many.

Neil Parcon, head of the Corporate Planning & Regulatory Affairs Department of MORE Electric and Power Corp. (MORE Power), said that for many consumers, the decision to shift to solar energy is driven by rising electricity costs.

“For most, it’s not really about the RE, it’s really about the cost because, for them, the RE coming from solar is cheap,” Parcon said. 

MORE Power Rates 

 

Solar power is one of the most accessible RE sources, allowing households and businesses to reduce their dependence on traditional utility providers and lower their monthly electricity bills.

While solar energy promises savings from consuming electricity from distribution utilities, Parcon acknowledged the substantial upfront installation cost that forces consumers to weigh their options carefully.

“It’s a lucrative idea to install solar power […] There’s an advantage and also disadvantage because it’s expensive,” he said.

Installed Capacity of Power Plants

 

“It’s a choice between an upfront cost of PHP 500,000 or just paying monthly electricity bills. Either you pay a lump sum and wait 15 to 20 years to recover your investment, or you opt for smaller monthly payments,” Parcon explained.

Beyond cost, durability, and reliability are also major concerns. Parcon said consumers must also trust that their solar panels will function efficiently for at least 15 years to ensure a full return on investment.

“It’s a decision-making factor for many. If electricity rates drop in the future, the upfront cost might not seem as lucrative. After all, the investment is big—it’s enough to buy a car,” he stressed.

Breaking down solar costs

The overall cost of installing solar panels varies based on factors such as system capacity, and whether the setup is for residential or commercial use, including the type of panel and brand.

Peak Power, an Iloilo-based solar power service provider, is among the pioneers of RE in Panay Island, having started its operations in 2009.

Since then, the company has expanded its installations across the country, offering solar services in Palawan, Cavite, and Boracay Island in Aklan, among others.

Joseph Teruel, general manager of Peak Power, noted that most of their customers invest in solar panels primarily for cost savings and energy independence.

He added that solar power has become an attractive investment for many households, providing both financial savings and environmental benefits.

“I have clients that rather than putting it in a bank, they put an investment in solar. At the same time, it also reduces your electricity consumption from the DU. Sometimes we experience surges and fluctuations when it comes to power rates and that pushes most of them,” he said.

In Iloilo City, around 80 to 85 percent of Peak Power’s customers are residential, while the rest are commercial clients.

Teruel said their common solar panel installation in a household is around 3,000 watts (3 kilowatts), which equates to six solar panels.

This capacity can already power essential appliances such as a one-horsepower air conditioning unit, a refrigerator, an electric fan, a television, and energy-efficient lights.

Rooftop Solar Installation Costs by House Size

 

Based on Peak Power’s pricing, the cost of a 3-kilowatt solar panel system, including its cost for installation, ranges from PHP 120,000 to PHP 150,000, while systems with battery storage cost between PHP 180,000 and PHP 200,000.

Availing of such service also comes with a 10-year warranty on solar panels and a 2-3 year warranty on other components.

With the high upfront costs, Teruel said some customers start with a single panel to test the investment before expanding their system.

Aside from the reduction of electricity costs, Teruel said one of the reasons why several households have installed solar power in their households is due to the city government’s incentive scheme for RE use.

In 2009, the city government approved an ordinance that provided a 20 percent real property tax (RPT) incentive to households utilizing RE sources. Under its Implementing Rules and Regulations, a household is only required at least one solar panel to avail the incentive.

Iloilo City in 2024 implemented a significant increase in its RPT, with a staggering 300% hike implemented as part of the first adjustment in 18 years.

Teruel acknowledged that the upfront costs of the are significant, but emphasized its long-term benefits, including lower electricity bills, cleaner energy, and reduced reliance on traditional power sources.

“If all of us passionate people could just change our mindset and opt for clean energy […] what we invest right now will be beneficial for future generations to really enjoy,” he added.

RE targets, initiatives

The Department of Energy (DOE) has set ambitious RE targets as part of its broader strategy to transition towards a more sustainable energy sector.

DOE aims to increase the country’s RE share in the power generation mix to 35 percent by 2030 and 50 percent RE share in its energy supply mix by 2040.

Programs such as the Green Energy Auction (GEA), National Renewable Energy Program (NREP), and Renewable Portfolio Standard (RPS) have been implemented to attract investments and accelerate RE adoption.

The GEA is a key program designed to attract market-driven investments in renewable energy. The third round of the auction (GEA-3) secured commitments for 7,500 megawatts (MW) of renewable energy capacity, significantly exceeding the target of 4,650 MW.

Meanwhile, the NREP outlines the policy framework for developing renewable energy resources, focusing on technologies like solar, wind, geothermal, and hydroelectric power.

In this framework, DOE aims to expand RE capacities by mainstreaming an additional 284 MW of solar power, with a long-term goal of reaching 1,528 MW.

Wind energy development targets 2,345 MW of new capacity to achieve grid parity, while hydroelectric power is set to grow by 160 percent. Geothermal energy capacity is expected to increase by 75 percent, reinforcing the country’s transition to sustainable energy sources.

In the RPS, electricity suppliers are mandated to include a higher proportion of renewable energy in their supply mix. The requirement has been increased from 1 percent annually to 2.52 percent to accelerate the integration of renewables into the energy mix.

The government has also allowed 100 percent foreign ownership of RE projects, which has contributed to increased investment in the sector.

To further encourage the shift to RE among the consumers’ level, incentive programs like the net metering program were also introduced.

This billing mechanism program allows individuals or businesses with RE systems, such as solar panels, to send excess electricity they generate back to the grid and receive credits.

The growing embrace of RE in Iloilo City signifies a positive step towards energy independence, environmental sustainability, and long-term economic savings.

Efforts from both the public and private sectors, including the expansion of RE infrastructure and the introduction of innovative programs, are crucial in accelerating the transition to clean energy.

(This is the first part of a three-part story. The narrative will continue in subsequent installments, which will be published separately.)

Reporting for this story was supported by the Institute for Climate and Sustainable Cities under the Jaime Espina Klima Correspondents Fellowship.