Renewable energy savings nearly double FIT-All rate, ICSC says

By Francis Allan L. Angelo

QUEZON CITY — Renewable energy projects supported through the Feed-in-Tariff mechanism reduced electricity bills by PHP 0.3916 per kilowatt-hour across 2024 and 2025, almost twice the recently elevated Feed-in-Tariff Allowance rate of PHP 0.2073 per kilowatt-hour, according to a new analysis by the Institute for Climate and Sustainable Cities.

At the system level, FIT-supported renewable energy generated an estimated PHP 99.2 billion in wholesale electricity market savings in 2024 and 2025 alone, the group said in a statement released Aug. 26.

That two-year amount is already equivalent to nearly half of the PHP 220.5 billion that consumers have paid through FIT-All over the roughly 11 years since collections began in 2015.

Cumulative market savings from renewable energy since 2015 will be considerably higher, ICSC said, underscoring how lower wholesale electricity prices have helped offset the cost of supporting renewable energy.

“The sharp decline in renewable energy costs over the past decade shows that sustained policy support, when paired with competition, can turn emerging technologies into affordable and competitive sources of electricity,” said Atty. Pedro Maniego, ICSC’s Senior Policy Advisor.

“The priority now is to build on these gains by expanding renewable energy, so more consumers can benefit from lower-cost electricity and reduced exposure to fuel-price volatility,” he added.

The growing competitiveness of renewable energy has helped drive these savings.

Solar projects supported under the FIT program were priced at around PHP 9.68 per kilowatt-hour in 2014, or about PHP 12 per kilowatt-hour in today’s prices after inflation. New solar projects are now being contracted at roughly PHP 3 to PHP 4 per kilowatt-hour.

The Green Energy Auction-ALL has reinforced this trend through competitive renewable energy auctions, helping keep solar prices within the PHP 3.68 to PHP 4.48 per kilowatt-hour range.

Competition has continued to push prices down. In GEA-1, most winning solar projects bid at the ceiling price. By GEA-4, only one out of 58 winning solar bids did so, indicating that developers are increasingly able to supply renewable energy at lower prices.

Renewable energy can also reduce electricity prices beyond the projects directly supported by FIT-All and GEA-All. Because solar and wind are often generated during periods of high electricity demand, they can displace more expensive power plants and lower prices in the Wholesale Electricity Spot Market.

Market data shows that variable renewable energy has already exerted a measurable downward pressure on electricity prices.

Even when solar and wind accounted for less than 3 percent of the country’s total energy mix, they reduced spot market prices by as much as 28 percent during peak hours in 2019.

More recent analysis using 2025 market data shows that higher renewable energy output continued to lower WESM settlement prices by around 70 percent during periods of peak renewable generation.

Newer technologies could follow a similar path, ICSC said. Offshore wind carries an auction ceiling of around PHP 11 per kilowatt-hour as the country begins developing the sector.

Greater competition, technological improvements, and economies of scale could help bring down offshore wind costs as the market matures, as has been seen in solar technology.

ICSC said consumers and policymakers need a fuller assessment of FIT-All and GEA-All, one that looks beyond their direct costs to the savings renewable energy can generate and the risks it can help reduce, including exposure to imported fuel prices and higher wholesale electricity prices during periods of tight supply.

Sustaining competition in renewable energy procurement and keeping grid development aligned with new capacity will be critical to capturing these benefits as the market matures, the group added.

Ultimately, FIT-All and GEA-All should be assessed based on their net value to consumers, or whether they contribute to a more affordable and reliable electricity system over time, ICSC said.

The group estimated the net economic benefit of the FIT mechanism by comparing the wholesale spot market savings attributable to FIT-supported renewable energy projects with the FIT payments made to those projects. Market savings were calculated by simulating WESM prices after removing the dispatch of FIT-supported projects and replacing it with the next available generators in the merit order.

The resulting difference between simulated and actual market prices was applied to total electricity traded in the spot market to estimate system-wide savings, which were then compared with total FIT payments. The per kilowatt-hour savings were calculated by spreading the net market savings to all electricity consumption, finding the price reduction per kilowatt-hour sold in the system.

The figures come ahead of an upcoming ICSC report titled “Navigating the Energy Trilemma: Advancing a Clean, Affordable, Secure Energy Future through Renewable Energy.”

The Institute for Climate and Sustainable Cities is a Philippine-based non-governmental organization that advances climate, energy, and low-carbon solutions to enable fair and climate-resilient development at the national and international levels.