Renewable Energy Projects Generate Nearly P100 Billion in Power Savings, Study Says

 

Renewable energy projects supported by the Philippines’ feed-in tariff mechanism generated nearly P100 billion in electricity cost savings over 2024 and 2025, according to an analysis by the Institute for Climate and Sustainable Cities (ICSC).

The climate policy think tank reported that FIT-eligible renewable energy facilities reduced electricity costs at the spot market by an estimated P0.3916 per kilowatt-hour during the two-year period. Based on overall electricity consumption, this translated into approximately P99.2 billion in cumulative savings.

The figure is particularly significant when compared with the amount consumers have contributed to the FIT mechanism. Since the government began collecting the Feed-in Tariff Allowance (FIT-All) in 2015, electricity users have paid about P220.5 billion to finance incentives for qualified renewable energy facilities.

The latest analysis therefore suggests that the market savings generated in only two years already represent nearly half of the total FIT-All collections accumulated over more than a decade.

Savings Outpace the Current FIT-All Charge

The ICSC said the estimated reduction in power costs was higher than the P0.3359 per kWh FIT-All rate approved by the Energy Regulatory Commission and implemented this month.

FIT-All is a uniform charge imposed on consumers connected to the national power grid. The proceeds are used to provide guaranteed payments to eligible renewable energy producers, including solar, wind and small hydropower projects.

Qualified facilities can receive FIT incentives for as long as 20 years, providing investors with a predictable revenue structure while renewable technologies develop and become more competitive.

The ICSC calculated the economic contribution of the program by comparing the electricity market savings associated with FIT-backed projects against the payments these facilities received through the mechanism. The resulting net savings were then measured against total electricity consumption to determine the reduction in cost per kilowatt-hour.

Solar Power Costs Have Fallen Sharply

The changing economics of solar energy provide a clear illustration of how the renewable sector has evolved.

ICSC data show that solar projects supported by the FIT program in 2014 were priced at roughly P9.68 per kWh. Twelve years later, newly contracted solar projects are being secured at approximately P3 to P4 per kWh.

That decline demonstrates how sustained policy support can help an emerging technology move down the cost curve. Early incentives effectively helped establish a market, attract investment and expand deployment. As competition intensified and technology improved, the cost of renewable generation fell substantially.

In this sense, the FIT mechanism can be viewed not simply as a subsidy but as an investment in building a competitive energy market, provided its long-term costs and benefits remain favorable to consumers.

Renewable Expansion Could Deliver Further Benefits

The ICSC said the government should build on the gains already achieved by accelerating renewable energy development. Expanding clean generation could give more consumers access to lower-cost electricity while reducing the country's exposure to fluctuations in international fuel prices.

The think tank also pointed to the Green Energy Auction (GEA) program as another policy instrument that has increased competition among renewable energy developers and contributed to lower electricity prices.

Under the GEA framework, winning projects receive guaranteed payments for the electricity they produce through the Green Energy Auction Allowance, or GEA-All, which is likewise designed to be recovered through consumer electricity bills.

For the remainder of 2026, however, consumers are being charged FIT-All while collection of GEA-All has been suspended.

Measuring Value Through Consumer Impact

The ICSC said both FIT-All and GEA-All should ultimately be evaluated according to their net contribution to the electricity system. The key question is whether these mechanisms produce meaningful long-term gains in affordability, reliability and energy security that outweigh the charges imposed on consumers.

The nearly P100-billion savings recorded over just two years indicate that renewable energy projects supported by the FIT system are already producing measurable market benefits. A broader assessment covering the program's entire operating period since 2015 could reveal an even larger cumulative impact.

For policymakers, the figures reinforce the importance of examining renewable energy incentives not only by how much consumers pay through their electricity bills, but also by the costs that these investments help avoid in the power market.