Renewable power purchase agreements (PPAs) in the Philippines remain inefficient and fragmented, with structural gaps in the power market contributing to higher costs, complex negotiations, and slower deal closures, according to industry experts during a panel discussion at Energyear Philippines 2026.

A PPA is a long-term contract between a power generator and a buyer that locks in electricity supply and pricing. Guido Alfredo Delgado, chairman and CEO of Delgado Inc., said these contracts are negotiated in isolation because the country lacks a coherent market structure. 

“The Philippines does not really have a market,” Delgado said, adding that power transactions are largely done on a bilateral basis, which prevents system-wide efficiency.

This fragmentation, speakers said, is compounded by price volatility in the Wholesale Electricity Spot Market (WESM), where electricity prices fluctuate based on real-time supply and demand. Carlos Korten, president of Green Tiger Markets, said exposure to WESM volatility has pushed many companies to seek long-term contracts. 

“What people really want is price certainty,” Korten explained, pointing out that renewable PPAs are increasingly used as financial tools rather than purely sustainability-driven decisions.

However, Korten stressed that PPAs are not always immediately available or easy to conclude. When negotiations take time, buyers and sellers often turn to hedging strategies to manage risk instead. 

Hedging refers to the use of financial contracts to limit exposure to electricity price volatility before or alongside a physical supply agreement. “You can hedge your exposure while you’re still negotiating the PPA,” Korten said, describing it as a way to manage price swings temporarily.

As PPAs have evolved, panelists said contract structures have become more complex, especially around risk allocation. Philip Roxas, commercial director of Berde Renewables, said buyers and developers now spend significant time negotiating delivery guarantees and downside risks. 

“The discussion now is no longer just about price,” Roxas said, pointing to issues such as guaranteed annual energy delivery, replacement power, curtailment risk, insurance, and operations as well as maintenance responsibilities.

These negotiations, Roxas added, increase transaction costs and lengthen timelines. Exit clauses and termination provisions have also become more heavily scrutinized, reflecting greater caution on both sides of the contract as market conditions remain uncertain.

Delgado also raised concerns over regulatory interventions that attempt to influence renewable PPA pricing. He warned that technology-specific reference prices or prescriptive rules could distort market signals. “The role of government should be to referee, not to set prices,” Delgado said, arguing that price discovery should be left to market participants.

Korten echoed this view, saying excessive intervention risks raising costs instead of lowering them. “If you interfere too much, you actually reduce flexibility,” he said, adding that rigid pricing frameworks can discourage innovation in contract design.

Overall, speakers agreed that while renewable PPAs remain an important tool for managing price risk and supporting the energy transition, their effectiveness in the Philippines is constrained by market design, regulatory friction, and increasingly complex risk allocation.

As demand for stable and affordable electricity grows, can reforms in market structure and regulation make renewable PPAs more efficient and easier to deploy?

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