Consumer affordability concerns were raised after the Center for Energy Research and Policy (CERP) welcomed, but also cautioned against, the proposed PHP 10.3859 per kilowatt-hour (kWh) price ceiling for offshore wind projects under the Fifth Green Energy Auction (GEA-5).

The Energy Regulatory Commission (ERC) earlier approved the preliminary Green Energy Auction Reserve Price (GEAR5) at PHP 10.3859/kWh for fixed-bottom offshore wind projects covering the 2028-2030 delivery period, with an installation target of 3,300 megawatts (MW). The draft price was opened for public consultation following its release on December 13 last year.

In its official media release, the ERC said the auction “is a milestone in achieving the Philippine Energy Plan set by the DOE,” with ERC Chairperson Nino Juan citing that offshore wind technology “will be first in the country with total potential capacity of more than 68GW.”

CERP issued its remarks in a statement posted on its official Facebook page, responding to the ERC’s proposed ceiling price.

“CERP welcomes the ERC’s move to set a price ceiling for GEA-5 to provide regulatory certainty and unlock offshore wind investment,” the group said.

However, it cautioned that the proposed rate remains significantly higher than prevailing spot market levels.

“However, the proposed Php 10.3859/kWh cap remains high, at around three times the November 2025 WESM average of Php 3.98/kWh, and must be carefully assessed against consumer affordability and overall system value,” CERP pointed out.

The group acknowledged that offshore wind is new in the Philippine context and may carry higher initial costs.

“We recognize that offshore wind is a new technology in the Philippine context, and it is reasonable for early auctions to carry a premium given higher costs, risks, and infrastructure requirements needed to attract private sector developers,” it affirmed.

CERP also added that offshore wind could strengthen energy security by diversifying the power mix and reducing exposure to imported fuels.

“Offshore wind can strengthen energy security by diversifying the power mix and displacing imported fuels such as coal and gas, which expose the country to global price volatility and foreign exchange risks,” it said.

At the same time, the group stressed that integrating large volumes of variable renewable energy would also require additional grid improvements.

“Integrating large volumes of variable renewable energy will require additional grid flexibility investments, including stronger interconnections, energy storage, and other balancing solutions, which should be transparently reflected in system planning and consumer cost impacts,” CERP said.

Drawing from international experience, CERP noted that offshore wind auctions typically begin at higher price levels but are expected to decline over time.

“International experience shows that initial offshore wind auctions often start at higher price levels, but the expectation is that price ceilings should decline in subsequent rounds as competition deepens, supply chains mature, and project risks become better understood,” it said.

The group also urged the government to explore blended finance mechanisms to reduce capital costs and deliver projects more cost effectively.

“To sustain public support for offshore wind, CERP calls for transparency on full system costs, including grid connection, transmission readiness, and integration requirements, and for safeguards that ensure consumers benefit from future cost reductions while maintaining reliability and timely project delivery,” it concluded.

As offshore wind enters the Philippine market, how will regulators balance the need to attract investment with the imperative to keep electricity costs manageable for consumers?

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