DOE’s Hydropower Plan to Restore 400 MW Raises Questions Over Coal Plant’s Fate

The Department of Energy (DOE) has announced plans to rehabilitate the Agus-Pulangi hydro complex, unlocking 400 megawatts (MW) of clean energy for Mindanao. However, with the region currently supplying up to 400 MW of electricity to Luzon and Visayas, Energy Secretary Raphael P.M. Lotilla cautions that the government must reconsider the retirement of the 232 MW STEAG coal plant, which may still be needed as a backup while the hydro facility undergoes phased upgrades.

The Agus-Pulangi hydro complex, which has a total installed capacity of 1,000 MW, has suffered from aging infrastructure, leaving 400 MW unavailable for grid supply. The government, through the Power Sector Assets and Liabilities Management Corp. (PSALM), has extended the facility’s operational life to allow for long-overdue rehabilitation.

Lotilla acknowledged that the rehabilitation process had been delayed due to a lack of counterpart funding and excess capacity in Mindanao, which made the investment less urgent in previous years. However, with Mindanao now exporting power to other regions, the need to ensure stable generation within the island has become a priority.

“The challenge for us now is that with Mindanao exporting up to 400 MW of power to the Visayas and even Luzon, and we have to rehabilitate one at a time the Agus and Pulangi plants, that means there is reduced capacity available in Mindanao,” Lotilla explained.

The DOE had initially proposed the retirement of the 232 MW STEAG coal plant in Mindanao as part of the country’s decarbonization efforts, with the facility potentially traded for carbon credits that could help finance cleaner energy sources. However, with hydropower rehabilitation happening in stages, there is now uncertainty over whether Mindanao can afford to lose the coal plant’s capacity in the short term.

“That will also mean you have to revisit whether or not the STEAG plant in Mindanao should be running or should be folded up. Because if the rehabilitation of Agus and Pulangi takes place, in the next few years, we will need backup from the STEAG plant to ensure our people have sufficient power capacity,” Lotilla said.

While retiring the coal plant aligns with the country’s clean energy ambitions, keeping it operational as a backup could provide grid stability, especially as the hydro complex undergoes gradual restoration. Lotilla indicated that the government is re-examining the move, balancing environmental commitments with practical energy security needs.

Beyond restoring 400 MW of lost capacity, the DOE sees the Agus-Pulangi rehabilitation as a stepping stone toward future energy expansion. Lotilla revealed that the project could pave the way for the construction of Agus 3, an unbuilt hydro plant with a potential additional 225 MW capacity.

“Right now, Agus-Pulangi has an installed capacity of 1,000 MW, but 400 MW of that is not available, which will be restored under the rehab plan. And then you have the potential of another 225 MW. Let’s hope we will be able to realize these future projects,” Lotilla said.

Should the DOE retire the STEAG coal plant as planned, or should it remain operational until the full rehabilitation of Agus-Pulangi is completed? Share your thoughts in the comments below, and follow Power Philippines for the latest energy sector updates!