^{In photo: Engr. Jeremy Jay Magdaong (center) accepting the Best Presenter Award on behalf of the team for their study “Refining Yardsticks for Energy Equity, Energy Security, and Environmental Sustainability: A Methodology for Calculating a Systemized Blended Cost of Electricity Metric” at the 2025 International Conference on Sustainable Energy and Green Technology (SEGT) in Kuala Lumpur, Malaysia.}

DLSU researchers propose a new system-based metric to guide the Philippines’ energy transition

As the Philippine government works to expand renewable energy while keeping electricity reliable and affordable, Engr. Jeremy Jay Magdaong of De La Salle University (DLSU) believes one key question deserves more attention: Are we measuring the right things?

In his paper “Refining Yardsticks for Energy Equity, Energy Security, and Environmenta

l Sustainability: A Methodology for Calculating a Systemized Blended Cost of Electricity Metric,” Magdaong and his team argue that widely used measures, such as the Levelized Cost of Electricity (LCOE), no longer reflect the realities of a power system increasingly shaped by renewable energy sources.

The research addresses the energy trilemma and the challenge of balancing energy security, affordability, and environmental sustainability. Magdaong explained in an exclusive interview with Power Philippines that the limitations of LCOE became evident as the team reviewed previous studies and examined how the metric was calculated.

“We realized it leaves out several important factors that can easily mislead energy planning, especially for systems aiming for higher shares of variable renewable energy sources,” he said.

The limits of LCOE

For years, LCOE has been the go-to metric for comparing the costs of power generation technologies. Its simplicity has made it useful for investors and policymakers alike. But Magdaong highlighted the risks of relying on the metric alone.

“Using the wrong metrics can easily paint a misleading picture. For example, the cost of variable renewable energy systems might seem low if we only look at the LCOE, while energy security might appear strong if we focus solely on the share of indigenous sources. These indicators can make very high shares of renewable energy look ideal on paper,” he said.

“But without proper calibration, they can lead to unintended outcomes like higher electricity costs and more frequent blackouts, especially during extreme weather events. Climate change adds another layer of risk, as shifting wind patterns could affect the reliability of wind power in the future,” Magdaong added.

Introducing the Systemized Blended Cost of Electricity

To address these gaps, the DLSU research team developed a new way to calculate what they call the Systemized Blended Cost of Electricity (SBCOE).

Instead of relying on static averages, the SBCOE uses hourly dispatch simulations that take into account demand patterns, renewable generation profiles, generation portfolios, and system constraints. This approach captures how different power sources interact dynamically across the day, providing a more accurate view of total system costs.

The researchers examined two high-renewable pathways (and a third reference scenario): Clean Energy Scenario 1 (CES1) and Clean Energy Scenario 2 (CES2), representing two distinct high-renewable generation mixes modeled in the Philippine Energy Plan 2023–2050.

CES1 featured a relatively lower share of dispatchable fossil fuel generation, such as coal and natural gas, alongside renewables. This made the system more prone to shortfalls, resulting in unserved energy in the simulation — shortfalls that, in real-world terms, could translate to brownouts or blackouts.

Both clean energy scenarios reduced emissions compared to the Reference (REF) scenario, with CES2 achieving the greater cut due to its heavier reliance on renewables, particularly offshore wind. However, this

dependence also created system challenges.

CES2 experienced curtailment — periods when excess generation forced power plants to reduce output — and was further affected by seasonal wind fluctuations such as the doldrum effect, a pronounced lull in wind speeds during the transition between the Amihan and Habagat seasons. This lull often coincides with peak power demand in the summer months, exactly when the grid requires more generation capacity. During these extended calm periods, wind turbines produce significantly less power, increasing the risk of supply shortfalls.

According to the SBCOE results, both CES1 and CES2 would result in a higher overall system cost compared to the Reference scenario. CES2, in particular, posted the most significant increase due to three compounding factors: the high capital expenditure for offshore wind, greater curtailment, and increased exposure to seasonal wind lulls that require backup capacity to maintain reliability. 

While the study did compute for peso-per-kWh values, this represents only a streamlined baseline estimate- limited to the generation and storage system only. Magdaong explained that the SBCOE results show a material upward pressure on system-wide electricity costs under the clean energy scenarios — with CES2 being the most expensive pathway tested.

“These results highlight the importance of calibrating energy strategies,” Magdaong told Power Philippines. “Increasing dispatchable capacity, such as natural gas, can improve reliability, while reducing offshore wind costs could make high-renewable systems more affordable and sustainable.”

Calibrating the energy trilemma

By capturing the true dynamics of the power system, SBCOE provides policymakers with a more realistic basis for evaluating energy strategies. Magdaong emphasized that increasing renewable energy is not an end in itself; it is a strategy to achieve the broader goals of affordability, reliability, and sustainability. SBCOE reveals hidden costs and system interactions that traditional LCOE overlooks, helping planners make better-informed decisions.

He noted that balancing the energy trilemma requires prioritization and sequencing.

“We might focus on improving reliability first, while gradually expanding renewable capacity and lowering costs through better planning and technology. The key is understanding that each country’s path to the energy transition will look different, depending on its resources, needs, and timing,” Magdaong said.

He added that this perspective underscores the importance of sequencing and timing in the energy transition. In broader planning contexts, this can extend to how countries decide when to scale up new technologies as costs evolve—a dynamic reflected globally in the steep decline of solar PV prices over the past two decades.

Should the Philippines lock itself into high-cost, first-of-their-kind technologies, or wait for the right moment to invest—when costs have stabilized and technologies are better suited to local conditions? Strategic planning, Magdaong noted, involves identifying the opportune moment for investment to balance affordability, reliability, and sustainability, ensuring that emerging technologies are adopted when they are both cost-effective and technically mature for Philippine conditions.

The research has gained attention in both academic and industry circles. The team presented their work at SEGT 2025 in Kuala Lumpur, the ECCP Energy Smart Forum 2025, the EJAP Energy Forum 2025, and most recently at ASMODIUM 2025 at DLSU.

“We were fortunate to receive one of the Best Presenter Awards at SEGT 2025, but more valuable than recognition was the opportunity to exchange ideas and refine our study. Several organizations reached out afterward because our findings resonated with the issues they are currently working on. That’s the best kind of response — seeing research spark meaningful real-world discussions,” Magdaong said.

Next steps for system-aware planning

Magdaong emphasized that integrating system-aware metrics like SBCOE requires collaboration across government, industry, and academe. The Department of Energy is already moving toward more data-driven planning, while the industry explores new technologies and business models.

“One practical step could be to start testing system-aware indicators in the planning and evaluation phases. Subjecting plans to different lenses ensures the robustness of strategies,” he added.

Ultimately, the study emphasizes the importance of continually reexamining how progress is measured. “The way we measure progress shapes the decisions we make. Using better, more system-aware metrics can help us see the bigger picture and make choices that are not only technically sound, but also fair, reliable, and sustainable for the long term. In short, we must evaluate how we evaluate,” Magdaong concluded.

What other system-aware indicators do you think should guide the Philippines’ energy transition beyond the traditional LCOE?

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