Taiwan's renewable energy companies are increasingly targeting Southeast Asian markets, with the Philippines emerging as their prime destination due to its favorable market conditions and strong government support.
The Philippine government aims to increase renewable energy's share in its power mix to 35% by 2030, with energy demand projected to grow 5.3% over the next five years. According to the 2024 Climatescope report by Bloomberg New Energy Finance (BNEF), the Philippines has risen to second place globally among the most attractive renewable energy investment markets, up from fourth place in the previous year. India maintains the top position, with China ranking third.
To drive renewable energy adoption, the Philippine government has implemented various policies, including Renewable Portfolio Standards, renewable energy auctions, net metering, and tax incentives. Most notably, the government permits 100% foreign ownership of renewable energy projects, which has successfully attracted substantial international investment.
Strategic market entry through local partnerships
Taiwan's interest in the Philippine renewable energy sector intensified after Minister of Economic Affairs Jyh-Huei Kuo highlighted the potential for green energy development in the country in October 2024. However, Taiwanese companies had already been drawn to the market by the Philippines' robust policy incentives.
Recent Taiwanese investments include ventures by J&V Energy Technology, HD Renewable Energy (HDRE), and ATE Energy International. While full foreign ownership is permitted, Taiwanese companies have opted to enter through joint ventures with local partners. J&V has established a partnership with SolarNRG, while HDRE and ATE have formed collaborations with the Philippine conglomerate San Miguel Corporation on various projects.
Despite the Philippines' supportive policy environment, industry experts emphasize that foreign companies still benefit from local partnerships to navigate the market effectively. The Philippine electricity market operates with greater liberalization compared to Taiwan's, ranking as one of Southeast Asia's most liberalized markets after Singapore.
Market structure and opportunities
The Electric Power Industry Reform Act of 2001 transformed the Philippine electricity market by promoting competition, reducing electricity prices, and attracting foreign investment. This legislation led to the restructuring of the state-owned power company and the liberalization of generation and retail markets.
The generation sector now operates with full liberalization, enabling private companies to function independently and compete effectively. While the distribution sector remains under government control, it operates through a franchise system, with electricity transmission franchised to the National Grid Corporation of the Philippines (NGCP). The retail market is progressively liberalizing through the Retail Competition and Open Access model, giving consumers choice in electricity suppliers.
Industry analysts note that the liberalized market structure offers distinct advantages for Taiwanese companies. Foreign firms can operate independently without requiring Power Purchase Agreements with the local government. This enables Taiwanese companies to compete directly in the market and generate profits through cost-effective, reliable energy provision.
Furthermore, the Wholesale Electricity Spot Market mechanism provides flexibility in electricity trading, allowing companies to adjust their supply strategies based on real-time demand and optimize profitability.