MAKATI CITY, 21 October 2026 — The cost of generating electricity from imported liquefied natural gas (LNG) in the Philippines could surge by 143% or more as rising fuel and equipment prices and peso depreciation compound the country's exposure to volatile global markets, according to an analysis by Sam Reynolds, research lead for gas/LNG in Asia at the Institute for Energy Economics and Financial Analysis (IEEFA).
The warning comes as the Philippines deepens its reliance on imported LNG, spending USD 2 billion (approximately PhP 126 billion) on shipments between January 2025 and July 2026.
Reynolds presents the findings at Powering the Philippines: From Energy Crisis to Energy Resilience, a senior policy forum organized by Race to Net Zero Philippines (RtNZ PH), the Institute for Energy Economics and Financial Analysis (IEEFA), and the Institute for Climate and Sustainable Cities (ICSC) at the Asian Institute of Management in Makati, alongside experts from the Department of Energy (DOE) and major banking and financial institutions. The forum comes as Congress reviews amendments to the Electric Power Industry Reform Act (EPIRA) and the DOE prepares to auction new gas-fired capacity.
At current prices, generating power from LNG costs about PhP 12.7 per kilowatt-hour before transmission, distribution charges and taxes. Recent generation rates for some LNG-fired power plants have surpassed PhP 15 per kilowatt-hour. About half of the country's LNG is bought on the spot market, where Asian prices tripled after the Middle East conflict began and are expected to stay high through 2028.
IEEFA's modelling shows how quickly those costs compound. The Philippines' planned gas expansion faces mounting equipment shortages, construction delays and financing challenges that could further drive up costs, raising questions about the affordability, bankability, and viability of the government's push to procure new mid-merit gas-fired power capacity.
According to IEEFA, none of the country's 6.5 gigawatts (GW) of planned LNG-fired power capacity has secured gas turbines required for operation. With global turbine delivery times stretching to approximately six years, IEEFA does not expect new gas plants to begin operating before 2031. That is too late to compete for the country’s top energy companies’ upcoming long-term supply contracts, and IEEFA warns that the terms of the government's planned gas auction may make new plants hard to finance at all. Across the Philippines, Thailand, Vietnam and Bangladesh, IEEFA counts 49 LNG power projects worth an estimated USD 56.1 billion that were cancelled or shelved in the past five years.
Meanwhile, IEEFA's analysis shows that cleaner options already cost less. It finds that new solar power paired with battery storage is cheaper in the Philippines than continuing to operate existing gas plants. The money spent on a single shipment of LNG, roughly USD 84 million, could instead buy solar panels with about 930 megawatts of capacity.
"Volatility in fuel, equipment and currency are challenging the growth of gas in the country. Meanwhile, the economics for clean technologies are there, but their ability to scale and implement is not. That needs to be a major focus for the entire system moving forward,” said Reynolds. "Every dollar committed to imported fuel is a dollar exposed to the next shock, while renewable energy keeps getting cheaper."
For the country's largest power users, the findings go straight to the bottom line. Race to Net Zero Philippines, the national movement supporting the United Nations Climate Change High-Level Champions’ Race to Zero campaign, heads the forum as key convener, bringing the view of companies that must secure reliable, affordably priced power while meeting their emissions commitments.
"Philippine companies cannot plan or compete on power costs that swing with every shock in the global fuel market," said Paulo Burro, Senior Strategy Consultant, Race to Net Zero Philippines. "Businesses that have committed to cutting emissions need clean power that is also stable in price, and that depends on policy and financing that make renewables and storage easier to build."
"Energy security is not just about having enough megawatts," said Jephraim Manansala, Chief Data Scientist, Institute for Climate and Sustainable Cities. "It is about keeping the lights on when fuel markets, exchange rates and supply routes are disrupted."
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About Race to Net Zero Philippines. Race to Net Zero Philippines is a national movement supporting the United Nations Climate Change High-Level Champions Race to Zero campaign. Piloted by the European Chamber of Commerce of the Philippines (ECCP), it rallies businesses, cities, and communities to take practical action toward halving emissions by 2030 and reaching net zero by 2050. racetozeroph.com
About IEEFA. The Institute for Energy Economics and Financial Analysis examines energy markets, trends and policies, with a mission to accelerate the transition to a diverse, sustainable and profitable energy economy. ieefa.org
About ICSC. The Institute for Climate and Sustainable Cities is a Philippine-based international policy group working on climate and energy policy, low-carbon development and climate resilience. icsc.ngo
