Stricter checks needed as 163 RE contracts terminated — analysts

By Sheldeen Joy Talavera, Reporter

THE GOVERNMENT should enforce rigorous screening of energy players seeking to invest in the country’s renewable energy (RE) market to ensure project delivery, analysts said, following the mass cancellation of several contracts that failed to meet development timelines.

“These incidents can be avoided in the future if energy authorities will strengthen due diligence and evaluation of energy companies, and ensure fair competition within the renewable energy market,” Riedo “Rei” Panaligan, president of the Center for Renewable Energy and Sustainable Technology, said in an e-mail interview with BusinessWorld.

Terminated and relinquished contracts over the past two years totaled 163, equivalent to nearly 18 gigawatts (GW) of potential capacity, according to the Department of Energy (DoE). These contracts encompass solar, hydropower, wind, geothermal, and biomass projects.

Solar Philippines Power Project Holdings, Inc., founded by businessman-turned-politician Leandro L. Leviste, accounted for 64% of the terminated contracts, representing more than 11 GW, according to the DoE.

Mr. Panaligan said the DoE should base the number of awarded energy contracts on a company’s track record and its ability to deliver projects on schedule.

“Economic growth was disrupted due to failure of these companies to deliver their committed power plants as scheduled,” he said.

While losing gigawatts of potential capacity may seem a setback, analysts said the cancellations signal the government’s push for greater accountability.

“The cancellations are best understood as pipeline rationalization, not a retreat from renewable ambition. Stronger enforcement at the service-contract stage, paired with better transmission planning, is essential to meeting the Philippines’ clean energy goals credibly,” Isabella Suarez, engagement analyst at TransitionZero, told BusinessWorld via e-mail.

Ms. Suarez added that consistent enforcement improves investor confidence over the medium term, reducing uncertainty and discouraging “speculative capacity hoarding.”

Noel M. Baga, co-convenor of the think tank Center for Energy Research and Policy, said the DoE’s actions “strengthen investor confidence by demonstrating that accountability applies equally to all parties, regardless of size or political connections.”

“The Philippines needs legitimate energy developers with proven capacity to expand our supply, which is fundamental to achieving both energy security and affordability for Filipino consumers,” he said in an interview.

Mr. Baga also said the move sends a clear signal that “the Philippines is open for business to serious investors who will deliver the power our country needs.”

Currently, renewable energy accounts for 25% of the national power mix, with the government aiming to increase the share to 35% by 2030 and 50% by 2040.

Before building a power plant, proponents must secure a service contract from the DoE, granting the right to explore, develop, and utilize RE resources in a given area. Companies may apply directly to the DoE or participate in the government’s green energy auction program, which promotes competitive and transparent procurement to secure the lowest cost of electricity.

The DoE terminates contracts of projects that fail to meet obligations, such as missing work program requirements or failing to secure necessary permits and grid connection studies. The crackdown on inactive projects began in 2024, following repeated delays and non-compliance.

Avril de Torres, deputy executive director of think tank Center for Energy, Ecology and Development, said the government should quickly replace terminated contracts with capable developers while maintaining the goal of affordable electricity.

“The terminations themselves are not the obstacle; they indicate the need to examine why targets are not being met,” she said.

“Failure to act on contracts that have not been honored — or to ensure their capacities are replaced by renewable energy to displace fossil-fuel generation — would hamper the Philippines’ RE targets,” Ms. De Torres added.

Energy Secretary Sharon S. Garin said the department is considering blacklisting firms that fail to deliver on project commitments.

“People should not monetize a privilege given by the government,” she told One News’ Storycon.