THE PHILIPPINES will need $1.79 billion in smart-grid investment to follow through on its renewable energy (RE) ambitions, according to energy think tank Ember.
In a report on Tuesday, Ember said upgrading grid infrastructure will be needed if the Philippines and Vietnam are to sustain the momentum of their clean-energy rollouts.
“Vietnam and the Philippines are expected to lead deployment, followed by Indonesia, Thailand, and Malaysia. This growth signals a strong commitment to clean energy but also unprecedented operational complexity,” Ember said.
The think tank said that ASEAN economies share the same challenges in building power systems that can support the rapid demand growth and huge influx of renewable energy.
According to Ember, smart grids are crucial to ASEAN’s clean energy transition, but require substation upfront investment.
A smart grid digitalizes electricity networks, enabling two-way communication between suppliers and users.
It said that a smart grid could deliver the flexibility needed for “high-renewables futures.”
“As the Philippines pursues its RE targets of 35% by 2030 and 50% by 2040, smart grid deployment will be vital in shaping a cleaner and more resilient energy future, delivering reliable, flexible, and secure electricity to both growing industries and households,” according to Alnie Demoral, Asia energy analyst at Ember and lead author of the report.
Ember said the rapid growth driven by digital industries, advanced manufacturing, and data-driven services will depend on reliable electricity. Even short outages can translate into “major economic losses and weakened competitiveness.”
Across ASEAN, the average value of lost load (VOLL) — a planning metric that estimates the economic cost of electricity outages — is estimated at $2.4 per kilowatt-hour (kWh).
Among the ASEAN countries, Myanmar, the Philippines, and Indonesia are exposed to higher risks with their VOLL exceeding $3 per kWh.
Ember said the power interruption on Panay Island in January 2024 was reported to have caused daily losses to the economy of around P400-500 million.
“While such a scale of blackout is uncommon for the island, it illustrates how grid disruptions can have material impacts on local economies and livelihoods,” the report said.
The think tank said that reliability could lead ASEAN to lose nearly $2.3 billion in annual outage-related losses by 2040, through foregone investment, missed industrial production, and a decline in regional competitiveness.
“Nonetheless, the message is clear: modernizing grids is essential to secure growth, unlock renewable potential, and safeguard its place in the global economy,” Ember said. “Delay, by contrast, risks billions in annual losses and erodes the resilience the region has worked hard to build.” — Sheldeen Joy Talavera