Philippines Smart Grid Market

The Philippines faces an energy crisis as utilities struggle to restructure themselves in order to provide reliable electricity to a rapidly growing population. The nation`s grid is over capacity and unable to take in additional input despite the presence of ample renewable and energy sources. It also lacks efficiency in transmission.

Brownouts occur annually, especially in the summer when air conditioners are heavily utilized. Such factors contribute to the Philippines having the most expensive electricity in ASEAN at $0.20 per kWh. Electricity reliability and price have prevented the nation from becoming an investment destination, and hindered economic growth as the population struggles to pay for electricity.

The Electric Power Industry Reform Law requires distribution utilities and electric cooperatives to perform long-range system planning, smart grid infrastructure development, and consumer empowerment. As industry is led by the private sector, the Department of Energy has authorized capital expenditures for smart transmission and distribution infrastructure.

This allows of industry to lead the way in proposing new technologies with the assurance that the Government will support them, and later bless them with official regulations. Such reassurances have allowed for local firms to invest in hiring technical consultants to develop the smart grid requirements and help with the procurement process/technical services, roll-out smart meters, establish AMI communication networks, and integrate operational and IT assets.

In the absence of clear government direction, local firms are enabled to experiment, and later propose full adoption of technologies and solutions. The major players in the market would be distribution utilities Meralco, Aboitiz, and Cepalco. There are also about 140 electric cooperatives. However, the larger players are more likely to be able to invest in expensive equipment, and scale. Together, projected combined capital expenditure would be $110 million for smart grid projects in the next 5-8 years. Needs would likely include automated metering infrastructure, advanced network automation, energy management systems; communications infrastructure, outage management; intelligence, strategy, and technology advisory services,  distribution automation, SCADA systems, micro energy management system, demand response platforms. 

Accessing the Market:

The Philippines needs to take its grid to the next level with interoperable standards, and greater security. The utilities will be seeking smart grid solutions, and many will be eager to provide them. The Japanese, Koreans, and Chinese are very present in the market, offering free pilots of products and solutions. Their proximity also allows for frequent technical trainings and after sales support. The Philippine utilities have many options to choose from, and have proven to be shrewd negotiators. The National Grid Corporation of the Philippines, which is the country’s grid’s system operator, has a joint concession partnership with the State Grid Corporation of China. In fact, the grid is managed from China.

While Asian options will likely be the first choice, it can be expected that U.S. firms will also get a share of the smart grid business as well. To tap into this opportunity, U.S. firms should establish relationships with the major utilities, and register themselves as accredited suppliers. Each utility will have a separate accreditation process that qualifies firms to participate in their RFPs. U.S. firms should seek such accreditation in cooperation with a local partner, a requirement for any business in the energy sector. As the energy sector is considered a public utility, only 40% foreign ownership is allowed. 

For more information contact  Thess Sula, Commercial Specialist, U.S. Commercial Service; Email: Thess.Sula@trade.gov.