₱5T push eyed for PH hydropower build-out

The Philippines will need about ₱5 trillion in investments to fully harness an estimated 25 gigawatts (GW) of hydropower potential, according to the Department of Energy’s Hydropower and Ocean Energy Management Division. The funding requirement reflects the scale of resources needed to expand renewable capacity as the government targets at least 25 GW of additional renewable energy by 2035 under the 10-year Green Energy Auction program.

This benchmark underscores the capital-intensive nature of hydro projects, which involve dams, reservoirs, tunnels, and associated grid infrastructure, but also provide long-lived, large-scale generation and storage capabilities.

Hydropower accounted for about 12% of the Philippines’ installed power generation capacity at the end of 2025. Increasing its share is seen as part of a broader shift toward renewables to address growing electricity demand and strengthen energy security.

Energy officials frame the expansion of hydropower as a response to energy insecurity linked to geopolitical risks, fuel price volatility, climate risks and changing operating requirements of the power system. They stress that the country is at an important point in its energy transition, with clear renewable ambitions and an urgent need for reliable and affordable electricity.

Hydropower plants in the Philippines include run-of-river systems, impounding hydro facilities, and pumped-storage hydropower. These assets are expected to contribute not only to bulk generation but also to grid flexibility and storage, which are increasingly important as more variable renewable energy comes online.

Some hydropower projects awarded under the third round of the Green Energy Auction (GEA-3) are expected to begin delivering electricity by 2028. GEA-3, which covers renewable technologies not eligible for feed-in-tariff incentives, attracted over 6,600 MW of subscribed capacity, including seven pumped-storage projects totaling 6,350 MW.

Pumped-storage hydropower is being positioned as a key technology to manage peak demand, enhance system flexibility and provide energy storage. Officials note that pumped storage should not be confused with total system capacity and will not replace batteries, conventional hydropower, geothermal energy, flexible thermal generation, demand response or transmission expansion, as each has distinct technical and cost characteristics.

The importance of pumped storage is heightened by expectations of a strong El Niño projected to persist through the first half of 2027. Warmer temperatures and drier conditions can lower reservoir and river levels, prompting conventional hydropower facilities to operate at partial capacity and potentially reducing generation by up to 40%.

Pumped-storage facilities can help bridge the gap by offsetting reduced output from run-of-river and impounding plants during such periods. The Caliraya-Botocan-Kalayaan (CBK) complex, which includes the country’s only operating pumped-storage plant at Kalayaan, provides an example of how this technology can support the grid through peaking capacity, energy storage and ancillary services.

The Kalayaan unit can ramp up to deliver power within about 10 minutes when demand surges, while the broader CBK complex also includes the 39.3-MW Caliraya plant and the 22.96-MW Botocan run-of-river facility. This combination illustrates how hydropower and pumped storage are integrated to provide both base generation and fast-response capability within the Philippine power system.