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Department of Energy (DOE) Secretary Sharon Garin said removing inactive renewable energy (RE) projects is creating new room for development and drawing a growing wave of investor interest in the Philippines.
Fresh from the Asia Clean Energy Summit in Singapore, Garin highlighted that investor interest in Philippine clean power remains strong. She noted that many firms are eager to build projects once the DOE clears out dormant projects. “We’re telling them we’re purging and trying to clean up, and there will be other areas that are more interesting that are not moving,” she said.
In the meantime, the DOE is pressing ahead with its crackdown on stagnant RE initiatives. The agency is following due process, issuing notices and show-cause orders to ensure fairness, but Garin stressed, “If the projects are not moving, then they should not be holding those contracts.”
In a prior statement, the DOE mentioned it is exploring a new mechanism to accelerate the revival of RE contracts, offering a quicker alternative to the standard open and competitive selection process.
(Also read: Counting the Wrong Costs: The Case for Thinking How We Judge Renewables)
Tracking the crackdown
As of November 2023, the DOE had awarded 1,186 RE service contracts, representing a total potential capacity of 132.9 gigawatts (GW). Yet only 5.7 GW have been installed, highlighting significant delays in project execution. Most contracts were for hydropower, with 433 approved projects, followed by 329 solar, 239 wind, 76 biomass, 37 geothermal, and nine ocean energy projects.
According to DOE Undersecretary Rowena Guevara, a small portion of these projects went to major companies while the majority were granted to smaller firms. “They’re able to get the service contract, but we are not seeing the projects being constructed,” she explained. The stalled projects created fresh investment openings for foreign firms, particularly those from Europe.
By October 2024, the DOE had identified at least 105 RE projects at risk of termination for failing to meet development milestones. Of these, 88 were found to be stuck in pre-development or showing no meaningful progress, with solar ventures making up most of the inactive portfolio.
By early 2025, the DOE confirmed it had begun sending out termination notices. Former DOE Secretary Raphael Lotilla defended the policy, saying that by pruning non-performing service contracts, the government could give more serious players a fair shot.
(Also read: Winter of Worry: Britain’s Energy Debts Hit Record High)
The “flippers”: Investors who never meant to build
A concern driving the purge is the behavior of so-called “flipper” developers — entities that obtain service contracts not with the genuine intention to build, but to resell the rights to more serious developers. This speculative strategy bogs down the pipeline and reduces the country’s chance of meeting its clean-energy targets.
Although the DOE has never explicitly used the term “flippers,” its officials have hinted at the problem. In an interview with the Manila Bulletin, Garin underscored that the department is tightening oversight of the developers’ project timelines. “We don’t want them to apply for service contracts and do nothing and just sell the service contract,” she said. “We want serious developers that do their homework to fulfill their commitment.”
In the US, the practice is reasonably common. A 2023 LevelTen Energy report found that speculative renewable projects without interconnection approval or clear construction pathways were losing appeal, with buyers preferring later-stage, ready-to-build developments. The study also highlighted an active secondary market for renewable projects, indicating that buying and reselling assets is a regular part of the industry.
In Europe, Limes Renewable Energy sold a 287-megawatt (MW) portfolio of solar and wind projects in Italy to an international independent power producer, even though some of the projects were only “authorized” or “ready-to-build,” not yet operational. In such deals, the seller may act as a “flipper” — developing early-stage project rights, then selling them before full build-out.
“Flipping” is common in mature markets like the U.S. or parts of Europe because developers can sell partially developed assets into a highly liquid secondary market. In the Philippines, however, the energy ecosystem is structured very differently, making “flipping” impractical and damaging to the country’s RE rollout because of these reasons:
- High capital costs
Ateneo de Manila University Economics Professor Fernando T. Aldaba noted that RE initiatives demand substantial upfront investment, with “higher initial costs compared to traditional energy sources.”
According to the International Energy Agency (IEA), the median weighted average cost of capital (WACC) for solar PV in Asia remains elevated, with the Philippines at 8% in 2024. This is notably higher than the 5 to 6.5% range typical of advanced economies, reflecting higher financing costs and greater investment risk in the region.
When investors take a “flipping” approach by buying RE projects for quick resale rather than long-term operation, the Philippines’ high upfront costs become a major barrier. Short-term owners may neglect essential expenses like maintenance, storage, or grid upgrades, stalling completion and undermining reliability. This speculative model discourages sustained investment, delays projects, and slows the country’s green transition.
- Structural hurdles
The country already grapples with structural hurdles: grid‑integration difficulties, land acquisition and permitting delays, and uneven regulatory and institutional frameworks.
“Infrastructure inadequacy remains a pressing concern. The current grid infrastructure, designed primarily for centralized fossil-based power generation, cannot efficiently handle distributed and intermittent renewable sources,” wrote Aldaba. “Investments must also be directed towards energy storage technologies and smart grid solutions, which can manage fluctuations inherent in renewable sources.
When renewables are treated as financial assets to trade rather than infrastructure for national development, existing problems get worse. Profit-focused investors often prioritize quick returns over long-term stability, reducing the incentive to complete complex and costly steps like permitting, community consultations, environmental assessments, and grid upgrades. Skipping or delaying these essential processes increases risks and slows reliable RE deployment.
- Intermittent generation
Unlike fossil fuels, renewables depend on the weather because solar needs sunlight and wind requires steady breezes. In the Philippines, with rising electricity demand, this intermittency challenges grid stability.
“The Luzon grid has faced several instances of red and yellow alerts due to insufficient power reserves, particularly during peak demand,” highlighted Aldaba. “The lack of adequate energy storage infrastructure exacerbates the problem, as excess energy generated during peak production hours cannot always be stored for later use.” While battery storage systems are being developed, they remain costly and insufficient for nationwide coverage.
Under a speculative model, investors may overestimate project output based on ideal weather, but actual production and revenue often fall short, undermining investor confidence and the long-term success of RE projects.
Stable investment, not speculation
While the green transition in the Philippines faces many hurdles, speculative “flipping” of RE projects should not be added to the list. According to Garin, foreign investors remain interested in the Philippine power sector, showing that long-term investment appetite is still strong when projects are treated as infrastructure rather than short-term financial assets.
Avoiding “flipping” allows developers and investors to focus on building and operating projects sustainably. By prioritizing long-term ownership, funds are more likely to be allocated to essential components like maintenance, grid upgrades, and energy storage. This ensures that RE projects are reliable and capable of meeting the country’s growing electricity demand.
Long-term investment also improves confidence among regulators, communities, and other stakeholders. With stable ownership, permitting, community consultations, and environmental safeguards can be carried out thoroughly, reducing delays and building trust. Ultimately, keeping “flipping” out of the sector accelerates the green transition by ensuring projects are completed, reliable, and capable of supporting a stable shift to clean energy.
Sources:
https://www.pna.gov.ph/index.php/articles/1217081
https://business.inquirer.net/500531/purge-of-dormant-renewable-energy-projects-tipped-to-widen
https://mb.com.ph/2024/11/20/doe-cracks-down-on-renewable-energy-delays
https://richestph.com/philippines-business-hurdles-slow-green-funds
https://businessmirror.com.ph/2025/03/07/the-risks-of-a-rapid-energy-transition-in-the-philippines
