Philippines Leads World in Solar Adoption Amid Soaring Power Prices

The Philippines is experiencing a surge in solar power adoption as households and businesses rush to install solar panels to escape the burden of soaring electricity prices. This has made the country one of the world's largest spenders on solar panels since the start of the conflict in Iran. Top power distributor Meralco has raised prices by 10% since the Middle East conflict began in late February. Consequently, a median household now spends around 12% of its monthly income on electricity, assuming a consumption of 200 kilowatt-hours, which is approximately the monthly average for three people. The Philippines is one of the few countries in Southeast Asia with minimal power subsidies, and its residential power prices are the highest in the region. Singapore comes close, but its citizens' average purchasing power is nearly 13 times higher. Adrian Sabatera, a 39-year-old software engineer, had considered solar for years but found it too costly. This changed as costs came down and electricity prices continued to rise. "I wouldn't be shocked if a third of the middle-class population eventually finds their way to this setup," Sabatera said after recently investing 570,000 pesos ($9,300) in an installation at his Manila home, which he shares with three others. In the three months through May, panel imports reached $407 million, a 145% increase from a year earlier, according to trade data from China, which accounts for most of the global supply. Even when Chinese panel shipments fell 13% in May after a tax rebate removal, exports to the Philippines rose by almost a third. On paper, the Netherlands remains a larger market for panels, but experts say that's because it is a transshipment hub. Surge in Inquiries Philergy German Solar, a Manila-based installer, received more than 2-1/2 times the number of customer inquiries in the first five months of this year compared to last year. At one point, it fielded 3,000 inquiries a day, according to managing partner Jochen Staudter. "Customers are deciding to buy much faster than before," Staudter said. "Demand will continue to be driven by high electricity prices." In two years, distributed solar capacity could nearly triple to 3,500 megawatts (MW), matching the current size of the Philippines' utility-scale solar fleet, as loan payback times shrink to 3.1 years from 4 years, said Alnie Demoral, analyst at energy think tank Ember. Solar accounts for under 4% of national power consumption, government data shows. Supply Challenges A weakening currency has compounded the increase in power prices, as the Philippines relies on imported coal and gas for power generation. This has pushed inflation to multi-year highs and slowed growth. Manila entrepreneur Jason Porciuncula installed a 12-kilowatt system with battery storage in January. As prices hit record highs in May, his monthly bill dropped to a fifth of last summer's 21,000 pesos. But it's not all smooth sailing. Installations are lagging behind demand due to component hoarding, volatile equipment costs, and inadequate quality checks, said Brenda Valerio, Philippines director at New Energy Nexus. The government offers loans for solar of up to 500,000 pesos at 5% interest, but it excludes private-sector workers. Another deterrent: high upfront costs, usually above average annual household incomes of 353,200 pesos. "The opportunity is real, but the upfront cost is often too high for a household or business, no matter how quick the payback time is," Ember's Demoral noted. ($1 = 61.2870 Philippine pesos) — Reuters