WASHINGTON, March 31, 2025 ¨C Å·ÃÀÈÕb´óƬ's Board of Executive Directors has to support the Philippine government¡¯s policy reform efforts aimed at scaling up the adoption of clean energy technologies, increasing the security, flexibility and competition of electricity markets, and improving water management across water uses.
¡°Focusing on renewable energy sources and using energy more efficiently can help the country reduce electricity costs, improve energy security, and cut down on pollution,¡± said Zafer Mustafao?lu, World Bank Division Director for the Philippines, Malaysia, and Brunei. ¡°Using more affordable renewable energy in the energy and transport sectors is crucial for the Philippines to build a strong economy.¡±
The Philippines has one of the most dynamic economies in the East Asia and Pacific region. While the economy has rebounded from the disruptions of the COVID-19 pandemic, it faces considerable risks and challenges to long-term growth and prosperity, including increasing dependency on imported energy, the high cost of electricity, and natural disasters.
Investing in energy transition by focusing on local renewable energy (RE) sources, energy efficiency (EE), and other clean energy sources can help lower electricity generation costs while increasing energy security. Expanding the proportion of consumers that can choose their electricity supplier and improving the framework for competitive procurement of renewable energy will contribute to lowering electricity prices by increasing competition in the sector.
"To accelerate energy transition and keep electricity affordable for all Filipinos, the Philippines needs reforms to ensure achieving the government¡¯s renewable energy and energy efficiency targets, improving grid capacity and flexibility, and enhancing competition in electricity markets," said Feng Liu, World Bank Senior Energy Specialist and Task Team Leader of the operation. ¡°These reforms can help lower power supply cost and improve the reliability and resilience of the power system, thereby making electricity more affordable and reliable for Filipino households and businesses.¡±
This will support actions that will accelerate energy transition and increase resilience to climate in the Philippines. It is expected to increase the share of renewable energy in installed generation capacity from 30 percent in 2023 to 42 percent by 2027; support the procurement of 1,000 megawatts of new offshore wind capacity; and implement energy efficiency measures saving 5 GWh annually. Electrification of public sector vehicles and improved electricity market reforms will further decarbonize the grid. By strengthening RE markets, and unlocking private sector investments, the program will contribute to scalable, transformative impact beyond 2030, placing the Philippines on a sustainable trajectory.
The operation will also help improve governance and cohesiveness in the water sector by introducing policy reforms for water resources management and water supply and sanitation by promoting better coordination between national and local governments.
¡°These reforms in the water sector are expected to increase access to safely managed water supply and sanitation services; raise funding and financing for water and sanitation projects; and improve the financial sustainability of local government-run water service providers. Ultimately, the DPL, a first for the Philippine water sector is a move toward more effective coordination, planning and management across sectors and levels of government,¡± said Maria Fiorella Fabella, World Bank Senior Water Supply and Sanitation Specialist.
This Development Policy Operation (DPL) in the amount of US$800 million, is a rapidly disbursing financial support operation provided by the World Bank to help member countries address development financing needs through a program of policy and institutional actions. These actions aim to promote sustainable growth, reduce poverty, and enhance the well-being and incomes of the poor, consistent with the country¡¯s development goals.
