The Philippines has been ranked first among 193 countries on the World Risk Index for a while now, and the reasons aren’t so difficult to see: nearly 20 typhoons a year, an active ring-of-fire seismic profile, and a coastline that keeps eroding. When Typhoon Rai hit Eastern Visayas in 2021, it destroyed 92.7 percent of the region’s power grid and knocked out transport electrification for 48 hours, cutting emergency response effectiveness below 40 percent during the critical first three days. That’s not a freak outcome. It’s what a centralized, single-point-of-failure grid does when the storm it was never really built for finally arrives.
So the Philippines is trying two different things to solve that vulnerability.
At the national level, the government fully opened its renewable energy sector to foreign capital. At the barangay level (the smallest form of government on the island chain), thousands of individual communities are building small, disconnected solar-and-battery systems designed to survive future storms that keep leveling the national grid. One track chases scale by inviting the outside world into the island nation. The other chases resilience by ensuring the community can survive without the outside world out entirely. Both are running right now, in the same country, aimed at the same problem: a coal-heavy, centralized system that keeps failing when it matters most.
I’ve written before about how most of the developing world’s energy history has followed the same basic pattern: a foreign company or nation finances an energy plant, dictates the terms of service, and the debt incurred by the hosting nation survives even when the power wasn’t delivered in full. Mexico’s answer was to lock the state into majority ownership of every project by constitutional amendment. Nigeria and Rwanda’s answer was to skip the national grid altogether and let villages own their own systems outright.
The Philippines picked neither of these options. In November 2022, the Department of Energy issued a ruling opening the entire renewable sector to 100 percent foreign ownership, removing a rule that had capped foreign equity in solar, wind, hydro, and tidal projects at 40 percent for over a decade. The Department of Justice backed the move with a genuinely creative bit of constitutional reasoning: the charter’s restriction on foreign ownership of natural resources applies to “potential energy,” and sunlight and wind, the DOJ argued, are technically kinetic, not potential, so the restriction never applied to them in the first place.
Whatever you think of the legal gymnastics and wordplay, the intent was straightforward: get foreign capital into the country as fast as possible, on foreign terms, because the country needs it to shore up its electricity grid. The DOE’s fourth renewables auction this year is offering up to 10.5 GW of new capacity, and the government has been fast-tracking projects hard enough to bring 1,471 MW online in a single month this spring. It’s working, at least by the metric of capacity added: solar additions outpaced new gas capacity in 2024, and coal generation is now falling for the first time in decades, a shift analysts increasingly credit to renewables rather than the LNG buildout that’s gotten most of the press.
There’s a catch that keeps this from being a clean handoff. Foreign-owned project companies still can’t own the land their solar farms sit on; that restriction is constitutional and untouched by the 2022 circular ruling. So the typical structure is a long-term lease from a Filipino landowner, sometimes paired with a usufruct arrangement. It’s a smaller check on foreign control than the previously mentioned 54 percent state stake, but it’s not nothing: whoever owns the panels still answers to whoever owns the ground underneath them.
Unfortunately, coal power isn’t being retired fast enough
Coal is still the backbone of the nation’s energy system, unfortunately, though. It made up 56 percent of generation in 2025, and the country has more total dependable capacity, nearly 28 GW against nineteen GW of peak demand, than it knows what to do with, while still suffering regular outages. The issue isn’t a shortage of power plants. It’s that two-thirds of that capacity is rigid baseload coal, forced to ramp up and down every day to follow demand it was never designed to follow, which wears the plants out faster and makes the whole system less reliable, not more.
Without early retirement, the Philippines’ coal fleet is on track to retire naturally sometime between 2047 and 2051. The government’s own energy secretary has put the cost of retrofitting or phasing out that fleet at up to $500 billion. In late 2025, the country started piloting “transition credits,” a new instrument meant to fund early coal retirement by monetizing the emissions the closure prevents. It’s unfortunately the kind of financing workaround you’d expect from a government that liberalized ownership and now needs to foot the bill for shutting down assets folks shouldn’t keep running.
While all that plays out at the national level, a completely different transition is happening at the local level, and it has basically nothing to do with any foreign investment laws.
The Microgrid Systems Act of 2022 let private developers build and operate small, independent solar-and-battery systems in off-grid communities without needing a congressional franchise, just clearance from the Energy Regulatory Commission. The pitch isn’t really about generation cost. It’s about what happens when a typhoon warning goes up. Generator-run municipalities lose fuel supply within 12 to 24 hours once the roads flood or the delivery trucks can’t get through; a solar-and-battery system just keeps running because it has no fuel dependency to interrupt in the first place. UNDP Philippines flagged this back in 2021: solar microgrids at evacuation centers meant covered courts stayed lit through blackouts that killed grid power for days.
The government has leaned into this directly rather than waiting for private developers to get there. It’s deployed Mobile Energy Storage units, essentially solar-and-battery systems on wheels, to disaster zones in Cagayan and remote parts of Palawan, powering command centers and hospitals within hours of a storm passing rather than the weeks it can take to restring downed transmission lines across an archipelago. And the engineering culture around this is genuinely different from what you’d see in a stable climate: Philippine solar installations are increasingly designed to trade some energy-capture efficiency for structural survival, because a farm that generates less power but is still standing after a supertyphoon beats one optimized for output that gets flattened in the first strong gust.
What’s interesting here isn’t that the Philippines picked a side between top-down liberalized development or bottom-up local government development. It’s that it didn’t. The national government is betting that opening the door to foreign capital is the fastest way to add gigawatts and finally bend the coal curve down. Individual municipalities are betting that the only real defense against a storm that takes out the national grid is a system small enough, and local enough, to not need the national grid at all.
Both bets are really answers to the same question I keep circling back to in this newsletter: who benefits once the money is spent and the storm that folks were preparing for arrives?
The Philippines is betting it doesn’t have to choose. Fast-track the capital at the top. Build out redundancy at the bottom. Whether that adds up to a country that’s actually more resilient by the time the next Typhoon Rai makes landfall is still an open question, one that depends less on solar panel costs at this point and more on whether the financing and the build-out keeps moving at the pace severe storms are setting.