Philippines leads the world in rush to solar as power prices soar

People across the Philippines are increasingly turning to rooftop solar power as soaring electricity prices push households to seek more affordable and reliable energy sources, making the country the world's fastest-growing market for solar panel imports since the conflict in Iran began.

Electricity rates charged by the Manila Electric Company (Meralco), the country's largest power distributor, have risen by about 10% since the Middle East conflict started in late February. As a result, a typical household consuming around 200 kilowatt-hours of electricity per month now spends approximately 12% of its monthly income on power.

The Philippines has the highest residential electricity rates in Southeast Asia, with limited government subsidies for consumers. While Singapore's electricity prices are similarly high, its residents enjoy significantly greater purchasing power.

For many Filipinos, rising power costs have accelerated the decision to invest in solar energy.

Adrian Sabatera, a 39-year-old software engineer, recently installed a rooftop solar system worth 570,000 pesos ($9,300) at the Manila home he shares with three other people. He said he had considered installing solar panels for years but only decided to proceed after equipment prices became more affordable while electricity costs continued to climb.

"I wouldn't be shocked if a third of the middle-class population eventually finds their way to this setup," Sabatera said.

The surge in demand has driven the Philippines to import $407 million worth of solar panels during the three months ending in May, up 145% from the same period last year, according to Chinese trade data. China remains the world's largest supplier of solar panels, and exports to the Philippines continued to rise even after overall Chinese panel shipments declined following changes to export tax incentives.

Solar installation companies are also reporting a sharp increase in customer interest.

Philergy German Solar, a Manila-based solar installer, said customer inquiries during the first five months of the year were more than two-and-a-half times higher than during the same period last year. At its peak, the company received as many as 3,000 inquiries daily.

Managing partner Jochen Staudter said customers are making purchasing decisions much more quickly than before, adding that strong demand is expected to continue as electricity prices remain high.

Energy think tank Ember estimates that the country's distributed rooftop solar capacity could nearly triple to 3,500 megawatts within two years, matching the Philippines' existing utility-scale solar capacity. Shorter loan repayment periods, which have fallen to an average of 3.1 years from four years, are helping make solar investments more attractive.

Despite the growing interest, solar power still accounts for less than 4% of the country's total electricity generation, according to government data.

The country's dependence on imported coal and natural gas has further increased electricity costs, especially as the weakening peso has made fuel imports more expensive. The higher energy prices have contributed to rising inflation and slower economic growth.

Manila entrepreneur Jason Porciuncula installed a 12-kilowatt rooftop solar system with battery storage in January. By May, when electricity prices reached record highs, his monthly power bill had dropped to about one-fifth of what he paid during the same period last year.

However, industry experts warn that the rapid increase in demand has exposed several challenges. Installations have struggled to keep pace because of equipment shortages, fluctuating component prices, stockpiling, and inconsistent quality standards.

Although the Philippine government offers solar loans of up to 500,000 pesos at below-market interest rates, the program does not cover private-sector employees. High upfront installation costs, which often exceed the country's average annual household income of 353,200 pesos, also remain a significant barrier for many families.

"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 analyst Alnie Demoral said. -Reporting by Sudarshan Varadhan and Ruth Chai in Singapore, Adrian Portugal in Manila; Additional reporting by Karen Lema in Manila and Sam Li in Beijing; Editing by Florence Tan, Tony Munroe and David Dolan/Reuters