2026 Update: Offshore Wind in the Philippines 20 April 2026

Comparison to other green energy auctions

For discussion purposes, we present a comparison between the GEA-5 GEAR price and recent auctions for fixed-bottom OSW projects in other countries across Asia and Europe (see Table 2). There are three observations that can be drawn from this comparison.

First, European OSW projects benefit from a mature regulatory environment with well-established shared transmission and port infrastructure, which removes a sizeable cost element from the developer calculation. Second, early-stage OSW markets typically face higher supply chain and logistics costs. These challenges apply to the first kind of project in any jurisdiction, where local supply chains have not been established, and infrastructure is limited. Over time, these costs have a clear tendency of decreasing as the market matures, setting clear precedent for future auctions in the Philippines.

Third, OSW markets in Asia have posed notable challenges for investors. Taiwan, for example, has experienced regulatory uncertainty and awarded OSW projects have been cancelled. Japan offers another example where several awarded OSW projects were subsequently withdrawn due to soaring costs far exceeding price projections. Those locations in Japan will be re-tendered, with the authorities hinting at substantial increase of the bidding cap price.

Table 2: Auction price comparison across Asia and Europe for fixed-bottom OSW.

Overall, the picture is one of early momentum for the OSW market in the Philippines. The GEAR price enhances project bankability and attracts investment by accommodating the capital-intensive nature of early OSW projects, making the Philippines very attractive in comparison to other Asian jurisdictions.

Implications if GEAR price is too high or low

Setting the GEAR price requires balancing two key priorities: creating a competitive auction and accounting for high upfront capital requirements for the OSW projects. The regulator has analysed these cost drivers in detail and, thanks to the transparency of that process (shaped in part by developer input), it is possible to scrutinise the underlying financial and commercial assumptions. When these assumptions are compared with models in other Asian markets, it appears the regulator adopted a conservative approach with substantial cost buffers. This reflects an intention to set a fair cap price that enables investors to realistically model their cost estimates in the jurisdiction.

If the GEAR price is attractive, developers typically respond by scaling up their projects and/or bidding below the cap to secure project allocation. This pattern can be observed in mature markets. For example, in Poland’s first OSW auction in 2025, winning bids came in at approximately 8 to 9% lower than the cap set by regulators. This demonstrates that when the price cap is sufficiently accommodating, competitive dynamics drive the price down rather than necessarily resulting in overpriced awarded tariffs.

Cost-reduction strategies

OSW projects are inherently capital-intensive, long-term and high-risk undertakings. Depending on water depth, distance from the shore and port readiness, a 1000MW project may require between US$3 – 4bn billion in investment. As an emerging OSW market, the Philippines faces structural challenges to the deployment of early OSW projects. GEA-5 represents the first wave of large-scale OSW deployment in a country where the pool of skilled workers, supply chain and its industrial ecosystem are still developing. This is a familiar starting point for each mature OSW market, and those experiences can offer valuable lessons for the Philippines. The trend seen globally is for costs to fall due to industrialisation through scale, shared infrastructure and multi-year development pipelines that justify long-term capital investment.

Strong DOE leadership will continue to be needed to ensure a unified and coordinated effort by all government agencies involved. This includes efficient permitting arrangements, timely completion of the required ports by the Philippine Ports Authority (“PPA”), and timely completion of the required transmission grid improvements by the National Transmission Corporation (“NTC”) and the National Grid Corporation of the Philippines (“NGCP”).

Further, as lessons from other jurisdictions show, the regulation of maritime aspects of OSW projects will be particularly important. Compared to previous renewable energy projects that were largely land-based, OSW development requires the support and involvement of maritime oriented agencies such as the PPA, the Philippine Coast Guard, the Maritime Industry Authority and the Bureau of Fisheries and Aquatic Resources. This aspect of the government’s involvement will be crucial for a timely delivery of the projects. On the part of the developers, they will need to engage and secure the support of the relevant coastal communities, fisheries associations and similar stakeholders.

Conclusion

The announcement of the GEAR price of PhP 11.00 per kWh in respect of GEA-5 represents a key milestone in the development of the OSW market in the Philippines, reflecting the ERC’s recognition of the high capital cost inherent in this nascent market. The transparent consultation process involved in establishing the assumptions behind this price cap may increase investor confidence, although upcoming stages of the auction will reveal the depth of market interest. These early projects will play a foundational role in shaping the long-term trajectory of the OSW industry in the Philippines, with lessons from mature markets indicating the general trend towards eventual cost reduction.

This article was co-authored with Kiril Caral of Gorriceta Africa Cauton & Saavedra. WFW Singapore Trainee Kate McMahon also contributed to this article.