The Department of Energy (DOE) is set to launch a dedicated Green Energy Auction (GEA) for off-grid island communities served by the National Power Corporation (NAPOCOR), an initiative that seeks to replace costly diesel generation with renewable energy and battery storage systems, improve energy security in island communities, and reduce the Universal Charge for Missionary Electrification (UCME) paid by electricity consumers nationwide.
Speaking during a press briefing on Monday, 03 August 2026, DOE Undersecretary Rowena Cristina L. Guevara said the initiative forms part of the Department’s continuing efforts to modernize power generation in off-grid areas while easing the financial burden borne by consumers across the country through the UCME mechanism.
Many of the country’s off-grid islands continue to rely almost entirely on diesel-fired generation, making electricity production highly vulnerable to volatile global fuel prices. The average true cost of generation in these areas is now about ₱18 per kilowatt-hour, while generation costs in some remote islands can reach as high as ₱62 per kilowatt-hour due to the high cost of transporting fuel.
While consumers in these islands pay the regulated electricity rates approved by the Energy Regulatory Commission (ERC), the gap between those regulated rates and the actual cost of generating electricity is subsidized through the Universal Charge for Missionary Electrification (UCME), which is collected from electricity consumers nationwide.
To address this, the DOE plans to replace diesel generation with solar photovoltaic systems paired with battery energy storage systems (BESS) through a competitive Green Energy Auction.
“Ang intensyon po natin ay mapababa ang presyo at maging secure ang supply ng energy dito sa ating mga islands,” Undersecretary Guevara said.
By introducing lower-cost renewable energy technologies, the Department expects to reduce the true cost of electricity generation in off-grid areas, lessen the subsidy requirement under the UCME, and deliver long-term savings to electricity consumers while ensuring more reliable power for island communities.
The DOE is initially targeting 20 of the country’s larger NAPOCOR-served islands for the auction. The Department recently conducted focus group discussions with renewable energy developers, local government units, and other stakeholders to refine the auction design and identify the measures needed to ensure its successful implementation.
Unlike conventional renewable energy auctions, the GEA for off-grid areas is specifically designed to address the unique operating conditions of island communities. NAPOCOR will continue to play a central role in ensuring uninterrupted electricity service throughout the transition while the winning developers construct and commission their renewable energy facilities.
The Department emphasized that the initiative supports the Philippine Energy Plan by accelerating the deployment of indigenous renewable energy, strengthening energy resilience in underserved communities, reducing dependence on imported diesel fuel, and promoting a more sustainable and financially efficient approach to missionary electrification.
The DOE is currently finalizing the list of eligible islands and the auction parameters, with the Green Energy Auction expected to be rolled out next year. Once implemented, the program is expected to improve electricity reliability in off-grid communities while helping reduce the UCME collected from consumers nationwide.
