The opportunities and challenges in solar power generation

Opportunities can be gained from solar power generation, but so do some challenges. Nonetheless, the sheer quantity of solar projects — from grid-scale to residential rooftop — suggests that the advantages far outweigh the drawbacks.

The most cited advantage of scaling solar power generation is how it maximizes a clean and indigenous source of energy, helping reduce reliance on imported fossil fuels. Considering today’s global context, more domestic energy sources can indeed shield the Philippines to some degree from the risks associated with geopolitics and global trade.

The share of renewable energy to Philippine gross power generation continues to expand, from 22% in 2024 to 25% in 2025, driven in part by the energization of more and more solar power facilities. With thousands in megawatts in committed projects and thousands more under the Green Energy Auction Program, the country expects more solar projects to help bring it to a milestone by 2040: a power mix that produces 50% from renewable energy.

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Additionally, there are many behind-the-meter solar PV installations — both registered and unregistered — that allow Filipinos to generate their own electricity and offset some grid use. Broken down, an estimated 1,398.25 megawatts of solar rooftop installations are utility scale, 202.03 megawatts are commercial, and 245.8 megawatts are residential, according to a solar mapping tool by the Institute for Climate and Sustainable Cities.

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The surge in solar can be attributed not just to accommodative government policy, but also to the preconditions of having a lot of solar irradiation and having a sound business case.

The International Energy Agency (IEA) estimated 20,000,000 megawatts of untapped solar and wind potential in Southeast Asia, which they said is “roughly 55 times the region’s current total generation capacity”.

At the same time, the price of solar PVs has consistently gone down, costing around $2.50/watt in 2010 to about $0.25/watt today, representing a tenth of what it cost a decade and a half ago. The decline in the cost of modules, inverters, labor, and installation now makes it easier to scale solar power generation.

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But both grid scale and behind-the-meter solar also introduces more complexity to the power grid. At its daily production peak, a system with a high penetration of solar power generation will oversupply at mid-day. However, as solar starts to decrease by 3:00pm, an afternoon peak in demand might already be developing or is already in full swing. By the time an evening peak in demand occurs at around 7:00pm, solar is totally unavailable.

Simultaneously, households using behind-the-meter solar PV installations without batteries return back to sourcing power from the grid. This makes the management of the grid — to balance supply and demand — become more difficult.

The good news is that energy storage technologies can capture solar’s oversupply and deploy that power during the demand peaks in the late afternoon to early evening to support the power grid. However, the tradeoff is how energy storage would entail an extra expense that would add to solar’s levelized full cost of electricity. Today, the levelized full cost of electricity of solar with energy storage still tends to be more expensive than fossil fuel alternatives. As such, we might also have to wait for the total installed cost of Integrated Renewable Energy and Energy Storage Systems (IRESS) to come down.

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“Integrating more variable renewables into the grid may lead to higher short-term costs; but a growing number of projects are combining solar, wind, storage, and digitalisation — enhancing economic performance and facilitating integration,” the IRENA noted.

Another caveat is the fact that batteries only have a finite amount of charge-discharge cycles and the capacity degrades over time. Consequently, these assets will eventually require replacements, and thus add to the cost of maintaining the system for the duration of the life of the IRESS facility.

Moreover, investments in power plants in general are also outpacing investments on grids, which serve as the networks and safeguards for generated electricity to reach its customers. According to the IEA, while there is about a trillion dollars on new generation capacities, there is just “some $400 billion being spent on grids”.

In the Philippines, considering the variability and intermittent supply of solar, the grid will need dispatchable flexible generation that will kick in immediately to pick up the slack. Besides other power generation capacities and energy storage, power network expansion and upgrades are also necessary.

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Indeed, solar power is a clean source of energy that the country can harness in its own backyard. But there is always a catch, and with solar it’s the need to accommodate its natural limitations with a technology or alternative power source that we’re all willing to pay for as a society.