Philippine energy market, second quarter 2026

The Philippines began 2026 with growth of 3.0%, inflation below 2%, a central bank still cutting and a stable peso. One quarter later the picture had changed. The oil price shock of March and April raised domestic liquid-fuel prices by more than half, took headline inflation to a three-year high, reversed the easing cycle and pushed the peso to a record monthly average. Growth slowed to 2.3%.

This edition of our quarterly market brief covers April to June 2026 and what is scheduled next. Every figure comes from the PSA, the BSP via the BIS, the IMF, the World Bank, the DOE or IEMOP. Where no official series exists, we say so.

Growth slowed to 2.3% on a fourth quarter of falling investment

Real GDP grew 2.3% year on year, against 5.4% a year earlier and 6.5% at the 2024 peak. It is the fourth consecutive quarter of slower growth.

Household consumption grew 2.8%, government consumption 8.3%.

Gross capital formation fell 9.2%, with construction down 14.8%. Capital formation has now declined for four quarters in a row.

Exports of goods and services grew 12.2%, goods alone 17.0%.

Unemployment was 4.9% in June, against 3.7% a year earlier.

Constant 2018 prices, from the Philippine Statistics Authority.

Inflation reached a three-year high and stayed above the band

Headline inflation rose from 2.4% in February to 7.2% in April and had eased to 6.1% by August, still above the 2 to 4% target band. Food inflation was 4.6% in August, below the headline: the acceleration is energy-driven.

The BSP had cut from 6.50% to 4.25% between mid-2024 and March 2026. It raised in April, June and August, to 5.00%. The peso moved from 59.19 to the dollar in January to a monthly average of 61.45 in August, against 57.30 in 2024 and 57.51 in 2025.

The merchandise trade deficit reached 18.0 billion dollars, the largest in the series: exports of 24.1 billion against imports of 42.1 billion, up 26.8%. The rise in imports coincides with the rise in fuel prices.

Diesel, coal and gas all moved together

Dubai crude rose from 62.0 dollars a barrel in December 2025 to 94.7 in May, then eased to 79.7 in August. Brent reached 120.4 in April. Australian thermal coal was 135.2 dollars a tonne, about a quarter above its 2025 average. Japan LNG was 13.94 dollars per million BTU in August after a 15.65 peak in April, a benchmark that matters more each year as Malampaya output declines.

At the pump, the consumer price index for diesel was 55.7% higher than a year earlier in August, after a 122.7% peak in April. Gasoline was 36.2% higher and LPG 29.6%. Electricity responded with a lag and then accelerated: 9.2% in March, 16.9% in July, 14.4% in August. There is no national series for industrial electricity tariffs.

There is still no market price for industrial biomass fuel

For biomass the only official series are household sub-indices. Wood fuel, pellets and briquettes were up 5.1% in August and charcoal 11.7%, following LPG upward. No official market price exists for industrial wood or agricultural-residue pellets in the Philippines. Coconut oil, the feedstock for the biodiesel mandate, stood at 1,853 dollars a tonne against a 2025 average of 2,480.

This is the gap that makes a fuel study site-specific. What a rice mill or a sugar mill can do with its own residue is not answered by a published index; it is answered by what the site produces and what it currently pays to get rid of it.

Spot prices fell from their regional peaks

IEMOP reported Luzon average prices falling 8.2%, from 7.95 to 7.30 pesos per kilowatt-hour, between the June and July billing periods, and Mindanao down 18.5%, from 12.75 to 10.39. The driver of the regional peaks was forced outages of large units, not fuel cost. The highest regional daily average was 15.19 pesos on 15 July. Supply margins narrowed in April as demand rose, and administered prices were imposed in May and June.

Generation charges pass fuel cost through with a one-to-two-month lag, so the peak in retail electricity inflation may not yet have been reached.

The auction programme and the policy record

GEA-1 to GEA-4 are awarded. GEA-5, the first offshore-wind-only round, covers 3,300 MW for delivery in 2028 to 2030: registration opened on 2 March, the ERC set its ceiling price on 27 February, and the DOE and PNOC signed the tenurial agreement on 29 August. GEA-6 to GEA-9 are to be held in 2026 and 2027 under the ten-year plan announced on 13 February, which targets 25 GW by 2035. Biomass sits in GEA-9, the last round.

26 February, DC2026-02-0008: storage is mandatory for new solar and wind plants of 10 MW and above, at no less than 20% of installed capacity.

July: the State of the Nation Address named expanded lifeline electricity subsidies, waste-to-energy and a review of nuclear energy as priorities. On 13 August the DOE accelerated waste-to-energy implementation.

20 August, DC2026-08-0017: zero-export self-generation and plug-and-play micro-solar up to 1 kW are permitted under reduced requirements.

Under the Extended Producer Responsibility Act, large enterprises must recover 60% of their plastic packaging footprint in 2026, 70% in 2027 and 80% from 2028. There is still no compliance carbon price and no official carbon or plastic-credit price series.

What is scheduled next

1 October: the biodiesel blend rises from B4 to B5, unless a deferral is issued.

October and December: two Monetary Board meetings remain, with inflation above 6% and the peso beyond 61.

Early November: the third-quarter GDP release, the first indication of whether the investment contraction has stabilised.

October to December: the GEA-5 offshore wind auction, with GEA-6 in preparation.

December: the 2027 General Appropriations Act, and the seasonal peak for fuel and power demand.

What it meant for a plant

The quarter reads three ways. Retail electricity is 14% dearer than a year ago and the pass-through is not finished, which strengthens the case for generating on site from a fuel you already control. Equipment, fuel and coal are priced in dollars, and a 7% depreciation in eight months moves project economics on its own, so currency exposure needs hedging rather than hope. And with construction down almost 15% there is less competition for contractors and sites, against tighter domestic financing.

If you run a fuel-fired boiler or a plant that produces a residue, an energy and waste audit turns those three lines into your own numbers. Tell us about your site and an engineer replies with the data we need. Earlier editions are filed under the quarterly market brief.