The Philippines will need roughly P5 trillion worth of investment to harness its estimated 25-gigawatt (GW) hydropower potential, according to the Department of Energy (DoE).

Ariel D. Fronda, head of the DoE's Hydropower & Ocean Energy Management Division, told reporters on the sidelines of the AboitizPower 101 workshop on Thursday that hydropower development costs about P200 million per megawatt (MW). At that rate, developing the full 25,000-MW potential works out to roughly P5 trillion, a figure that frames the scale of capital the sector's expansion would involve.

He said the case for maximizing hydropower is underscored by the energy insecurity facing the Philippines, which stems from its vulnerability to geopolitical risks.

"We are expanding our renewable energy portfolio responding to growing electricity demand, and strengthening energy security in an environment shaped by fuel price volatility, climate risks, and the changing operating requirements of our power system," he said.

"These developments require us not only to build more generating facilities, but also to develop the flexibility, storage, and supporting infrastructure that will allow the entire power system to operate reliably," he added.

Hydropower plants produce electricity by using flowing or falling water to spin turbines connected to generators. They come in several forms, including run-of-river systems, impounding hydro, and pumped-storage hydropower.

The DoE said hydropower accounted for about 12% of the Philippines' installed power generation capacity at the end of 2025, making the technology a core part of the existing fleet that the DoE is looking to build on as electricity demand grows.

Some hydropower projects are expected to begin delivering electricity by 2028 following the third round of the green energy auction (GEA-3) held last year, Mr. Fronda said. GEA-3, which covers renewable energy technologies that do not qualify for feed-in-tariff incentives, attracted more than 6,600 MW of subscribed capacity. How those subscribed projects progress toward the 2028 delivery window will offer an early indication of how quickly the country's untapped hydro potential is being converted into operating capacity.

The Philippines is bracing for a strong El Niño that began this year and is projected to persist through the first half 2027, threatening to tighten power supply as extreme heat drives up electricity demand and dry conditions weigh on generation.

Because hydropower facilities depend on reservoir and river levels, a reduction in water availability could prompt plants to run at partial capacity and lower power output. The DoE has warned that warmer temperatures could cut hydropower generation by as much as 40%, making water availability a key variable for the hydro fleet's contribution to the grid in the period ahead.

Mr. Fronda said pumped-storage hydropower could help offset reduced generation from conventional plants, such as run-of-river and impounding facilities, during El Niño.

"It can help bridge the gap and lessen the decline in output from these conventional hydropower plants," he said.

Pumped-storage hydropower works by using electricity to pump water from a lower reservoir to an upper reservoir when energy is available. When power is needed, the stored water is released through turbines to generate electricity. The technology speaks directly to the flexibility and storage requirements Mr. Fronda outlined, giving the power system a way to store energy when it is available and dispatch it when output from other plants falls short.

— Sheldeen Joy Talavera, BusinessWorld (Original article)