The Philippines has set ambitious targets for renewable energy. As more solar farms, rooftop systems and other renewable projects enter the grid, it is tempting to think that the country’s energy transition is mainly a matter of building enough clean-energy capacity.
But adding renewable energy is only the first part of the challenge.
Mike Thomas, co-founder of The Lantau Group, argues that the Philippines is entering a more difficult stage of the energy transition, when the power system must learn how to manage large amounts of electricity that cannot always be produced when consumers need it.
Thomas discussed this challenge during the AmCham Annual 9th Energy Forum: Powering Through the 2026 Energy Disruption: Strategies for Resilience, Recovery, and Transition, held on August 13, 2026
He describes the energy transition as occurring in different waves. In the first wave, renewable energy such as solar can enter the electricity system relatively easily because the grid already has unused flexibility that can absorb the additional variable generation.
Solar therefore appears to fit into the existing system without creating major problems.
Thomas explained that this happens because the power system already has resilience that was previously not being fully used. As solar increases, however, it gradually consumes that spare flexibility.
Eventually, the system enters what Thomas calls “Wave Two”, and that is where things become more complicated.
When More Renewable Energy Changes the Problem
Thomas said Wave Two begins when the electricity system starts running out of the flexibility that previously allowed it to absorb renewable energy easily.
“You start getting curtailment, you get insufficiency, you get super low prices, you get your duck curve, you get opportunities for batteries,” he said.
Curtailment occurs when a renewable-energy facility is capable of generating electricity but the grid cannot absorb all of its output.
The duck curve creates another challenge. Solar production can become abundant during daylight hours, when thousands of panels generate electricity simultaneously. But production falls rapidly as the sun sets, just as electricity demand may remain high.
The power system therefore needs other resources that can quickly increase or decrease production.
This is why Thomas believes the difficult part of the transition is not simply adding renewable capacity.
“Wave two is the tricky one,” he said.
Thomas describes the requirements of this stage using a very different set of words from those normally associated with renewable-energy development.
“This is about resilience,” he said. “Adequacy, responsiveness, agility, flexibility, those are the words of wave two.”
The Problem Solar Cannot Solve by Itself
Solar power has an obvious advantage. Once a facility is constructed, sunlight does not need to be imported and there is no fuel bill in the traditional sense.
But solar also has an equally obvious limitation.
Electricity production depends on when the sun shines rather than when consumers decide to use electricity.
A power system with relatively little solar can accommodate these variations through conventional generating plants and other sources of flexibility already available on the grid.
As solar penetration rises, however, that becomes increasingly difficult. The solution is not necessarily to stop building solar. Rather, the rest of the electricity system has to change with it.
Thomas draws an important distinction between solving today’s integration problems and discussing technologies that may transform electricity markets farther into the future.
“Wave three is all the future stuff,” he said, but he warned: “Wave three does not solve wave two.”
The message is particularly relevant for countries such as the Philippines. It is easy to focus on future technologies and ambitious renewable-energy targets. The immediate challenge is less glamorous: making sure the existing power system becomes flexible enough to accommodate the renewable capacity being built.
What Western Australia Can Teach the Philippines
Thomas pointed to Western Australia as an example of what can happen as solar penetration rises.
He described its electricity market as relatively small and isolated, with around four gigawatts of capacity. But it also has an unusually high amount of rooftop solar per capita.
This makes Western Australia useful as a laboratory for what other electricity systems could eventually encounter.
Rooftop solar presents a particular challenge because much of the generation occurs behind the meter.
“What happens on the roof tends to be invisible to the system until after it’s happened,” Thomas said. “The system has to kind of deal with it after the fact.”
A household with rooftop solar draws less electricity from the grid while the sun is shining. From the perspective of the electricity system, part of demand effectively disappears.
But clouds can suddenly reduce solar output. Households then need more electricity from the grid, which means conventional generators or storage resources must respond.
Thomas cited the possibility of losing a large share of grid supply within a short period when weather conditions change in a system with high rooftop solar penetration.
The Philippines has not yet reached Western Australia’s level of rooftop solar adoption.
Thomas acknowledged this, saying rooftop solar was only “starting to pick up here” and probably would not grow as rapidly as it did in Australia.
Nevertheless, the Australian experience offers a glimpse of challenges that could become more relevant as Philippine solar capacity expands.
Flexibility Becomes the New Source of Value
The transition therefore changes what becomes valuable in an electricity system.
Generating electricity is one source of value. But Thomas argues that the speed at which the system can adjust also has economic value.
“The speed with which electrons in the system adjusts to situation, that’s your ancillary services, that has value,” he said.
This is where flexible gas plants, battery storage and ancillary services become increasingly important.
A power plant that can rapidly reduce output when solar production is abundant and increase it when renewable production falls may become more useful than a plant designed to operate at nearly the same level throughout the day.
Batteries can perform a similar role by storing electricity when supply is abundant and releasing it when the system needs additional power.
Thomas said Western Australia has already moved toward flexible capacity and batteries as renewable penetration has increased.
The lesson for the Philippines is that renewable capacity and system flexibility have to develop together.
More Solar Could Require a Different Kind of Power Market
This also changes the economics of investing in electricity.
In the early stage of renewable development, investors can focus largely on the cost of building solar farms and selling the electricity they generate.
In Wave Two, the economics become more complicated.
Investors also need to consider curtailment, periods of extremely low electricity prices, storage requirements and the availability of flexible generation.
Thomas noted that storage and other flexibility resources need revenue opportunities that make investment economically viable.
The implication is that the success of the renewable-energy transition will depend partly on whether the electricity market properly rewards resources that provide flexibility.
Simply setting higher renewable-energy targets does not solve that problem.
The Harder Part of the Transition Is Beginning
None of this means the Philippines should slow its development of renewable energy.
Thomas’ argument points in the opposite direction.
If the country wants substantially more solar and other variable renewable generation, the electricity system surrounding those resources must evolve at the same time.
This means greater flexibility from existing generating plants, more responsive ancillary services, better market signals and eventually greater use of battery storage.
The first phase of the energy transition was largely about adding renewable capacity.
The next phase is about making sure the electricity system can handle it.
For the Philippines, the question may therefore no longer be simply how many more megawatts of solar it can build.
The more important question is whether the power system can become flexible enough to use all that solar when it arrives.
