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Meralco PowerGen Corp. (MGen) is preparing to launch one of its most ambitious projects in recent years, marking a significant step in how the Philippines plans to meet surging electricity demand in the Visayas. The company is setting its sights on breaking ground within the first quarter of 2026 for a 73-megawatt (MW) coal-fired facility in Toledo, Cebu, a move that underscores both the opportunities and complexities shaping the country’s power sector.
At the center of the push is a sizable investment commitment. MGen President Emmanuel Rubio confirmed that roughly ₱1 billion will be allocated this year as part of the company’s capital expenditure program, with the Toledo project accounting for the lion’s share.
“Most of the capex would be for Toledo, which we expect to break ground by the first quarter,” Rubio said. The full cost of the project is estimated at around $150 million, or close to ₱8.8 billion, spread over the multiyear construction period.
Once completed, the Toledo plant is expected to be operational by October 2028. Its capacity will be contracted to MGen’s retail electricity supply arm, MGen RES, ensuring a ready market for the power it will generate.
Building under a shifting coal policy
The project’s timing is notable. In recent years, the Philippine government has sought to curb new coal developments through a moratorium. However, the Toledo facility secured confirmation from the Department of Energy (DOE) that it is exempt from this policy, effectively allowing construction to proceed.
Projects that were already substantially advanced and had secured key local and regional approvals were not covered. This carve-out also enabled MGen to obtain clearance for its much larger 1,200-MW Atimonan coal project in Quezon province, although that plant carries a condition that coal must no longer be used as a fuel by 2050.
While coal continues to underpin the Philippine grid today, companies are being nudged to prepare for alternative fuels. Rubio said MGen is assessing ammonia as a possible replacement fuel in the future. Should a viable substitute fail to materialize, he acknowledged the company may be forced to close the Atimonan plant by 2050.
For Toledo, the immediate focus is on execution. MGen has already attracted proposals from Chinese firms to handle the engineering, procurement, and construction work for the project, clearing another major hurdle toward full-scale development.
(Also read: Iloilo Shines as a Renewable Energy Trailblazer)
Strengthening the grid with storage and solar
Alongside the coal facility, MGen is rolling out complementary projects in the same area, aimed at shoring up the reliability of the Visayas grid. Through its subsidiary Toledo Energy Development Corp., the company is building a battery energy storage system (BESS) with a planned capacity of 49 MW.
Engineering, procurement, and construction contracts have been signed with Contemporary Amperex Technology Co. Limited (CATL) and SUMEC Complete Equipment and Engineering Co. Ltd., both from China. The first phase — 25 MW or 40 megawatt-hours — is scheduled for completion in the first quarter of 2026, with the remaining capacity coming online in 2027. Valued at around ₱700 million, the battery project is designed to improve grid stability, particularly during peak demand periods and intermittent supply conditions.
Beyond Cebu, MGen is also stepping into solar power. The company recently announced its first photovoltaic project in Iloilo in partnership with Saudi Arabia-based ACWA Power.
“We are looking at land in Concepcion, Iloilo. That’s our first project with them,” explained Rubio. “They’re also eyeing land on their own. The first project with them is solar in Iloilo. We already signed a contract to sell around 120 hectares.”
Together, these projects highlight a dual-track strategy: reinforcing conventional baseload capacity while gradually expanding into renewables and storage technologies.
(Also read: NGCP Takes Charge: Stabilizing Aklan’s Power Transmission)
Coal demand remains strong
MGen’s continued investment in coal is unfolding against a broader regional trend. According to the International Energy Agency (IEA), the Philippines is set to remain one of Southeast Asia’s largest coal consumers through 2030, despite accelerating efforts to diversify the energy mix.
The IEA projects that the country’s coal demand will rise by 15% to 54 million tons by the end of the decade, up from an estimated 47 million tons in 2025. The increase is being driven by sustained economic and population growth, coupled with a forecast 27% jump in electricity demand.
“While renewable deployment accelerates, coal-fired generation continues to provide baseload supply,” the IEA stated.
DOE data shows coal still contributes about 63% of the country’s power generation, dwarfing the 22% share of renewable energy. Think tank Ember has even described the Philippines as having the most coal-dependent grid in Southeast Asia.
This dependence carries supply risks. Nearly 98% of the country’s coal is imported, mainly from Indonesia. On the domestic front, Semirara Mining and Power Corp. is likely to keep output steady at about 15 million tons annually through 2030, accounting for almost all local production.
Across ASEAN, coal consumption is forecast to continue climbing, reaching close to 643 million tons by 2030.
Sources:
https://businessmirror.com.ph/2026/01/02/mgen-aims-to-start-building-cebu-coal-power-plant-in-q1
https://www.philstar.com/business/2026/01/02/2498134/mgen-spending-p88-billion-cebu-coal-project
https://www.philstar.com/business/2026/01/02/2498140/philippines-coal-demand-seen-growing-15-2030