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Pumped-storage hydro power makes a splash as nation’s tycoons race to seize mega asset

Jay Hilotin (Senior Assistant Editor) | Gulf News | March 30, 2025 07:31

ENERGY BARONS (clockwise, from top left): Filipino tycoons Isidro Consunji (Semirara Mining and Power); Enrique Razon (Prime Infrastructure); Jaime Augusto Zobel de Ayala (Giga ACE); Manny V. Pangilinan (Meralco PowerGen), Ramon S. Ang (San Miguel Global Power), and Sabin Aboitiz (Aboitiz Renewables) are some of the major players who have taken interest in CBK pumped-storage hydropower facility, due for a new private concession in 2026. Bloomberg | SMC | Aboitiz Power | Meralco | ACEN | FB

Manila: A quiet revolution is churning in the Philippines. It’s fuelled by water.

Long overlooked as an energy powerhouse, the country is now making waves with pumped-storage hydroelectric power (PSHP), drawing in billions from some of its wealthiest clans.

Energy gold rush

At the heart of this energy gold rush is the 797-megawatt Caliraya-Botocan-Kalayaan (CBK) hydropower complex in Laguna.

The system, first energised in 1983, is South-east Asia’s oldest such facility. It has two giant “penstocks”.

These mighty 6m-wide penstocks (floodgate for regulating water flow) run 1,300 metres downstream, from Caliraya Lake in Quezon, to Laguna Bay.

The bay, which adjoins Manila, is a 911.7-km² lake, the Asian nation’s biggest freshwater source (with an area bigger than Singapore).

The penstocks, anchored by six concrete blocks at slope changes and supported by saddles, form a duo carrying a massive gush of water that drives power turbines below.

This 42-year-old facility is a silent, clean and renewable electricity generator.

Comparison to Bataan Nuclear Power Plant

At least four more giant PSHP plants are in the works, harnessing its abundant water resources, and using the latest engineering techniques for flood control.

One, the Pakil Pumped Storage Hydroelectric Power Project, is designed to match the capacity of two Bataan Nuclear Power Plants (BNPP).

Construction of the mothballed Westinghouse-built BNPP, located 100km west of Manila, started in 1976, funded by a loan.

BNPP had a claimed capacity of 621 MW, but went into cost overruns that eventually ballooned to a $2.3-billion hit on Filipino taxpayers (from the original $644 million loan, and $500-million Westinghouse bid in 1974).

The loan, provided by the US Eximbank, was guaranteed by Manila and paid in full April 2007. While completed in 1984, it was never energised due to safety concerns, alleged corruption and a US court case that was later settled for about $100 million.

BNPP was the Philippines’ only attempt at building a nuclear power plant.

In 2021, the Philippine Supreme Court ordered Herminio Disini, a crony of former President Ferdinand Marcos Sr, to pay back Manila over Php1 billion in damages, affirming a 2012 Sandiganbayan (anti-graft court) decision. The Office of the Soliticor General also ruled that Marcos Sr’s estate return Php22.2 billion to the government for his conspiracy with Disini to defraud the government.

In August 2023, the Supreme Court reduced from Php1 billion to Php100 million the “temperate damages” that the Disini estate must pay for brokering the 1974 deal behind BNPP.

BNPP stands as a somber reminder of the nation’s unrealised vision for energy security and good governance.

Win, win, win, win

This time, it’s the private concessionaires leading the charge.

The government’s role: No longer providing direct funding, rather it acts as a regulator, ensuring a level playing field for investors and consumers alike.

The potential result is a “win-win-win-win”.

That is: harnessing free-flowing water (that otherwise cause misery when they overflow), boosting renewables, enhancing energy security, harnessing engineering solutions and (potentially) cutting power rates.

This new generation of era-defining PSHP plants could help flip the narrative.

It looks complex; it entails huge upfront investments. Yet it’s so elegant that they’re doing PSHS even in the desert (Dubai is expected to energise the Hatta PSHP next month).

How much does it cost?

The US National Renewable Energy Laboratory (NREL) has an open-source, bottom-up cost model tool for PSHS. It estimates how much new projects might cost — based on specific site specifications like geography, terrain, construction materials, and more.

The tool, too, integrates data from users — including assumptions about PSH reservoir, dam, and conveyance characteristics — along with other design decisions, like reservoir volume and assumptions about indirect costs, like relocation.

This helps even engineering students simplify building a cost estimate for individual pumped-storage hydro projects.

Pakil PSHP (also known as Ahunan PSHP, in Laguna province), rated at 1,400 MW (project cost: $5.03 billion, or about Php296 billion), alongside the $2.57 billion (Php147 billion) Wawa PSHP in Rizal province, with a rated capacity of 600 MW, are due both in 2030.

They are set to become two of the Asian nation’s most significant power facilities, as per the Department of Energy (DoE).

Avoiding kickbacks

Such large-scale projects are up for grabs through what is known as a “public-private partnership” (PPP) scheme, in which the taxpayers pay zero for their construction.

This not only avoids kickbacks, but also generates upfront revenue to fund other priorities.

The government-run Power Sector Assets and Liabilities Management Corp. (PSALM) recently held a pre-proposal conference, and the room was packed with heavyweights.

Nine major entities — both local conglomerates and foreign firms — are vying for control of the country’s only operating pumped-storage facility.

Among the contenders are industry titans: Ayala-led Giga Ace 11 Inc., First Gen Prime Energy of the Lopez Group, San Miguel Global Power under tycoon Ramon Ang, Semirara Mining and Power of the Consunji family, and Enrique Razon Jr.’s Prime Infrastructure Capital Inc.

The foreign interest is just as formidable: Tokyo-based Marubeni Corp., Korea Water Resources Corp., and I Squared Capital-backed Hexa Philippines Holdings Inc. have also thrown their hats in the ring.

The Thunder Consortium — a powerhouse alliance of Aboitiz Renewables Inc., Japan’s J-Power, and Sumitomo Corp. — is also making a strong bid.

Why the frenzy?

The Philippines, long a laggard in power investments, has finally gotten its act together, starting with crucial legislative reforms.

With at least 421 rivers crisscrossing the country — and countless mountain streams swelling in the rainy season — there’s no shortage of hydropower potential.

Now, the focus is on unlocking this “free” energy by harnessing waterways with cutting-edge turbines to generate gigawatt-hours of electricity.

The CBK privatisation, which was supposed to happen last year, hit a roadblock when the government scrapped the initial auction to reassess its assets.

PSALM aims to generate up to Php100 billion ($2 billion) — funds that will help plug the country’s budget deficit.

As the June 16 bid submission deadline looms, the competition is heating up.

The pre-proposal conference gave interested biddersan overview of the project, documentary requirements, the bidding process and the agreements involved in the CBK concession.

Post June 16, the winner will inherit CBK’s facilities in Lumban, Majayjay, and Kalayaan, but they’ll have to take them “as is, where is.”

That means embracing the risks and rewards of an asset whose 25-year build-rehabilitate-operate-transfer (BROT) contract expires in 2026.

With private-sector giants betting big on pumped hydro, the Philippines is no longer just dipping its toes in the renewable energy pool — it’s diving in headfirst.

Push for hydropower

Why the renewed push for pumped storage hydro-electric power?

First, it forms part of man’s aim to master nature. In practical terms, there’s been a rise in data centre, domestic (especially for cooling), and industrial electricity demand, given the expected spike in manufacturing.

In 2023, electricity consumption in the Philippines reached approximately 118,000 gigawatt-hours. But coal remained the dominant source of power generation (about 60%).

Year after year, electricity consumption has trended upward: The residential sector consumed around 37,000 gigawatt-hours (GWh), while the industrial sector used approximately 29,500 GWh in 2023.

In 2020, the highly-mineralised Asian country reported an impressive 2.37 billion metric tons of coal resource potential.

But it is also rich in breathtaking waterfalls.

Pumped-storage hydro projects

The Philippines is actively developing its pumped hydroelectric power generation capacity through several key initiatives:

1. Caliraya-Botocan-Kalayaan (CBK): Established in 1983, also known as the Kalayaan Pumped Storage Power Plant (KPSPP), is the first of its kind in Southeast Asia and remains the only operational pumped storage facility in the Philippines. Located in Laguna, it currently has a capacity of 797 MW.
2. Pakil Pumped Storage Hydroelectric Power Project: This upcoming project in Laguna is set to become one of Asia’s largest pumped storage hydroelectric power facilities, boasting a capacity of 14,000 MWh per day and a generating output of 1,400 MW. It is scheduled to commence operations by 2030, as per the Mace Group.
3. Wawa Pumped Storage Hydroelectric Power Project: Targetted for commercial operations by 2029, this project will have a storage capacity of 6,000 MWh per day and a generating output capacity of 600 MW.
4. Aklan Pumped-Storage Hydro Power Plant Project: Developed by Strategic Power Development Corp. (SPDC), this proposed 300 MW project aims to enhance the country’s renewable energy infrastructure, as per the Global Energy Monitor.
5. Seawater-Based Pumped-Storage Hydropower Plant: Repower Energy Development Corp. (REDC) is pioneering the construction of a 320 MW pumped-storage hydropower plant in Real, Quezon province, utilising seawater — also a first in the Philippines.

How it works

Scaling up pumped-storage hydroelectric power systems, alongside wind, solar and batteries (SWB), could boost the country’s energy equation away from coal, enhance the grid and the reliability of electricity.

More importantly, PSHP could cut the need to build costly diesel or coal “peaker” plants, or even nuclear power plants, whose downsides are well known.

Water power

Given the updated PPP rules in the Philippines, renewed interest shown in pumped-storage hydropower generation could only ramp up green power here.

Critical challenges still need strategic solutions:

The Asian nation, endowed with hundreds of rivers and water falls, is beset by floods due to uncontrolled (and hugely underutilised) water resources.

By using a improved engineering solutions, green power generation could help meet growing demand from its young population of more than 120 million people.

Game-changer

If built well, these projects could energise the nation for decades to come, like the CBK itself.

Think of pumped storage hydropower as the ultimate power bank — only way bigger and wetter.

These plants store energy for rainy (or windless, sunless) days, making them the most advanced grid storage solution out there. Some experts even believe they could be the perfect fix for the Philippines’ nuclear dilemma (i.e. no need for expensive, controvesial nuclear fission-based power plants).

Could pumped storage hydroelectric system be the country’s next big energy game-changer?

Source: Gulf News