Forced outages and coal reliance expose Philippine grid to price spikes

Coal at 60% and gas at 15% leave Philippine electricity prices exposed to global fuel swings during summer demand peaks.

The Philippines has enough projected power supply for the second quarter of 2026, but forced outages of 700 to 800 megawatts are exposing reserve fragility and raising the risk of price spikes and brownouts.

Jephraim Manansala, Chief Data Scientist at the Institute for Climate and Sustainable Cities, said the issue is not a lack of megawatts but the system’s dependence on inflexible baseload plants. He said about 66% of dependable bulk capacity is tied to plants designed to run at constant levels, even though the grid now needs flexible supply during afternoon and evening peaks.

“We have too much rigid baseload, limited system flexibility, and market signals that fail to properly reward the flexible capacity that can respond to the grid under stress,” Manansala said.

Maria Theresa Capellan, Chairperson at the Philippines Solar and Storage Energy Alliance, said summer cooling demand pushes reserves to thin levels, especially from February to May when temperatures rise. Gerard Arances, Executive Director at the Center for Energy, Ecology, and Development, said repeated unplanned shutdowns by coal and gas plants have worsened red and yellow alert risks.

Fuel exposure adds another weakness. Manansala said coal accounts for about 60% of generation, whilst gas contributes around 10% to 15%, leaving electricity prices exposed to global fuel swings. Arances said utilities dependent on the spot market pass higher costs to consumers during supply stress.

Capellan said summer reserves still rely heavily on diesel-run plants, whilst hydro output weakens. Solar with storage could extend clean supply into the evening, but current rules limit wider use of that configuration.

The proposed fixes include enforcing the coal moratorium, expanding renewable energy, modernising the grid, contracting more reserves during summer and raising penalties for unplanned shutdowns.

For the Philippines, the test is whether it can add flexible capacity and reduce fuel exposure before reserve shortages become a recurring cost shock for consumers.