Makati City Bakuna

A vital resource of modern reality

"If our current power problems are not solved soon, then the prospect of recovery and the road to a new prosperity looks dim."


Before the pandemic, the Department of Energy and the power industry already warned of tight power supply which according to National Grid Corporation of the Philippines (NGCP) data was already alarming in 2019 with 51 yellow alerts and 15 red alerts. As industries started re-opening, power demand recovered and by May 2021, already surpassed pre-lockdown levels peaking seasonally in the 2nd quarter when power output from hydro-electric plants was at its lowest.

Another aggravating factor is that 70 percent of the power plants in Luzon are at least 16 years old, requiring more frequent maintenance down time. According to the Energy Regulatory Commission’s report during a Senate Committee on Energy meeting, the recent Red Alerts were caused by power plants that were more than 18 years old which were supposed to supply 3,600 Mega Watts (MW) of electricity. Renewable sources on the other hand like hydro, solar and wind, which accounts for about 20 percent of installed capacity are not always available. Although DOE and NGCP data show that there was new power capacity, availability has been 4,000 to 6,700 MW lower than the installed capacity since 2019. This means the actual power generated is far below the optimal capacity of these power plants.

NGCP tracking of the daily power situation from Jan 2019 to May 2021 shows that though the scheduling maintenance of power plants under the Grid Operating and Maintenance Program considers that there should be enough generation capacity, forced outages cannot be anticipated even as we regularly experience this around the summer months. During the Red Alerts from May 31 to June 2, 2021, Luzon unavailable capacity reached 4,452 MW, much worse compared to 3,064 MW from April to June 2019 (NGCP). Tight supply situations expectedly pushed the Wholesale Electricity Spot Market (WESM) prices higher which struck not just in the NCR but also Distribution Utilities (DUs) in other regions.

The DOE is expecting new generation capacity from power projects in Luzon to generate 6,347 MW of new capacity from 2021 to 2025, but this is still not enough to meet the growth in demand, the diminished capacity of old power plants, and the outages due to scheduled maintenance or breakdowns. DOE and NGCP data comparing committed capacity against increasing demand and outage anticipates a 1,753 to 3,141 deficit in 2021. This will further worsen by 2025 to 3,006 to 4,394 MW supply deficit which simply means more power outages.

This scenario is seen by renewable energy (RE) proponents as an opportunity to increase the share of RE technologies in the country’s power and energy balance. Big capital is being poured into new RE projects such as the 115 MW solar power facility of Global Business Power Corporation (GBP) of the Meralco Group of companies now being built in Baras, Rizal and to be implemented by subsidiary PH Renewables Inc. Its operations will be integrated with Meralco PowerGen as a result of the merger and acquisition deal last March.

According to Meralco President Ray C. Espinosa, they will continue to increase the group’s RE capacity to 1,500 MW in the next five years. GBP’s power plants’ total gross capacity is 1,091 MW.

The 120 MW GigaSol Alaminos solar farm of Ayala-led, AC Energy (ACEN) now operating in Zambales is the company’s second solar facility and country’s second largest. The new solar plant will support the power demand of the Luzon grid and supply green electricity to 80,000 homes.

AC Energy President and CEO Eric Francia said in a statement that the plant has already added 183MW of solar capacity to the grid earlier this year and expects to start the operations of the 150 MW Ingrid Power very soon.

However, in the recent Senate Committee on Energy hearing, DOE data showed that 27 power projects have been bogged down by delays and should have been producing 2,045 MW five years ago.

Upon the urging of Senate Committee on Energy Chairman Sen. Sherwin Gatchalian, the DOE is convening a task force to address the looming brownouts. More than short term measures, there should be policy reforms that would ensure adequate and dependable power reserves that will assure continuous power even when there are unplanned outages. More bids under the Competitive Supply Process should be conducted to cover increasing demand. The DOE and ERC should further streamline the approval process of pending supply contracts of DUs and the NGCP. Also, investments in Energy Storage Systems (batteries) for RE plants should be encouraged.

Now that we are transitioning into a more digital economy, having reliable and affordable electricity is a vital resource that literally powers every device or machine needed to support our modern reality. If our current power problems are not solved soon, then the prospect of recovery and the road to a new prosperity looks dim.

Topics: Department of Energy , National Grid Corporation of the Philippines , Energy Regulatory Commission
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