Decentralized power could fix Visayas grid crisis, think tank says

By Joseph Bernard A. Marzan

MANILA — A Quezon City-based think tank on Tuesday, Sept. 15, suggested that a more “diversified, decentralized, and flexible power system” may be the key to responding to persistent grid alerts and high spot market prices.

In its analysis, the Institute for Climate and Sustainable Cities (ICSC) said the recurring grid alerts and high Wholesale Electricity Spot Market prices have exposed the risks of relying heavily on centralized coal-fired power plants.

The ICSC said forced outages at major coal plants have contributed to recurring yellow and red alerts in the Visayas.

Its analysis noted that coal accounted for about 60% of the Philippines’ electricity generation.

In the Visayas, several coal-fired generating units have experienced notable shutdowns in recent months.

Therma Visayas Inc. Unit 1, with a capacity of 150 megawatts (MW), had been offline for 125 days since May 3 and was expected to return on Sept. 15.

Its 150-MW Unit 2 had been offline for six days since Sept. 9, following a previous 161-day outage from March 24 to Aug. 31. The unit had no indicative return date as of the analysis.

Panay Energy Development Corp. Unit 3, also rated at 150 MW, had been offline for 16 days since Aug. 29. Its previous target return date of Oct. 3 had been pushed to the end of October.

Cebu Energy Development Corp. Unit 1, with an 82-MW capacity, was offline for 42 days from July 24 to Sept. 3.

The ICSC said the large capacity of individual coal units means an unplanned outage can deliver a significant shock to the power system.

“When multiple units suffer simultaneous outages, the loss of capacity compounds rapidly, triggering widespread grid instability and driving up market prices,” the ICSC said in its analysis.

The Visayas had recorded 134 yellow or red alert days in 2026 as of Sept. 14, including 94 yellow alerts and 40 red alerts.

These alerts are issued by the country’s sole grid operator, the National Grid Corporation of the Philippines.

Yellow alerts are issued when power reserves are wearing thin and may worsen, while red alerts mean the existing supply can no longer meet demand.

The ICSC said unplanned and extended coal plant outages are the primary driver of the frequent grid alerts, particularly during peak demand periods when the system has less capacity to absorb the loss of a large generating unit.

Power sharing between grids also cannot fully address the shortfalls when neighboring systems face similar constraints, the institute said.

The Visayas grid is linked to Luzon through the Leyte-Luzon interconnection and to Mindanao through the Mindanao-Visayas Interconnection Project, which was energized in 2023.

Rather than adding more inflexible baseload plants, the ICSC called for greater use of flexible generation that can respond quickly when demand rises.

“Deploying distributed renewable energy paired with battery storage can address this need for flexibility,” the analysis said.

Rooftop solar can serve local demand during the day, while batteries can provide fast-responding power during peak hours.

Locating generation and storage closer to consumers can also help cushion the grid from the impact of large generating-unit outages.

The ICSC stressed that these technologies are not intended to replace large generators or transmission infrastructure. Instead, they can provide an additional layer of resilience around existing power assets.

The institute described accelerated deployment of distributed renewable energy and battery storage as an immediate opportunity to help protect consumers from future service interruptions and economic losses.

The ICSC also welcomed plans for battery energy storage facilities in the Visayas, citing simulations by the Department of Energy (DOE) that indicate the deployment of 200 MW of battery storage could cut the occurrence of yellow and red alerts by half.

“Battery energy storage systems should not be treated merely as a short-term fix to the unfolding power crisis in Visayas—they are the core solution on both the short and long-term,” said Alberto Dalusung III, ICSC’s energy transition adviser.

“When paired with renewable energy, battery storage directly bridges the critical supply gap without waiting years for new generation and transmission projects to be built. We can act now because these technologies can be deployed rapidly to meet our immediate energy needs,” Dalusung added.

The analysis comes as the DOE evaluates 3,000 to 5,000 MW of unbuilt, moratorium-exempt coal capacity under its developing transition policy.

The DOE imposed a moratorium on new greenfield coal-fired power projects in October 2020, but projects that had already secured endorsements or were in advanced stages of development were exempted.

The institute said these large thermal facilities would require years of development, extensive transmission buildouts, and significant continuing fuel and maintenance costs.

Such projects, it added, cannot be built quickly enough to address current outages, while adding more capacity from the same source could further reinforce the country’s dependence on centralized coal generation.

The rising number of grid alerts underscores the need for faster solutions, the ICSC said, particularly as capacity shortfalls are concentrated during afternoon and evening peak periods.

“Traditional baseload additions will arrive too late and will cost too much,” the analysis said.

The ICSC said accelerating distributed generation paired with battery storage, while complementing existing thermal assets, provides the fastest and most practical response to the Visayas’ current power grid challenges.