DOE blames NGCP contract delays for Visayas brownouts

ILOILO CITY — The Visayas could have had additional protection against the recurring rotational brownouts months ago had the National Grid Corporation of the Philippines (NGCP) completed its ancillary service contracts on time, the Department of Energy (DOE) said.

The DOE said on Oct. 5 that NGCP failed to complete the required Ancillary Services Procurement Agreements (ASPAs) on time despite directives issued as early as May to secure at least 250 megawatts (MW) of reserves for the Visayas.

ASPAs are contracts between NGCP and a qualified power generator or other facilities for services that keep the electricity grid stable and reliable.

For instance, if a 200 MW power plant suddenly shuts down, the grid loses 200 MW.

An ASPA allows NGCP to call on contracted reserve providers — such as another generator or a battery-storage facility — to quickly supply reserve power or reduce the risk of frequency and voltage instability.

NGCP holds the government franchise to operate the country’s power transmission network and serves as its System Operator, the entity responsible for keeping supply and demand in balance.

A yellow alert is typically raised when contingency reserves fall below the capacity of the largest online power plant, while a red alert signals that supply is insufficient to meet demand and required reserves.

The department said it first directed NGCP on May 22 to execute the contracts following the declaration of a State of National Energy Emergency under Executive Order No. 110.

Further directives were issued on May 27, June 16, June 18, and Aug. 3, primarily in response to the critical power situation in the Visayas.

NGCP’s failure to fully execute and file the required agreements prompted the DOE to issue a Show Cause Order on Aug. 13.

The DOE said the contracting delays also affected electricity prices because the absence of firm ancillary service contracts could increase dependence on the Reserve Market, where prices can surge during periods of tight supply.

“We saw the risk as early as May and directed NGCP to secure the necessary reserves. The batteries were there. The Visayas needed these reserves on the grid months ago. What was missing was timely execution. Delays in contracting left consumers with less protection when generating units unexpectedly went offline,” Energy Secretary Sharon Garin said.

The DOE cited a simulation by the Independent Electricity Market Operator of the Philippines that showed timely delivery of the required reserves could have prevented the yellow and red alerts and helped mitigate high electricity market prices.

The simulation projected that delays in completing and executing the ASPAs could result in at least 10 red alerts and 30 yellow alerts, with electricity market prices averaging above PHP 12 per kilowatt-hour.

The DOE said securing the reserves on time would have provided the Visayas grid with a stronger reserve buffer while reducing consumers’ exposure to volatile reserve-market prices.

An emergency

During a joint congressional hearing on the Visayas power crisis on Oct. 3, NGCP argued that before it can finalize the ancillary service contracts, it needs to know when the facilities will actually be available and connected to the grid.

But Garin pointed out that investors will not necessarily build the facility unless they first have assurance that NGCP will contract or procure their ancillary service capacity.

“NGCP is asking that the plant should already be there. It’s a chicken-and-egg situation. We have been instructing them to proceed because this is an emergency. The normal rules should be overridden because the DOE has already instructed them to proceed,” she said.

Garin said the DOE had been pushing NGCP to execute the contracts as soon as possible because the Visayas urgently needs the reserves.

“If there is anybody at fault, then let them blame me, but this really needs to be done. I am very emotional about this because this is the Visayas. We need those contracts as soon as possible,” she said.

Garin also disclosed that one investor had already constructed an ancillary service facility despite the lack of a contract.

She stressed that the directives to NGCP to secure an affordable and reliable power system remained pending, along with the required connections, testing, commissioning, and completion of the ASPAs.

“As System Operator, NGCP must maintain sufficient reserves to protect the grid. It must also ensure that adequate transmission infrastructure is completed on time so electricity can flow where it is needed,” she said.

Amid the tight power supply in the Visayas, the DOE is facilitating the deployment of 253 MW of ancillary service capacity across the region, including battery energy storage system (BESS) projects in Cebu, Leyte, Negros, Bohol, and Panay.

The battery systems are designed to provide fast-response reserves when generating units unexpectedly trip, allowing the System Operator to stabilize the grid and reduce the risk of supply shortages escalating into yellow or red alerts.

The DOE said it is working with power companies on the deployment, and some facilities are already prepared to support the grid.

Transmission constraints

The DOE has also raised concerns over transmission constraints that limit the transfer of available capacity across the Visayas.

In particular, congestion and security limits on key interconnections have restricted the flow of additional electricity from Luzon to Leyte and from Leyte to Cebu, reducing the grid’s ability to move available power to areas where it is needed.

The agency said it has repeatedly called NGCP’s attention to these constraints and directed it to accelerate critical transmission projects needed to relieve congestion and strengthen transfer capacity in the Visayas.

The DOE has likewise directed NGCP to ensure that the necessary transmission infrastructure is ready to connect critical power generation facilities to the grid, consistent with the results of their respective System Impact Studies.

The department also emphasized the need for the timely implementation of the Transmission Development Plan and the prioritization of infrastructure required to address persistent transmission constraints.

The DOE said it would pursue accountability for failures that have contributed to the recurring power alerts in the Visayas, in coordination with Congress and other government stakeholders.

It said it would continue exercising its regulatory and oversight authority to ensure that directives intended to protect the reliability and security of the country’s power system are acted upon fully and on time.

Continued non-compliance may result in administrative proceedings, penalties, sanctions, and other legal remedies, the DOE said.

“Every part of the power system has a responsibility, and the DOE will work with Congress to hold each accountable,” Garin said.