ERC warns of evening ‘flexibility shortage’ in Philippine power grid

MAKATI CITY — The Philippines is facing a growing “flexibility shortage” in its power system during late afternoon and evening hours, the Energy Regulatory Commission said, citing the string of red and yellow alerts that hit parts of Luzon and the Visayas earlier this month.

ERC Chairperson and CEO Francis Saturnino C. Juan said the alerts exposed weaknesses not in overall power supply, but in the country’s ability to respond quickly once solar generation declines after sunset.

He made the remarks May 26 during the third Energy Forum of the Economic Journalists Association of the Philippines, held in Makati under the theme “Beyond the Crisis: Defining the New Era of Philippine Energy.”

“We are not simply facing an afternoon and early evening shortage,” Juan said. “We are facing a flexibility shortage in hours after the sun goes down.”

His comments followed yellow and red alerts raised between May 13 and 15, which triggered manual load dropping in several areas across Luzon and the Visayas. A yellow alert signals thin operating reserves, while a red alert indicates a supply deficiency that can lead to rotational outages.

During that period, prices at the Wholesale Electricity Spot Market — the venue where generators sell power to distributors — repeatedly hit the ceiling, Juan said. Households, hospitals, and small businesses experienced outages and operational disruptions.

“I will not stand here and tell you we performed well in managing that crisis,” Juan said. “I will tell you what the data is telling us and what we, as a regulator, intend to do about it.”

Based on ERC analysis, electricity demand typically peaked at around 2 p.m., coinciding with peak solar generation.

The grid’s problems, however, began emerging between 3 p.m. and 4 p.m., as solar output started declining while household demand continued rising into the evening.

The red alerts and under-generation events observed during the period extended from late afternoon until around midnight, Juan said.

“The trouble begins between 3 and 4 p.m. when solar generation begins to dip,” he said.

Juan said the situation underscored the need for more fast-response and dispatchable resources capable of supplying power during evening peak hours.

“The right tool for a late afternoon to evening flexibility crisis is not new baseload,” he said. “With its fast, flexible, dispatchable response, energy storage, demand response, and peaking plants can be called and dispatched in minutes.”

The distinction matters because baseload plants — typically coal or geothermal — are designed to run steadily and cannot ramp up or down quickly, unlike batteries or peaking plants built to switch on within minutes.

Juan said battery energy storage systems deserve “urgent attention,” noting that the country already experiences periods of solar overgeneration during midday hours.

WESM prices sometimes fall into negative territory because excess solar power cannot be fully used or stored, he said.

“That is, in effect, electricity we are paying to throw away,” Juan said. “If we had the systems to capture even a portion of that midday surplus and dispatch it during the evening peak, none of that energy would be wasted.”

The ERC also plans to revisit reserve market rules, ancillary service procurement, demand response frameworks, and the WESM secondary price cap following the recent alerts, Juan said.

The commission is studying whether reserve requirements should move beyond static reserve margins toward more dynamic, weather-indexed targets.

The ERC is likewise coordinating with the Department of Energy, the National Grid Corporation of the Philippines, generators, and other stakeholders to accelerate procurement of ancillary services and open more opportunities for battery storage, hybrid renewable projects, and aggregated demand response providers.

Juan also noted that Luzon, the Visayas, and Mindanao are becoming increasingly interconnected in terms of operating stress.

Mindanao avoided alerts during the period partly because it still had around 500 megawatts of additional reserves that were unavailable to Luzon and the Visayas, he said.

The ERC is also planning to modernize public-facing information systems through near real-time dashboards showing grid alerts and electricity price conditions.

“We owe the Filipino consumers the truth about that and a credible plan to make sure that the next El Niño does not ride the same headlines,” Juan said.

El Niño, the climate pattern associated with hotter and drier conditions, drives up electricity demand for cooling while reducing the output of hydropower plants — a combination that has strained the grid in past dry seasons.

Opening the forum, EJAP President John Ted Cordero stressed the need to spark dialogue on the country’s energy future amid global uncertainties, particularly tensions in the Middle East and their implications for the Philippine energy sector.

The ERC was also represented by Market Operations Service Director Sharon O. Montañer, who joined a panel discussion on building a more resilient, reliable, and sustainable energy future.

Montañer said achieving energy security must go hand in hand with building a more flexible power system, particularly by ensuring adequate storage capacity and sufficient reserves to support the growing share of renewable energy and meet rising electricity demand.

The panel also included DOE Undersecretary Felix William B. Fuentebella, MGEN Renewables President and CEO Dennis B. Jordan, Prime CoreGen President and CEO Jose Victor Emmanuel A. De Dios, and Jose M. Layug Jr. of DivinaLaw. It was moderated by Philippine STAR Business Editor Iris C. Gonzales.

The forum was held at Frabelle Corporate Plaza in Makati.