Grid congestion drives up Panay, Negros power costs

By Joseph Bernard A. Marzan

Grid congestion and weak interisland transmission links continue to raise power costs in Western Visayas, with Panay and Negros among the Visayas areas where the system is signaling the need for more generation and stronger grid capacity, according to Singapore-based Aurora Energy Research.

Patrick Tan of Aurora Energy Research said the Visayas grid remains vulnerable because electricity supply must move across islands through submarine cables, which are costly and difficult to expand.

“When you go to places like Visayas, the problem is [that] it’s made up of five major islands, and the islands are only connected by subsea cables. And subsea cables are expensive. It’s not easy to build,” Tan told Daily Guardian.

Data compiled by Aurora as of May 2026 indicated that the Visayas tends to post higher locational marginal prices, because congestion from low-capacity submarine cables forces the dispatch of more expensive local generation within the islands.

In July 2024, network congestion led to nodal price outcomes that were 42% higher than the regional average for some Visayas nodes.

The nodal price outcomes are based on market trading nodes of the Independent Electricity Market Operator of the Philippines (IEMOP), which runs the country’s Wholesale Electricity Spot Market (WESM).

At the 08NABAS node in Panay, the July 2024 dispatch price was PHP 13.76 per kilowatt-hour (kWh), compared with a weighted average Visayas regional price of PHP 8.03 per kWh.

Several Western Visayas nodes ranked among the most congested in 2024, including 08NABAS at PHP 9.20 per kWh with 12.9% congestion when dispatched.

The 08DINGLE node was at PHP 8.90 per kWh with 12.9% congestion, 08BVISTA at PHP 8.90 per kWh with 12.5% congestion, 08ILOILO1 at PHP 8.70 per kWh with 12.5% congestion, 06BACOLOD at PHP 8.20 per kWh with 7.2% congestion, and 06KBANBESS at PHP 8.10 per kWh with 7.1% congestion.

Tan said the issue is not only the amount of power generated but whether electricity can reach demand centers such as Cebu and Panay when lines are congested.

“The power, even though it’s generating in other islands, it cannot get transmitted to where the demand center is. And that’s where you get the issues on congestion, power outages,” Tan said.

Tan said the Visayas is the region to watch because its grid is “not robust.”

He added that the Visayas’ frequent yellow and red alerts are often issued by the National Grid Corporation of the Philippines (NGCP) because of those constraints.

“Any plant that goes offline can have a very big impact on the Visayas grid, because it’s not robust enough for it to optimize,” he said.

“So I would say that’s why you always hear yellow alert, red alert in the Visayas region. There’s always the place where you will see this count alert,” he added.

Recent grid advisories have continued to reflect that pressure.

The NGCP on Monday, June 29, issued another yellow alert on the Visayas grid as of 8:30 a.m., scheduled for 6 p.m. to 7 p.m., with available capacity at 2,751 megawatts (MW) against peak demand of about 2,405 MW.

NGCP cited the unavailability of coal plants TVI 1, TVI 2, and PEDC 3.

It also reported forced outages on several plants, including 13 on forced outage since June, eight since May, one since March, three since 2025, two each since 2024 and 2023, and one since 2021.

Sixteen plants are also operating at derated capacity, with a total of 963.4 MW unavailable to the grid.

Tan said congestion can force Panay to rely on diesel generation when cheaper power from another island cannot reach the load center.

“You have to turn on your diesel generator on Panay to meet the demand so that you can keep the lights on. So if you turn on diesel, what’s going to happen? Diesel is the most expensive generator in the mix,” Tan said.

Aurora’s data also linked past Panay price separation to generation outages and transmission limits.

It said the 08PEDC coal plant reduced output by about 130 MW in early 2024, requiring more imports from Negros while Panay demand held steady.

The 138-kilovolt (kV) Barotac-Dingle lines were constrained for 42% of intervals on July 1, 2024, causing significant price separation between 08BAROTAC, 08DINGLE, and the broader Panay region.

The removal of the N-1 contingency for the Barotac-Dingle lines on Sept. 9, 2024, and the energization of a third line on April 4, 2025, helped ease the constraint and normalize prices.

For investors, however, Tan said Negros and Panay are attractive near-term locations because prices remain relatively high amid congestion, and recent submarine cable upgrades allow more power to be drawn into Cebu.

“[In] Negros and Panay Islands, the prices are fairly high because of congestion. It needs more generation to be built in [these] islands,” Tan said.

Tan said investors should also look beyond near-term signals because congestion patterns can shift as new grid upgrades are completed.

“If you’re asking me today where people should look at, Negros [and] Panay [are] good [locations], but if your pipeline is looking five years, 10 years forward, definitely look at Samar and Leyte,” he said.

Aurora’s data indicated that most renewable connection sites in Negros and Panay are forecast to experience less than 5% curtailment, although some locations carry a higher risk.

It also showed that curtailment risk is expected to increase as more Green Energy Auction capacity is commissioned in the region, raising congestion on transmission corridors to Cebu.

It identified future grid projects that could reduce curtailment risk for renewables, including the 230-kV Panay-Guimaras-Negros line in 2035, Cebu-Negros Lines 3 and 4 in 2038, and the 230-kV Bulalacao-Buruanga interconnection in 2041.

The Philippine power market offers about 21 gigawatts (GW) of renewable investment opportunities and about 8 GW of flexible storage opportunities over the next decade.

Tan said developers should use nodal prices and grid connectivity as key indicators in deciding where to build.

He said nodal pricing is intended to direct investment to areas where new capacity can add value to the grid and consumers.

“[In] the Philippines, I’ll say the most important thing is grid connectivity and the nodal price. This is the most, I’ll say the two most important metrics ever,” Tan said.

“Go to the place where the system needs you so that it can yield good returns for your projects. At the same time, you’re building what the system needs,” he added.