WESM power prices drop 26% in first half of 2025

Electricity prices in the Wholesale Electricity Spot Market (WESM) fell by 26% in the first half of 2025, driven by a surge in renewable energy capacity and expanded transmission infrastructure.

From an average of PHP5.58 per kilowatt-hour (kWh) in the same period last year, prices dropped to PHP4.14/kWh, the lowest level since 2020, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

“To understand why prices are lower in the WESM, at least for the first half of the year, we need to appreciate the contribution of each segment in the electric power industry value chain,” said Atty. Richard J. Nethercott, IEMOP president and CEO.

“The lower prices in the market is the result of improved efficiency in the entire industry value chain. It is a product of the collaborative efforts of all sectors, public and private,” he added.

IEMOP credited the price reduction to wider supply margins, over 1,000 megawatts of new renewable energy (RE) capacity, and major grid expansions that reduced transmission bottlenecks.

System-wide average supply margin reached 6,916 MW in the first half of 2025, up from 5,626 MW in the same period last year, reflecting increased generation from natural gas and new RE facilities.

The Department of Energy (DOE) also played a key role through a series of structural reforms and policy support aligned with President Ferdinand R. Marcos Jr.’s directive to reduce electricity costs.

Among these are the Green Energy Auction Program (GEAP), competitive power procurement rules, and incentives for demand-side energy management and grid development.

According to IEMOP simulations, successful implementation of GEAP rounds 1 to 5 could lower average electricity prices in Luzon to PHP3.36/kWh by 2029, from PHP4.95/kWh in 2025—representing a potential reduction of PHP1.32/kWh.

The full commercial launch of the Renewable Energy Market (REM) in December 2024 and the liberalization of foreign equity for RE projects further fueled investments in cleaner and cheaper power sources.

“The private sector responded by maximizing output from available generation assets, especially from RE and natural gas,” Nethercott said.

Grid projects such as the Mindanao–Visayas Interconnection Project (MVIP), Cebu–Bohol Interconnection, and the Hermosa–San Jose 500kV transmission line significantly eased regional congestion and improved access to affordable power.

Distribution utilities and retail suppliers adjusted their strategies to take advantage of WESM’s lower prices, contributing to a more competitive energy landscape.

Retail market participation also rose, aided by programs like the Green Energy Option Program (GEOP), Retail Aggregation Program (RAP), and Retail Competition and Open Access (RCOA), with the retail market share reaching 22.26% as of June 2025.

“Lowering electricity prices is an industry concern requiring an industry-wide collaborative response,” Nethercott said.

“The problem cuts across every link in the industry value chain as the industry operates under a system of pass-on charging. And as shown by market results in the last six months, a collective effort of all stakeholders can indeed lower market prices.”