Visayas power alerts test whether grid can keep up with growth

CEBU, Philippines — The Visayas is becoming a test of whether the Philippines can build an electricity system capable of supporting economic growth, as Cebu businesses demand more reliable and competitively priced power while the government pursues a mix of new generation, renewables, battery storage and transmission investment.

The pressure was emphasized on Tuesday when the Visayas grid entered red and yellow alerts after a 140-megawatt supply deficit emerged during peak hours.

The National Grid Corp. of the Philippines said available capacity stood at 2,352MW against projected peak demand of 2,492MW. A red alert was declared from 5pm to 7pm, with yellow alerts from 3pm to 5pm and again from 7pm to 8pm.

The immediate problem was the unavailability of several large coal-fired plants — TVI 1, TVI 2 and PEDC 3 — combined with limited electricity imports from Mindanao.

Twelve power plants were on forced outage and another 15 were operating below capacity, leaving 962.9MW of generation unavailable, according to NGCP.

The situation had improved from Monday, when the grid faced a 309MW shortfall, with 2,153MW of available capacity against peak demand of 2,462MW.

For Cebu’s business community, however, the latest alerts are less a temporary supply problem than evidence of a structural weakness in the region’s power system.

“The business sector cannot build a more competitive Cebu economy on an unreliable power supply,” said Regan King, president of the Cebu Chamber of Commerce and Industry (CCCI).

The chamber is pressing the government, regulators, utilities and generators to coordinate investment across the electricity supply chain, arguing that businesses and workers should not have to absorb the costs of a system they did not design.

“MSMEs and the workers and families who depend on them cannot afford to simply absorb the cost of a problem they did not create,” King said.

The stakes are unusually high for Central Visayas. The region produced about P1.32tn in economic output in 2025, making it the country’s largest regional economy outside Metro Manila, while recording growth of 3.7 percent.

Yet the region is confronting an electricity system in which shortages can quickly translate into higher and more volatile costs for companies.

The issue is not simply the headline electricity tariff. Unpredictability can be equally damaging for manufacturers and other power-intensive businesses, making it harder to manage production costs, protect margins and commit capital to expansion.

Investment is moving — but so is demand

There is no shortage of investment in the Visayas power system.

AboitizPower has installed a 60MW battery energy storage system in Naga City, Cebu, while Meralco PowerGen has energised the first phase of its Toledo battery storage project.

Renewable energy (RE) investment is also expanding. Department of Energy data cited by the Philippine Information Agency showed 2,179.47MW of committed renewable-energy capacity in the Visayas as of May, covering biomass, geothermal, hydropower, solar and wind. Committed energy-storage capacity stood at 419.9MW.

Transmission investment is advancing alongside those projects. NGCP is developing the Cebu-Lapu-Lapu 230-kilovolt transmission line and Lapu-Lapu substation to support rising demand in Metro Cebu and Mactan Island and accommodate additional renewable generation.

But the experience of recent weeks illustrates the limits of simply adding more nameplate capacity.

A power system can have more generating capacity on paper without having enough dependable electricity available when consumers need it. Forced outages, maintenance, deratings and fluctuations in renewable generation can rapidly erode the margin between supply and demand.

That makes the question of resource adequacy increasingly important for Cebu and the wider Visayas.

The region needs enough dependable generation, storage and transmission capacity not only to meet normal demand but also to withstand the loss of major generating units.

Efficiency matters as much as capacity

The debate is also moving downstream, towards the efficiency of the networks that deliver electricity to consumers.

Electricity prices have come under scrutiny over system-loss charges, amid proposals to amend the Electric Power Industry Reform Act and remove such charges from consumer bills.

Energy Secretary Sharon Garin has argued that consumer protection must be balanced against the reliability and long-term financial sustainability of the power sector.

The Department of Energy (DOE)  has established a task force with the Energy Regulatory Commission, National Electrification Administration and electric cooperatives to examine the possible removal of system-loss charges and the associated value-added tax.

But changing who pays for system losses would not, by itself, eliminate the physical losses.

Those require investment in transmission and distribution lines, substations, transformers, metering and network management.

That distinction is important for Cebu businesses. Lowering the amount shown on a power bill may provide relief, but it does not make electricity more reliable.

The region therefore faces a more complicated investment challenge: it must add generation while ensuring that the grid can transport and distribute that electricity efficiently to the factories, offices, commercial centers and households driving demand.

The combination of renewable energy and battery storage could help make the system more flexible, particularly as solar and other intermittent sources account for a larger share of the generation mix.

But batteries and renewables cannot eliminate the need for dependable capacity. Nor can transmission investment substitute for electricity that has not been generated.

The challenge is to make the different pieces of the system work together.

For Cebu, that means coordinating generation additions with transmission projects, ensuring distribution networks can accommodate changing patterns of supply and demand, and maintaining enough reserve capacity to prevent an isolated plant outage from becoming a regional shortage.

A test of the investment case

The consequences extend beyond the power industry.

Cebu has positioned itself as one of the Philippines’ principal centers for manufacturing, tourism, services and trade. Its ability to attract new capital depends partly on whether investors can regard electricity as a predictable operating cost rather than an infrastructure risk.

For a factory, an interruption can mean idle workers, lost production and disrupted deliveries. For retailers and service companies, it can mean lost sales. For businesses running generators during outages, it means higher fuel and maintenance expenses.

Solar panels, batteries and other distributed energy resources can provide companies with a degree of protection. But such investments are, in many cases, a response to an unreliable grid rather than a substitute for one.

That creates an uncomfortable paradox.

Businesses are being encouraged to invest in their own energy resilience at the same time that the region needs a stronger common electricity system to support the next wave of economic growth.

The Philippines’ energy strategy will therefore be judged not merely by how many megawatts are added to the system, but by whether those megawatts can be delivered at the right time, at a predictable cost and with enough reserve to withstand the next outage.

For Cebu, that is becoming an increasingly urgent test.

A growing economy can accommodate higher electricity demand. What it cannot easily accommodate is uncertainty over whether the electricity will be available when it needs it.

The success of the Visayas’ energy transition will ultimately be measured not at the power plant but at the factory, office and shop floor — where the reliability of the grid becomes a direct determinant of investment, productivity and jobs. — (FREEMAN)