Institute for Climate and Sustainable Cities
PRESS RELEASE

QUEZON CITY, 01 June 2026 –– The Institute for Climate and Sustainable Cities (ICSC) emphasized that recurring grid alerts and sustained high prices in the Wholesale Electricity Spot Market (WESM) point to a fundamental gap in the Philippine power system: the lack of flexible generation capacity.

Throughout May 2026, grid alerts have been repeatedly raised across Luzon and the Visayas, with multiple instances of yellow and red alerts declared due to thin operating reserves. These alerts have, at times, necessitated rotational blackouts in multiple areas across the country to keep the system stable. During the same period, WESM prices surged sharply, reaching as high as PHP 32/kWh during peak hours, reflecting tight supply conditions. These developments have prompted renewed calls to accelerate investments on generating capacity at the country’s power sector.

However, the more critical question is not simply how much capacity to build—but what kind of power generating capacity the country actually needs. The evidence increasingly points to one answer: flexible capacity.

“We need to look at the time when these problems are occurring,” said Engr. Jephraim Manansala, Chief Data Scientist of ICSC. “Grid alerts and WESM price spikes are not happening throughout the day—they are concentrated within specific hours. This indicates that the issue is not a lack of overall capacity, but a lack of capacity that can respond at the right time.” 

Data from recent weeks show that grid alerts are typically raised between late afternoon and evening—around 4:00 PM to 10:00 PM, and in some cases extending to midnight. WESM price spikes follow a similar pattern, occurring in the same hours when demand remains high and available supply tightens. Taken together, these trends point to recurring periods of system stress, where the grid operates with thin reserves and limited ability to respond to changes in demand or unexpected outages.

This consistent timing points to a structural gap in the country’s power supply. The concentration of alerts and price spikes within a narrow window of the day indicates that the issue is not a lack of overall capacity, but a shortage of resources that can respond quickly during peak demand hours. Without sufficient flexible capacity, even minor supply disruptions can escalate into grid alerts and significant price spikes.

“All of these findings suggest that simply adding more baseload capacity will not address the challenges we are facing today,” Manansala added. “What the system needs are resources that can deliver power precisely during periods of peak demand and system stress.” 

These observations are consistent with recent statements from Energy Regulatory Commission (ERC) Chairperson and CEO Francis Saturnino C. Juan, who identified a “flexibility shortage” and emphasized the need for fast-response and dispatchable resources during evening peak hours. 

Sustained periods of high WESM prices can eventually translate into higher generation charges for consumers, underscoring the importance of addressing the underlying causes of constrained electricity supply during peak demand hours. System flexibility can be provided by fast-ramping technologies such as battery energy storage systems and pumped-storage hydropower.

Greater system flexibility will also become increasingly important as more renewable energy is integrated into the grid. Flexible resources help manage variability in electricity supply and demand, allowing the power system to accommodate higher shares of renewable energy while maintaining reliability and affordability.

ICSC emphasized that, alongside efforts to expand installed power generating capacity, it is equally important to develop flexible resources that can respond to rapid changes in demand and system conditions. Flexibility is essential to maintaining both reliability and affordability, particularly during periods of peak demand. 

Policy mechanisms to guide the development of the right type of capacity are beginning to emerge. The Green Energy Auction Program (GEAP) establishes differentiated capacity installation targets across Luzon, Visayas, and Mindanao, with dedicated auction categories for  integrated renewable energy and energy storage (IRESS) as well as  pumped-storage hydropower. These measures reflect early recognition of the need to align capacity expansion with system flexibility requirements.

ICSC called for stronger market and regulatory frameworks that properly value flexibility services—including energy storage, demand response, and other fast-response resources—to ensure investments align with system reliability requirements.

“Without stronger signals to support flexible capacity, the power system risks continued reliance on inflexible baseload capacity additions that do not address peak-hour constraints,” Manansala stressed.

As electricity demand rises and renewable energy penetration increases, system flexibility will be essential to maintaining reliability, managing price volatility, and ensuring long-term affordability. Building the right mix of capacity—not simply more capacity—will be critical to a stable and resilient power system.

ABOUT
The Institute for Climate and Sustainable Cities is a Philippine-based non-governmental organization that advances climate, energy, and low-carbon solutions to enable fair and climate-resilient development at the national and international levels.

CONTACT
Sanafe Marcelo, ICSC: media@icsc.ngo, +63968 886 3466, +63917 149 5649

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PHOTO BY: Beng Ragon on Unsplash