Institute for Climate and Sustainable Cities
ANALYSIS

The Institute for Climate and Sustainable Cities (ICSC) is calling for a more diversified, decentralized, and flexible power system, as the twin issues of persistent grid alerts and high Wholesale Electricity Spot Market (WESM) prices—fueled by forced outages across major coal plants—highlight the risks of overdependence on centralized baseload power plants as seen in the recurring yellow and red alerts experienced in Visayas.

Coal accounts for around 60% of the Philippines’ electricity generation. In Visayas, these coal power plants had notable shutdowns in recent months: 

  • Therma Visayas Inc. Unit 1 (TVI 1) — 150 MW
    • Offline for 125 days since May 3; expected to return by September 15
  • Therma Visayas Inc. Unit 2 (TVI 2) — 150 MW
    • Offline for 6 days since September 9, but previously offline for 161 days from March 24 to August 31; no indicative return date
  • Panay Energy Development Corp. Unit 3 (PEDC 3) —150 MW
    • Offline for 16 days since August 29; previously targeted to return by October 3 but was pushed to end of October
  • Cebu Energy Development Corp. Unit 1 (CEDC 1) — 82 MW
    • Offline for 42 days from July 24 to September 3

Because coal power plants often have hundreds of megawatts (MW) in a single unit, their unplanned outages deliver a significant shock to the system. When multiple units suffer simultaneous outages, the loss of capacity compounds rapidly, triggering widespread grid instability and driving up market prices. 

This is the situation that we can see in Visayas right now, which has recorded 134 yellow or red alert days in 2026 as of September 14, including 94 yellow and 40 red alerts. 

Unplanned and extended outages from coal power plants are the primary driver of these frequent grid alerts, particularly during peak demand hours when the system has the least room to absorb the loss of a large generating unit. Power sharing across grids cannot resolve these shortfalls when neighboring systems face similar constraints—what is needed is not more inflexible baseload power plants, but a move toward flexible generation that can rapidly respond when demand spikes. 

Deploying distributed renewable energy paired with battery storage can address this need for flexibility. By placing generation and storage closer to where electricity is used, this combination drastically cushions the grid against large plant outages. Rooftop solar serves local demand during the day and batteries provide the fast-responding, flexible ramping power needed during peak hours. These resources do not replace large generators or transmission infrastructure; rather, they add a critical layer of resilience around them. Accelerated deployment of these solutions represents the immediate, low-hanging fruit to shield consumers from future service interruptions and economic losses. 

ICSC welcomes and supports the plans for battery energy storage system (BESS) facilities in Visayas which in Department of Energy’s (DOE) own simulations, could reduce the occurrence of yellow and red alerts by half once the 200 MW of battery energy storage capacity is in place. Battery storage is a key solution to our power grid problem because its flexible ramping capabilities directly address system constraints during specific peak windows. 

“Battery energy storage systems should not be treated merely as a short-term fix to the unfolding power crisis in Visayas—they are the core solution on both the short and long-term,” said Alberto Dalusung III, ICSC’s Energy Transition Advisor.  “When paired with renewable energy, battery storage directly bridges the critical supply gap without waiting years for new generation and transmission projects to be built. We can act now because these technologies can be deployed rapidly to meet our immediate energy needs,” Dalusung added.

Additionally, while the DOE evaluates 3,000 to 5,000 MW of unbuilt, moratorium-exempt coal capacity under its developing transition policy, these massive thermal facilities require years of long-lead development, extensive transmission buildouts and carry significant ongoing fuel and maintenance costs. They cannot be built quickly enough to solve outages happening today, and adding more capacity from the same source only reinforces our existing overdependence risk. 

Rising grid alerts underscore a critical reality: the system cannot afford to wait years for long-lead infrastructure buildouts. With capacity shortfalls concentrated in afternoon and evening peak windows, traditional baseload additions will arrive too late and will cost too much. Accelerating distributed generation paired with battery storage to complement existing thermal assets provides the fastest, most practical solution for today’s power grid. 

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
Sanaf Marcelo, ICSC: media@icsc.ngo, +63 968 886 3466, +63 917 149 5649