If I were a foreign investor looking to establish a business in Southeast Asia, the power situation in the Philippines, specifically in Visayas, might be enough to make me think about some place else.
Its peers have much lower power rates and yet still have better generation per capita numbers. Malaysia (6,381 kWh), Vietnam (2,997 kWh), and Indonesia (1,332 kWh) exceed the Philippines’ 1,151 kWh. Admittedly, those countries enjoy greater energy self-sufficiency and/or sector-wide subsidies by their governments, thereby allowing them to have much lower power rates than the PH.
At the time of writing, a cumulative 30+ yellow and red alerts have already been declared year to date in the Visayas. Considering that structural fatigue is inevitable in any kind of power plant, the Philippines’ shortcomings in energy security tell us that it still lacks reserve capacity, as its relatively low power generation per capita already indicates.
In particular, we need power plants that are dependable and dispatchable all year round. As a foundation, we need baseload power plant capacity that ensures the grid runs uninterrupted. Baseload is critically important to investors since demand for electricity from factories, computers, and the digital infrastructure, commercial and residential real estate, and fleets of electric vehicles does not stop. Electric power is simply the fundamental backbone of the entire economy.
Power situation in the Visayas
For years, embedded power plants in the Visayas haven’t been enough to supply its own power needs, prompting imports from the Luzon and Mindanao grids to address the gap. With the existing transmission infrastructure, Luzon can export 250 megawatts to Visayas, while Mindanao can transmit 450 megawatts.
This reliance on Luzon and Mindanao is not sustainable. A good example would be last month when a major earthquake in Mindanao led to widespread outages, which limited its ability to export, thereby further constraining the power supply in the Visayas. The lesson here is that Visayas needs more embedded, in-island power plants that can independently support its own power demand.
Delays in the completion of the Mindanao-Visayas Interconnection Project itself (seemingly the norm for most transmission projects), as well as the risk of undersea cables being damaged (like when dredging activities hit the submarine cable connecting Negros and Cebu), also suggest that importing power shouldn’t be the only strategy for the Visayas.
Proponents of renewable energy are quick to say that solar and wind builds should be prioritized in the Visayas, arguing that the breakdown of baseload coal power plants is what causes the precarious power situation. However, would these renewable energy builds be enough? To answer this question, let’s look at the availability and capacity factors of solar, wind, and coal-fired plants in the Visayas from 2024 to 2025.
According to the Independent Electricity Market Operator of the Philippines (IEMOP), availability factor “measures how much generator capacity is available with respect to its registered capacity”. It is inversely proportional to deration and directly proportional to efficiency. Meanwhile, capacity factor is “a measure of how often a plant operates with respect to its maximum power output” (i.e. dispatched output in megawatts measured against its registered capacity).
The availability and capacity factors of solar power plants in the Visayas from 2024 to 2025 remained at 18-19% due to solar’s intermittent nature. Visayas wind power plants, on the other hand, had 22-23% average availability and capacity factors in the same period.
In contrast to both, coal’s average availability factor was 86-88%, while its average capacity factor was 61-64%. In other words, coal has consistently been more available and more efficient in producing power for the Visayas in the span of two years. That’s why it’s considered a baseload power plant capacity.
Also consider the Negros Island Region, which is the fourth largest island in the Philippines. Despite having its own in-island geothermal, solar, hydro, and biomass capacities, an estimated 70+% of energy supplied to its residents still comes from imported coal and diesel power.
In a groundbreaking ceremony for an energy project in Naga City, Cebu, Governor Pamela Baricuatro put it plainly, “Before we can attract more investments, we must also ensure that we have the infrastructure to support them.”
We also need to talk about Mindanao
The economy in Mindanao vis-à-vis its electricity consumption and peak demand also continues to rise and expand. The risk is that today’s electricity surplus might breed complacency in preparing for Mindanao’s needed power supply in the future.
Based on data from the Department of Energy, electricity sales in Mindanao continue to grow, nearly doubling from 9.35 million MWh in 2013 to 18.69 million MWh in 2025. Mindanao’s system peak demand also underwent a 5.9% annual average growth rate from 2016 to 2025, outpacing Luzon (4.6%) and the Visayas (4.3%).
While it can still meet these demands today, the planning, approving, and building of new power plants, grid lines, and power cables must begin while there is still sufficient lead time. Otherwise, without available and reliable power, why would investors go there?