Coal plant outages drove recurring power shortages in the central Philippines this year, causing estimated economic losses in Cebu of nearly 111 million pesos ($1.74 million) for every hour without electricity, according to a new report.
The Center for Energy, Ecology, and Development, or CEED, said unplanned outages at coal-fired power plants thinned electricity supply across the Visayas, forcing utilities to impose rotating power outages and buy electricity from the wholesale spot market.
The Visayas is one of the Philippines’ three main island groups. Metro Cebu, one of its major economic hubs, experienced rotational brownouts as recently as September.
Coal accounted for 5,492.3 megawatts of aggregated lost generating capacity in the Visayas from January to June, compared with 115.2 MW from solar outages, according to the report.
CEED identified Therma Visayas Inc. Units 1 and 2, Panay Energy Development Corp. Unit 3, KEPCO Salcon Power Corp. Units 1 and 2, and Cebu Energy Development Corp. among coal plants repeatedly cited by the National Grid Corporation of the Philippines as major contributors to yellow and red alerts.
Yellow alerts are issued when operating margins are insufficient to meet grid contingency requirements, while red alerts signal that electricity supply is insufficient to meet consumer demand and regulating requirements.
The Visayas grid recorded 160 yellow and red alerts from January to Sept. 28, one fewer than the number recorded during the same period in 2019, the report said.
CEED said Therma Visayas Units 1 and 2 and Panay Energy Development Corp. Unit 3 exceeded allowable unplanned outage periods under Energy Regulatory Commission rules.
The report also found that outages at several coal units overlapped, further reducing available power supply.
On Sept. 9, outages and unavailable capacity at Therma Visayas Units 1 and 2 and Panay Energy Development Corp. Unit 3 contributed to grid instability that resulted in two hours of rotational brownouts in areas served by Visayan Electric Co., including large parts of Metro Cebu.
The three units accounted for 488 MW of unavailable capacity, according to the report.
CEED estimated the two-hour outage cost Cebu about 221.65 million pesos ($3.7 million) based on a value of lost load of about 227,104 pesos per megawatt-hour. This translates to an estimated economic loss of around 110.83 million pesos ($1.74 million) per hour.
Electricity prices also rose as supply tightened. The Visayas wholesale electricity spot market price increased from 11.29 pesos per kilowatt-hour to 18.59 pesos per kilowatt-hour in August, according to the report.
“This report is further proof of the unreliability of coal plants and possibility of market abuse in our power sector. Consumers, in particular, have borne the brunt of the Visayas energy crisis,” said CEED Executive Director Gerry Arances.
Arances warned that rotating brownouts could remain a problem in the coming years if the country continues its dependence on fossil fuels and delays the transition to renewable energy.
The report also questioned whether existing penalties are enough to deter prolonged outages.
Under current ERC rules, generation companies that exceed allowable unplanned outage periods may face penalties ranging from 50,000 pesos to 200,000 pesos or more, depending on plant capacity and the duration of the excess outage.
CEED called for stricter power plant reliability rules, higher penalties for underperforming generators and publication of government performance audits.
It also urged authorities to speed up renewable energy and battery storage development in the Visayas and reduce the country’s dependence on fossil fuels.
