The location of renewable energy projects matters as much as their technology and capacity, according to an energy analyst, as recurring Visayas grid alerts expose a mismatch between Philippine green power procurement and the island group’s transmission constraints.
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Cebu, the Visayas’ largest power market, has been affected by repeated regionwide red alerts in recent months. The National Grid Corp (NGCP) issued at least 20 red alert notices in August alone, while the Visayas grid had logged about 40 red alerts for the year by mid-September, amid power plant outages, derated generating units and tight operating reserves.
Patrick Tan, Head of Wider Asia, Asia Pacific at France-based energy intelligence platform Aurora Energy Research, said transmission constraints between the Visayas islands can leave Cebu short of supply even when renewable plants in Negros and Panay are generating. Cebu accounts for about half of electricity demand in the Visayas, making the wider regional grid heavily reliant on the province’s stability.
The government’s Green Energy Auction Program (GEAP) risks favouring projects in lower cost locations such as Negros and Panay without adequately considering whether their electricity can be delivered to Cebu, Tan said.
The GEAP was kickstarted in 2022 to make the procurement of renewable energy supply in the Philippines a competitive process. It is one of the policies put in place to help the country achieve the goals set under its renewable energy plan which aims to achieve a 50 per cent renewable energy target by 2040.
Through the auction, solar and onshore wind projects are being developed in Negros and Panay, where land and construction costs are generally lower. But the islands, including Cebu, Negros, Panay and Samar, are connected by subsea transmission cables that Tan said are frequently congested.
“When the grid is congested on the subsea level between the islands, even when these plants are generating, it’s not able to transport to Cebu,” Tan told Eco-Business.
That can force Cebu to dispatch diesel-fired open-cycle gas turbines during periods of high demand or system stress, raising electricity prices even when cheaper solar generation is available elsewhere in the region, he added.
The Philippine electricity market uses nodal pricing, intended to reflect congestion and line losses and signal where new generation is most valuable. Plants built closer to demand centres can, in principle, earn higher prices, while generators behind constrained transmission links receive weaker price signals, he said.
However, Tan said green energy auctions do not sufficiently incorporate these locational signals. Since developers primarily compete on the lowest offered tariff, projects in Negros and Panay hold an advantage over those in Cebu, where land acquisition and construction can cost more.
“The green energy auction is designed for low cost developers to win [the contract]. It is not designed with location in mind,” Tan said. “The intention is good. They want low cost electrons and generation to come in … but if the system cannot use it, then what’s the point [of developing the renewable energy projects].”
He said future auctions could set island-specific procurement targets, such as a dedicated volume of renewable capacity or battery storage for Cebu, instead of allocating capacity only at the Visayas level.
As of 3 September, the NGCP projected available capacity in the Visayas at 2,187 megawatts (MW) against peak demand of 2,575 MW, leaving a 388 MW shortfall as generating units remained on forced outage or operated at reduced capacity, leading to the red and yellow alerts.
Upgrade cables, build renewables in Cebu
Tan urged the NGCP to accelerate upgrades to the Visayas’ subsea inter-island transmission links, saying additional capacity is needed to move power from Negros and Panay to major demand centres such as Cebu.
NGCP’s 2026 Transmission Development Plan includes measures to strengthen subsea cables, but the key issue is whether the upgrades can be completed quickly enough to ease congestion, Tan said.
The timing is particularly important because many projects awarded under the fourth GEAP are located in Negros and Panay.
“[NGCP] has to make sure that these new upgrades come on time before these GEAP projects deliver electricity. Otherwise, the government is just spending taxpayer money into these projects that are built, but at the end may face severe curtailment because the electron generated cannot reach the consumer,” he warned.
Tan said the government should prioritise grid development in Negros and Panay, particularly inter-island connections, to ensure that new renewable capacity can reach demand centres. He added that encouraging large electricity users, including new factories, to locate in areas with surplus generation could also help absorb renewable output locally and reduce the risk of curtailment.
Tan also urged developers should build more renewable capacity and battery storage in Cebu itself, reducing the island’s reliance on constrained inter-island transmission links. He said additional solar, onshore wind and batteries near Cebu’s load centres could ease supply scarcity, increase competition and help lower electricity prices for consumers.
While land availability and higher acquisition costs can make projects in Cebu more difficult to develop than those in Negros or Panay, Tan said the island still has untapped potential for renewable-energy development. Higher costs could be partly offset by stronger revenue prospects for projects built closer to demand, he added.
“There are definitely sufficient land [areas] in Cebu for renewable energy development,” Tan said. “In terms of landmass, the full potential is not achieved yet,” he said.
Tan said expanding local generation, deploying storage and reinforcing subsea connections should be pursued together, although he acknowledged that transmission upgrades would require substantial capital investment and take time to complete.
