Deregulating the power market
The Philippines has been making big strides in opening its electricity market to make its energy sector more dynamic and competitive. A key step in this journey was the establishment of the Independent Electricity Market Operator of the Philippines (IEMOP) in 2018. It took over running the Wholesale Electricity Spot Market (WESM), breaking the control that the Manila Electric Company (Meralco) previously had.
The WESM started operating in Luzon in 2006 and then expanded to Visayas in 2010 under the Electric Power Industry Reform Act. This move has helped balance supply and demand better, improving economic signals for energy trading. IEMOP manages electrical pricing, schedules generation units, and handles the metering and settlement of transactions in the electricity market.
Additionally, starting in 2013, the Philippines Government allowed qualified users to pick their retail electricity supplier through Retail Competition and Open Access. These changes aimed to cut costs and improve market efficiency. However, there are still hurdles in adapting to new rules and ensuring enough investments to meet demand and stabilize electricity prices. The ongoing liberalization focuses on making the market more transparent and inclusive to benefit customers and support sustainable energy development.
Generation sources and grid mix
Regarding electricity generation, coal is a major source, followed by natural gas and renewable sources like solar, wind, hydro, and geothermal. Opportunities for green sourcing include on-site solar panels, off-site Power Purchase Agreements (PPAs), Renewable Energy Certificates (RECs), and green supply rates. Among these, on-site solar panels and green supply rates are the most widely available. Refer to the Zeigo Network Philippines Market Brief for a summary of these points.
The Philippines electricity market offers fixed and wholesale-plus options, with around 15 licensed suppliers, including Shell, Aboitiz, Direct Power, and Team Energy Corporation. The competitive bidding process helps find the best prices for supply contracts.
Natural Gas
As for the natural gas market, it’s partially deregulated but not fully open for sourcing activities yet. Challenges like the depletion of the Malampaya gas field, a major source of natural gas, have led to efforts to boost local oil and gas reserves. The Department of Energy promotes small-scale power generation using marginal gas fields and improving downstream oil industry policies. There’s also a push to attract foreign investment for offshore exploration and develop a robust LNG infrastructure.
The downstream sector of the natural gas market has been deregulated since 1998 and is dominated by major players like Petron, Shell, and Chevron. The need for better LNG infrastructure and policies to ensure a steady supply and stabilize the market is growing as the Malampaya field nears depletion.
Regarding green sourcing, companies in the Philippines are mainly involved in biogas and biomethane projects, backed by government incentives. Interest in green sourcing opportunities is rising among corporates in the Philippines.
In summary, the Philippines’ electricity and natural gas markets are undergoing significant changes toward liberalization and sustainable energy development. Though challenges remain, ongoing efforts aim to create a more competitive and transparent energy sector to benefit consumers and the environment.