Philippines (WESM & PEP) Expertise

  • Power demand and supply outlooks (Market analysis, design & gross pool)

  • Institutional and regulatory frameworks

  • Generation mix, fuel security, and steam offtake

  • Private sector participation (GenCos, Retail Suppliers & Distribution Utilities)

  • Renewable energy (Investment) and efficiency promotion (Optimal competitive bidding)

Sector Overview

Governance & Regulation

The Philippines’ energy sector is overseen by the Department of Energy (DOE), which sets overall energy policy and planning.

The Energy Regulatory Commission (ERC) is the independent regulator responsible for licensing, tariff setting, ensuring competition, and protecting consumer interests.

Strategic oversight comes from the National Power Corporation (NPC) for missionary electrification (off-grid areas), while system operations and transmission are handled by the National Grid Corporation of the Philippines (NGCP) under a government concession.

Market Structure – Wholesale Electricity Spot Market (WESM)

A key reform under the Electric Power Industry Reform Act (EPIRA) of 2001 was the creation of a competitive power market. This led to the establishment of the Wholesale Electricity Spot Market (WESM), which began operations in Luzon in 2006, expanded to the Visayas in 2010, and later to Mindanao.

  • Design: WESM is a gross pool market where generators offer their capacity and buyers (distribution utilities, electric cooperatives, and some contestable customers) purchase electricity.

  • Operation: The market is operated by the Independent Electricity Market Operator of the Philippines (IEMOP), a non-stock, non-profit entity. NGCP provides system operations and ensures dispatch alignment with grid stability.

  • Pricing: Market clearing prices are set hourly (and more recently in shorter intervals), based on supply bids and demand requirements. This introduces competition and helps reveal the true cost of electricity.

Private Participation & Renewables

The Philippines has a strong private sector presence in power generation. The Renewable Energy Act of 2008 created incentives such as:

  • Feed-in Tariffs (FiTs): For wind, solar, biomass, and hydro projects.

  • Renewable Portfolio Standards (RPS): Obligations on suppliers to source a portion of supply from renewables.

  • Green Energy Option Program (GEOP): Allows consumers to directly contract renewable power.

These frameworks have boosted solar, wind, geothermal, and hydro development, with geothermal particularly significant as the Philippines is one of the world’s top producers.

Industry Participants

  • Generation Companies (GenCos): Private entities own and operate most generation capacity, following the unbundling and privatization of NPC assets.

  • Transmission: NGCP manages the high-voltage grid under a long-term concession.

  • Distribution Utilities (DUs): Examples include Meralco (serving Metro Manila) and various electric cooperatives across provinces.

  • Retail Competition and Open Access (RCOA): Large consumers above a threshold demand can directly choose their electricity suppliers in the competitive retail market, buying either through bilateral contracts or from WESM.