The Department of Energy (DOE) will be locking horns with system operator National Grid Corporation of the Philippines (NGCP) to resolve the “mismatch” in the country’s transmission development game plan, to ensure that the grid actually delivers where the capacities are needed.

Referencing the 10,260-megawatt (MW) excess capacity that NGCP stipulated in its information advertisements, Energy Secretary Raphael Lotilla indicated that, “We have noted it, and we will come up with our comments on how best to address the mismatch between the timing of generation and transmission facilities being there.”

The Energy chief stressed that, “What we need is coordination of having the generation plants in place; and then the transmission lines are there, so they can be brought to where they are needed.”

Lotilla explained that even if there are transmission facilities that are built, if they are not strategically installed where the transport of plant capacities would be direly needed—or if they are not constructed and operated on time—then these investments would just end up as “stranded assets” and will result in foregone revenues for power investors. In turn, these could scare off future capital flow, and the country will also be rated as “risky territory” for energy investments.

“The financial institutions and even insurance companies, their premiums would be higher if their perception of the risks is high—if in their estimation, the transmission lines will not be built there, resulting in stranded power,” he expounded.

The DOE Secretary primarily cited Mindanao’s case, wherein it has had excess power capacity since 2016, “but we were only able to connect Mindanao with the Visayas where the power is needed in 2024; and therefore, the stranded power and the foregone income resulted from that had to be absorbed by the power generators, so this is not the best arrangement.”

Lotilla similarly noted that, “in substation capacity, this increased by 167 percent since 2009; and that’s under the NPC [National Power Corp.] grid; but the transmission line has only grown by 28 percent, so most of the lines therefore that are being used were mostly from TransCo’s [National Transmission Corp.] asset base at the time that privatization started.”

To put investor fears to rest and end the grid guessing game, Lotilla stated that with state-backed Maharlika Investment Corp. (MIC) now in NGCP’s inner circle as shareholder, the government will be rolling up its sleeves for “real talk” with the grid operator, emphasizing that “we want to address these issues for the good not only of the power sector, but the economy as a whole, because we need that additional power where they are to be used.”

It was emphasized that even if power plants are built—for example, if the generating facilities are sited in the north, but the excess transmission capacity has been installed in the south—those capacities could still sit idle and will not shore up supply availability in the grid. Or there will be unwarranted curtailments; thus, return on investment could tank.

Without a synchronized buildout between transmission and generation, as well as a supporting distribution network, the Philippines risks burning billions in green capital, because no investor would want to just watch their renewable energy (RE) projects get strangled by curtailments—similar to the grid fiasco that scorched Vietnam’s clean energy boom.

Typically, power plant developers set up projects based on land availability for siting, water and infrastructure access, as well as considerations for ease of logistics. Then ideally, grid planning shall not just be left to chance—that’s why other markets demarcate specific RE zones where transmission development shall be seamlessly integrated, similar to what Australia, India, Denmark, as well as Serbia have been enforcing as a policy.