The Independent Electricity Market Operator of the Philippines (IEMOP) reported that electricity prices in the Wholesale Electricity Spot Market (WESM) have significantly dropped in the first half of 2025.

This was due to better supply margins, transmission infrastructures, and the renewable energy (RE) fleet.

In a statement, IEMOP found that spot market prices averaged ₱4.14 per kilowatt-hour (kWh) in the first half of the year, which is lower by 26 percent than last year’s average of ₱5.58/kWh.

The substantial decline in prices is said to be the most affordable average market price since 2020, which would redound to more competitive electricity pricing for consumers and businesses.

Richard Nethercott, president and chief executive officer (CEO) of IEMOP, lauded the electric power industry for contributing to the price drops during the first six months of the year.

“To understand why prices are lower in the WESM, at least for the first half of the year, we need to appreciate the contribution of each segment in the electric power industry value chain,” he said.

“The lower prices in the market [are] the result of improved efficiency in the entire industry value chain. It is a product of the collaborative efforts of all sectors, public and private,” Nethercott added.

He further explained that policies helped kickstart the trend of lower WESM prices in the first half of the year, citing initiatives from the Department of Energy (DOE) such as the Green Energy Auction (GEA), competitive selection process (CSP), among others.

“It begins with government. As in any other industry, government plays an essential role in crafting the necessary policy and legal framework to guide private stakeholders in their strategic decision making. Even more so in the Philippine electric power industry whose structure is ‘almost’ completely private,” he elaborated.

Based on the simulations conducted by IEMOP, successful GEA rounds, including the first to fifth, could bring down pobywer rates to around ₱3.36/kWh in Luzon by 2029, while Visayas and Mindanao could save around ₱0.90 to ₱1.32/kWh.

Spot market price drops can also be attributed to energy efficiency efforts, as IEMOP stated that commercial, government, and industrial sectors have been encouraged to reschedule high-energy operations to avoid peak load strain.

Additionally, the expansion of transmission projects has helped minimize congestion costs and allow affordable power sharing, while the liberalization of RE facility ownership has helped boost investments for clean energy projects.

The recent decline in electricity prices was also driven in part by the implementation of market-based programs such as WESM Mindanao, the Ancillary Services and Reserve Market, the Green Energy Option Program (GEOP), and the Renewable Energy Market under the retail and wholesale electricity markets.

“Equally important, the Energy Regulatory Commission (ERC) implemented several key regulations aimed at lowering electricity prices for consumers, one of which is the Omnibus Rules for Customer Choice Programs in the Retail Market,” IEMOP said.

On the generation side, the availability of existing generation units has also affected price movements. IEMOP stated that the increased RE capacity underwent priority dispatching and dispatched higher-priced plants.

Market operators explained that most natural gas plants this year offered maximum capacities; however, a few have been derated.

“This resulted in an increasing trend with an average capacity reaching 3,674 megawatts (MW) for natural gas. Furthermore, the minimum and maximum available capacity for this technology type increased to 3,404 MW and 4,121 MW, respectively.”

The overall average demand found in WESM inched up by 1.83 percent, following a higher average system-wide supply margin of 6,916 MW.

Five projects of National Grid Corp. of the Philippines (NGCP), which include interconnection, transmission, and backbone facilities, helped facilitate better generator performance, reducing risks of power outages and increasing supply.

“Distribution utilities (DUs) are also contributing by consciously strategizing their participation in the market such as getting supply from market especially in times when the spot prices are relatively low. Utilities that manage their supply sourcing well by remaining active in monitoring market trends are positioned to offer consumers lower power rates,” IEMOP added.

As of June 2025, the retail market share has slightly increased from 21.27 percent last year to 22.26 percent.

Other WESM updates that contributed to the recent price declines include the integration of Mindanao to WESM last 2023, the integration of reserve trading, GEOP, and the RE market (REM) that took off last December 2024.

“As of now, there are 50.5 million RE certificates (RECs) issued in the registry covering the periods 2018 to 2025,” IEMOP added.

Nethercott further emphasized that because the industry operates under a pass-on charging system, every part of the value chain plays a role in pricing. Therefore, coordinated efforts among stakeholders reflect the movements in electricity prices.