As yellow and red alerts return to the Philippine grid, the recurring drop in power supply exposes deep weaknesses in the country’s energy system. Delayed infrastructure, aging plants, thin reserves, and rising demand continue to strain the national electricity grid, leaving millions vulnerable to outages and higher electric bills.

Although in theory the Philippines operates an interconnected grid, in practice it is made up of three major regional grids with transmission constraints. Interconnection started with the Visayas and Luzon grids in 1998, followed by the Mindanao and Visayas grids in 2023. The country may now be nationally interconnected, but it has not yet achieved full electrical integration such that when there is a surplus in Mindanao, it does not automatically translate into available power for Luzon when the latter has a shortfall.

For context, a yellow alert means the operating reserve is thin and the grid has little buffer if another plant trips online, while a red alert makes rotating brownouts necessary due to insufficiency of available power to reliably meet demand. This summer, the worst period was in the middle of May when both the Luzon and Visayas grids experienced red alerts amid high demand driven by extreme heat that forced power plants to shut down. 

Luzon relies heavily on fossil fuels for 71 percent of its power source, with coal as the backbone of its baseload supply – accounting for 39 percent of installed capacity. Natural gas is the second-biggest source at 21 percent, largely from power plants in Batangas that rely on either the Malampaya field or liquefied natural gas imports. Oil-based power plants using diesel or bunker fuel account for 11 percent of Luzon’s installed capacity but contribute a much smaller share of actual electricity generation.

According to the Department of Energy, the remaining 29 percent of Luzon’s generating capacity come from renewables: solar and hydro at 11 percent each; geothermal at 3 percent; wind at 2 percent; and biomass at 1 percent. Solar has grown rapidly but only generates during daylight hours, so its contribution to actual energy produced is lower than its capacity share indicates.

During the May 2026 red and yellow alerts, many of the outages that triggered supply shortages involved coal and gas plants – highlighting Luzon’s dependence on a relatively small number of large generating units. This was the reason why several plant outages quickly eroded reserve margins. Some oil-based generators were called upon to help stabilize supply, but the downside was that electricity from these plants is very expensive because petroleum is imported and subject to global price fluctuations.

From a grid operator’s perspective, hydroelectric power is especially valuable because it is dispatchable: its output can be increased or decreased relatively fast. Thus, hydro is useful for balancing intermittent sources like solar and wind.

Straddling the provinces of Laguna and Quezon is the Caliraya-Botocan-Kalayaan (CBK) hydro complex – Luzon’s largest hydroelectric generating facility with an installed capacity of almost 800 megawatts (MW). Located just a few hours away rom Metro Manila, its centerpiece is the Kalayaan pumped-storage power plant, which is conceptually similar to a giant battery energy storage system (BESS).

The difference is that instead of storing energy chemically in lithium-ion batteries, Kalayaan stores energy gravitationally by pumping water uphill into a reservoir. In fact, pumped-storage hydro is considered the world’s oldest and largest form of grid-scale energy storage – and Kalayaan is the Philippines’ first utility-scale energy storage system decades before the term BESS became fashionable.

In 2025, CBK was privatized by the government’s Power Sector Assets and Liabilities Management Corp. or PSALM. The Thunder Consortium won the bidding with an offer of ₱36.3 billion, surpassing its closest competitor’s ₱19.6 billion bid. Led by Aboitiz Power Corp., the consortium also includes Japan’s Electric Power Development Co. Ltd. or J-Power and Sumitomo Corp.

With the country facing power shortages on an increasing basis, why doesn’t the government utilize the CBK hydro complex as a long-duration battery system? If a major dispatchable resource is available yet it has not been fully tapped to bolster reserves and prevent supply shortages, regulators should explain whether the decision was driven by technical limitations, operational considerations, or market rules. 

When households and businesses face the prospect of rotating brownouts, market rules should not stand in the way of using available capacity. In a power crisis, the public expects reliability – not merely economic efficiency – to be the overriding objective.