National Grid Corporation of the Philippines (NGCP) raised the country’s first red alert of 2026 on May 13, with peak demand of 12,537 megawatts exceeding available capacity of 12,447 MW in Luzon.
Meralco implemented manual load dropping that affected about 1.9 million customers across Metro Manila, Bulacan, Cavite, Laguna, Quezon, and Rizal.
Two days later, the deficit widened to 852 MW after another unit tripped. The Visayas grid fared no better.
NGCP attributed the squeeze to more than 4,000 MW unavailable due to forced outages and derated plants, some of which have been offline since 2019. And for our friends in Mindanao, don’t worry — the time will come.
But stopping at the technical explanation misses the point entirely. The real problem is market failure — or, more accurately, the absence of a market.
Under EPIRA, the Philippines was supposed to transition from a state-planned power sector to a competitive one.
Liberalization was meant to let prices, not bureaucrats, signal when and where capacity is needed. That is how the textbook works.
Except the textbook market does not exist here.
Missing signals
What exists is the Wholesale Electricity Spot Market (WESM), and WESM is a poor substitute for the market the system actually needs.
It is a short-term generation market that clears electricity hour by hour. It tells consumers what power costs today. It says nothing about whether anyone is investing in the capacity the country will need three, five, or ten years from now.
There is no long-term market. No proper capacity market. No robust reserve market. The price signal that should drive investment either arrives too late or never arrives at all.
I have argued this for years (see insiderph.com/author/delgado-guido-alfredo-a-1): liberalization without a complete market architecture is worse than the regulated regime it replaced. It diffuses accountability without creating real incentives.
Generators are not obligated to build. Distribution utilities pass costs through. The government insists it is “letting the market work” while the market it has built cannot do so.
Completing the architecture — through forward, capacity, and reserve markets — is part of the answer. But those institutions take years to build, transmission lines take even longer, and tariffs will remain high regardless.
Consumers cannot keep waiting.
The other half of the solution is to deregulate downward. This means removing the net metering capacity cap and recognizing rooftop solar and behind-the-meter generation as legitimate embedded generators with full export rights.
It also means streamlining distributed energy resource interconnection rules and replacing the ERC approval process for self-generation to expedite the installation of behind-the-meter systems.
Let households, malls, factories, and barangays build their own microgrids without waiting on Manila. Every kilowatt-hour generated behind the meter means one less unit competing for scarce grid capacity and one less customer exposed when NGCP next declares a red alert.
Until then, expect more red alerts — and more candles for those still waiting on the grid. — Ed: Corrie S. Narisma
