The continued suspension of reserve market operations could discourage investments in battery storage and other critical power infrastructure, potentially prolonging electricity supply shortages and high power costs, particularly in the Visayas.
The Philippine Solar and Storage Energy Alliance (PSSEA) warned that keeping the reserve market suspended weakens investment signals without addressing the supply constraints driving electricity prices higher.
In a position paper submitted to the Energy Regulatory Commission (ERC), the group called for the immediate resumption of commercial dispatch and settlement in the reserve market across Luzon, Visayas, and Mindanao.
PSSEA argued that suspending market operations under ERC Case No. 2023-002 RC, while intended to protect consumers, only creates further market distortions instead of encouraging investments in additional reserve capacity.
“The solution to high electricity costs affecting Visayas is to address the underlying supply and flexibility constraints in the region,” PSSEA Chair Tetchi Capellan said on Tuesday.
The group maintained that restoring market operations, alongside competitive procurement of battery energy storage systems (BESS), would help attract private investments needed to strengthen grid reliability.
“Battery energy storage is immediately deployable and can help provide the fast response to outages. Its grid-forming capability has the flexibility needed by the grid, while supporting the integration of more renewable energy,” Capellan said.
The Visayas grid continues to face supply pressures from generating-unit outages, limited electricity transfers from Mindanao, and insufficient reserve procurement.
Data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed that the region’s average supply margin dropped to just 62 megawatts in August, after accounting for reserve requirements and interregional transfers.
The region also recorded 86 hours of yellow alerts and 53 hours of red alerts during the month, highlighting the need for additional capacity.
Tight reserve supply has also translated into higher electricity costs.
Citing ERC figures, PSSEA said reserve-market purchases contributed P1.29 per kilowatt-hour (kWh) to Visayas electricity rates in 2025, compared with just P0.02 per kWh from ancillary services procurement agreements (ASPAs).
The difference represents a roughly 64-fold increase in the reported rate contribution, underscoring the cost pressures associated with reserve-market purchases.
However, PSSEA pointed to IEMOP data showing that contingency-reserve prices declined by 24.8 percent in July as offered and contracted reserve volumes increased and scheduling adequacy improved.
The group said the decline reinforced the need to expand reserve supply rather than restrict market operations.
The ERC earlier suspended commercial dispatch and settlement in the Reserve Market to curb soaring reserve costs, particularly in the Visayas, where spot purchases reached P19.57 billion in 2025, compared with P1.69 billion under contracted ancillary services.
The regulator directed NGCP to accelerate reserve contracting while market operators develop reforms within six months to address pricing distortions and encourage long-term investments.
Meanwhile, PSSEA President Ping Mendoza said competitive procurement and properly located battery storage facilities could strengthen reserve availability while improving investment conditions.
“Battery storage should be part of the solution to the Visayas’ power challenges. By combining competitive procurement with forward contracting and appropriately located storage, we can strengthen reserve availability, make better use of renewable energy, and improve the conditions for investment in a more reliable power system,” Mendoza said.
