The Visayas power grid entered the second quarter of 2026 with structural negative operating margins, meaning local generating capacity is insufficient to meet regional demand without sustained high-voltage imports from Luzon and Mindanao, according to the Institute for Climate and Sustainable Cities (ICSC). The think tank’s Philippine Power Outlook for April to June 2026, published March 25, projected yellow alert conditions in the Visayas during May even with imports in place, and warned that these risks could intensify if generating conditions in the importing grids deteriorated. Those conditions did deteriorate: on April 16, simultaneous unplanned outages across the Luzon grid triggered that system’s first yellow alert of 2026, cascading immediately into a second yellow alert for the Visayas.
Key Facts At A Glance
- The Visayas grid operates on structural negative operating margins, meaning installed local generation cannot meet regional demand without HVDC imports from Luzon and Mindanao.
- ICSC’s Q2 2026 power outlook projected yellow alert conditions for the Visayas in May, even with imports of up to 450 MW from Mindanao and 250 MW from Luzon held constant.
- On April 16, the Luzon grid experienced its first yellow alert of 2026, triggered by 5,137.2 MW of simultaneous unplanned outages and derations across 35 power plants.
- The April 16 Luzon alert directly caused a yellow alert in the Visayas, as reduced Luzon reserves constrained HVDC export availability.
- LNG-fired units Excellent Energy Resources Inc. (EERI) Units 1, 2, and 3 and Ilijan Block A and B, sharing a single LNG terminal, were among the key Luzon plants that went offline simultaneously.
- Coal accounted for 56 percent of Philippine power generation in 2025; coal import prices rose approximately 12 percent in the first two weeks after the Middle East conflict began.
- The DOE’s Interruptible Load Program, a key fallback during grid alerts, relies on diesel generation, whose costs have risen substantially amid the Hormuz crisis.
- ICSC called on the NGCP to release a 2026 power outlook, noting that the NGCP had not published one at the time of ICSC’s March report.
A Grid Dependent On Itself To Fail
The Visayas is the central island group of the Philippine archipelago, comprising major provinces and cities across Eastern and Western Visayas, Central Visayas, and the island of Mindoro. Its electricity grid is operated by the National Grid Corporation of the Philippines (NGCP) and connected to the Luzon and Mindanao grids via high-voltage direct current (HVDC) interconnectors. Those links serve as the Visayas grid’s lifeline: local generation capacity, historically composed of coal-fired baseload plants and smaller oil-based facilities, does not produce enough electricity to meet the region’s own demand under normal conditions.
The Independent Electricity Market Operator of the Philippines (IEMOP) identified this configuration as a structural risk before 2026 began, noting as far back as December 2025 that the Visayas had become “heavily dependent” on imports from the two larger grids, making it “the first grid to feel the impact” of any forced outages in Luzon or Mindanao. ICSC’s March 2026 power outlook confirmed this dependency numerically: operating margins in the Visayas were described as negative, meaning that after accounting for all forced outage assumptions of approximately 700 to 800 MW system-wide, local generation falls short of meeting local demand before a single watt of imports is counted.
The Alert Calendar In 2026
The year’s first Visayas yellow alert occurred on January 20, during the cool season when demand is typically at its lowest point. ICSC described this as a signal that the grid’s vulnerabilities are structural rather than seasonal. By the time ICSC published its Q2 outlook in late March, it had flagged yellow alert conditions for May as a near-certainty given existing capacity assumptions.
The April 16 events confirmed the risk mechanism. On that date, 35 power plants in the Luzon grid went on forced outage simultaneously, with 14 additional plants operating at derated capacity, resulting in a combined unavailability of approximately 5,137 MW. Among the facilities offline were Excellent Energy Resources Inc. Units 1, 2, and 3, which together represent 1,262 MW, and Ilijan Block A and B, with a combined capacity of 1,200 MW. Both are LNG-fired generation assets that draw from the same LNG terminal, a configuration ICSC identified as a concentration risk. Scheduled maintenance at the Magat hydroelectric plant units 1 through 4, totaling 345 MW, compounded the situation, though those outages were planned under NGCP’s Grid Operating and Maintenance Program.
As Luzon’s reserves tightened, HVDC exports to the Visayas were reduced. The Visayas grid, already operating on net negative reserves before imports are counted, moved into yellow alert territory. NGCP confirmed both alerts. ICSC noted that these events matched precisely the scenario its Power Outlook had warned about weeks earlier: a cascading constraint in which tighter Luzon conditions automatically worsen Visayas supply without any additional local failure.
The Structural Diagnosis
ICSC and IEMOP converge on a common diagnosis. The Philippine power system is baseload-centric, organized around large, centralized coal and gas-fired plants designed to run continuously. This architecture concentrates generation risk: when a major facility trips or derates, the system loses hundreds or thousands of megawatts in a single event, with no fast-ramping alternatives capable of filling the gap quickly.
Coal’s share of Philippine generation rose from approximately 10 percent in the 1990s to 56 percent in 2025. Coal plants in 2025 frequently exceeded their allowable forced outage rates, according to ICSC data. The dependence on imported coal has also introduced a global price exposure that did not exist when the fleet was smaller. Following the outbreak of the Middle East conflict on February 28, 2026, coal import prices increased approximately 12 percent within two weeks. That cost transmission travels directly into generation costs and, ultimately, into consumer electricity bills.
LNG exposure adds a second channel of vulnerability. In Luzon, a substantial share of gas-fired generation capacity draws from a concentrated set of LNG import infrastructure. The April 16 simultaneous outage of EERI Units 1 through 3 and Ilijan Block A and B demonstrated that co-locating multiple large generating units at a single LNG terminal compounds concentration risk. The Hormuz crisis, which disrupted Qatari LNG flows globally, has also raised the cost of replacement LNG cargoes for Philippine importers.
The Fallback Problem
When yellow alerts are issued, the DOE’s Interruptible Load Program activates. The ILP calls on large commercial and industrial electricity consumers to shift to their own diesel generator sets, reducing the load on the grid and freeing capacity for residential users. The program has historically served as a pressure-release valve during periods of tight supply.
In 2026, this fallback is itself under strain. Diesel prices in the Philippines surpassed 130 pesos per litre at their March 2026 peak, having risen sharply in the weeks following the Hormuz closure. ICSC noted that elevated diesel costs are making ILP activation economically prohibitive for some large consumers, reducing the effective capacity of the program precisely when it is most needed. Off-grid and remote areas, where 89.3 percent of installed backup capacity is diesel-based, face a similar constraint.
The Visayas faces a third layer of difficulty in this framework. Luzon’s ILP operates across a large, densely industrialized grid where the pool of potential ILP participants is deep. The Visayas, with a smaller industrial base and a regional grid that is already import-dependent, has fewer large consumers available to activate, and its sub-island geography limits the transmission of any locally available capacity across island boundaries within the region.
Recommendations On Record
ICSC’s March 2026 report recommended a reorientation of the power development agenda away from additional baseload capacity and toward flexible, fast-ramping technologies. Specifically, it cited hydropower with reservoir storage, battery energy storage systems, and open-cycle gas turbines as assets capable of responding to sudden generation losses within seconds or minutes, as opposed to the hours required to restart a coal plant. It also recommended expanding distributed generation, particularly rooftop solar with battery storage, as a means of reducing grid stress during peak hours without requiring new transmission infrastructure.
The group called on NGCP to publish a 2026 power outlook, noting that the absence of an updated official transmission planning document had forced ICSC to rely on a 2024 baseline adjusted with available DOE committed capacity data. IEMOP separately flagged that some renewable energy projects scheduled for 2026 commissioning could face delays, potentially reducing the new capacity available to ease Visayas constraints before the peak summer months close.