By Green Tiger Markets

Electricity prices in the Philippines have taken a notable dip in 2025. The first half of the year has seen the average spot market price hover around PHP 4 per kilowatt-hour, a sharp fall from PHP 5.80 over the same period in 2024. For consumers, this spells relief. For generators, especially those reliant on high-cost fuels, it is a cause for concern. The trend reflects structural shifts in supply, demand, and the evolving economics of power generation.

Rain, Sun and Slack Demand

Among the biggest drivers has been a surge in generation from hydro and solar sources. Better-than-average rainfall has kept reservoirs full and turbines spinning. At the same time, solar capacity continues its quiet ascent. Thousands of new panels have been connected to the grid, as we have written in recent articles on the topic. Together, these sources have displaced costlier alternatives — notably diesel and fuel oil, which linger at the top of the merit order and are only called upon in moments of scarcity.

Such moments have been rare. Demand itself is down about 3% year-on-year, a reversal of the upward trajectory seen in previous years. The culprit is not industrial malaise, but meteorology: cooler-than-expected temperatures have dampened air-conditioning use across the archipelago. With lower demand and growing supply, the system has enjoyed unusually wide reserve margins, suppressing both volatility and price.

More Power, Less Pain

Looking ahead, several of these trends may persist. GDP growth remains strong — above 5% — which should eventually revive demand. But on the supply side, the outlook remains bearish for price hawks. Imported coal and gas prices, having spiked during the global energy crisis of 2022–23, have since normalised. Futures markets suggest this moderation will endure, making thermal generation less expensive across the board. Meanwhile, new capacity — both renewable and conventional — continues to connect to the grid, further bolstering supply.

That poses a strategic question for generators hoping for a return to 2024’s higher prices. Which of the downward pressures on price are likely to reverse? Weather is fickle, to be sure. A drier year could throttle hydro. But the momentum behind solar is unlikely to slow, and the demand drag from efficient appliances, distributed energy, and behavioural adaptation is more durable than it appears. Fuel prices might spike again, but barring geopolitical shocks, the trend remains downward.

The upshot is a power market that is more resilient, more liquid, and more affordable. That is good news for consumers — and a gentle warning to generators still waiting for the return of the good old days. They may not be coming back.