By John Knorring, CEO of Green Tiger Markets

Forecasting the price of electricity is never straightforward. Weather patterns, the level of reserve capacity, plant outages, fluctuations in fuel prices and the vagaries of hydro reservoirs, among a multitude of other factors, all conspire to keep market operators on their toes. Yet a clear trend is emerging in the Philippines: solar power is beginning to warp the midday market.

For the year to August, baseload electricity has averaged 3.95 pesos per kilowatt-hour (kWh). By contrast, power sold during the solar-heavy midday hours has fetched just 3.29 pesos/kWh—a discount of about 17%. A year ago the gap was a mere 3%. That widening spread tells the story of solar’s growing clout.

The arithmetic suggests the discount could deepen still further. Based on bids and offers on the Green Tiger Markets Platform, Baseload prices are expected to hover around 4.25 pesos/kWh next year. If the midday markdown stretches to 25%, as looks likely, solar hours would clear at about 3.2 pesos/kWh. That would lock in a structural shift: sunshine hours priced not just below baseload, but threatening to pull the entire curve lower.

The reason is simple. Developers are racing to add solar farms, lured by falling installation costs, policy encouragement and the country’s abundant sunlight. Over the next 18 months, a surge in new capacity is forecast, much of it concentrated in Luzon, where demand is highest. Each megawatt of photovoltaic supply that connects to the grid deepens the lunchtime trough.

The implications are stark. By 2027, if the trend continues, midday power could slip below 3 pesos/kWh. Such levels would mark a fundamental break from historic norms in a market long dominated by coal and gas.

Cheap solar is welcome news for consumers and policymakers eager to diversify the country’s fuel mix. But the discount carries risks. Conventional generators may struggle to recover costs if their output is persistently undercut during daylight hours. The system operator must juggle an increasingly lopsided load curve, with sharp evening ramps once the sun sets. Storage and flexible capacity will be vital shock absorbers.

The Philippines is hardly alone. From California to Queensland, solar-rich grids have seen the emergence of the “duck curve”: prices sagging at noon before spiking as demand rises at dusk. But the Philippine case is more acute, owing to rapid capacity additions relative to the size of the grid.

Forecasting power prices will always involve caveats—an untimely typhoon or a spike in global LNG prices can upend even the strongest models. Still, the direction is unmistakable. In the Philippines, the midday sun is casting a long shadow over the future of electricity pricing.