Electricity prices in the Wholesale Electricity Spot Market (WESM) dropped by 26% in the first half of 2025 compared to the same period last year, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

From an average of PHP 5.58 per kilowatt-hour (kWh) in 2024, WESM prices fell to PHP 4.14/kWh, the lowest since 2020. IEMOP attributed the drop to higher supply margins, increased renewable energy (RE) capacity, and improved transmission infrastructure.

“To understand why prices are lower in the WESM, at least for the first half of the year, we need to appreciate the contribution of each segment in the electric power industry value chain,” said Atty. Richard J. Nethercott, IEMOP President and CEO. “The lower prices in the market is the result of improved efficiency in the entire industry value chain. It is a product of the collaborative efforts of all sectors, public and private.”

The Department of Energy (DOE) played a central role by advancing policies aligned with the Marcos administration’s goal of lowering electricity prices. These include the Green Energy Auction Program (GEAP), competitive power procurement rules, demand-side energy management initiatives, and transmission development mandates.

According to IEMOP simulations, successful implementation of GEAP rounds 1 to 5 could bring down average electricity prices in Luzon to around PHP 3.36/kWh by 2029, from the current PHP 4.95/kWh, a potential reduction of up to PHP 1.32/kWh.

Reforms such as DOE’s liberalization of foreign equity for RE projects, and the full commercial launch of the Renewable Energy Market (REM) in December 2024, further supported the shift to cleaner and cheaper sources of energy.

Nethercott emphasized that the private sector responded positively, with generation companies maximizing capacity output, especially among natural gas plants and new RE facilities. RE capacity increased by about 1,000 MW, and the system-wide average supply margin rose to 6,916 MW in H1 2025, up from 5,626 MW in H1 2024.

Transmission infrastructure projects such as the Mindanao–Visayas Interconnection Project (MVIP), Cebu–Bohol Interconnection, and the Hermosa–San Jose 500kV line helped reduce grid congestion and enable cheaper energy to flow across regions.

Distribution utilities also adjusted their strategies to take advantage of spot market lows. Meanwhile, the retail market grew, with programs like Retail Aggregation Program (RAP), Green Energy Option Program (GEOP), and Retail Competition and Open Access (RCOA) contributing to more competitive supply sourcing for commercial and industrial end-users. Retail market share increased to 22.26% as of June 2025.

“Lowering electricity prices is an industry concern requiring an industry-wide collaborative response. The problem cuts across every link in the industry value chain as the industry operates under a system of pass-on charging. And as shown by market results in the last six months, a collective effort of all stakeholders can indeed lower market prices,” Nethercott said.

Do you think current market conditions and policy reforms are enough to sustain low electricity prices beyond 2025? How can stakeholders further contribute to long-term affordability and reliability in the power sector?  

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