Power generators in the Philippines can now build larger plants after the Energy Regulatory Commission (ERC) removed capacity limits, a move intended to expand electricity supply, encourage investment, and foster greater competition in the power sector.

In a resolution dated Oct. 9, the regulator scrapped the previous limits of 600 megawatts (MW) per generating unit in Luzon and 150 MW in the Visayas and Mindanao. The ceilings applied to individual generating units rather than entire facilities, and the ERC said lifting the caps will allow developers to propose larger generating plants based on market demand, technological advancements, and grid capacity.

“By removing outdated capacity restrictions, we are opening opportunities for greater investments and additional power supply,” ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said in a statement issued late Wednesday.

Mr. Juan said allowing larger generating plants could strengthen competition, improve energy security, and help ensure more competitive electricity prices.

The decision comes as the country’s major power grids, particularly in the Visayas, face red and yellow alerts amid tight supply and rising demand. The Visayas grid logged 123 yellow and red alerts from January to late September due to forced shutdowns of several power plants. A yellow alert is issued when the operating margin is insufficient to meet the transmission grid’s contingency requirement, while a red alert is declared when available supply falls short of demand, raising the risk of rotational brownouts.

Despite the removal of capacity limits, proposed projects must still meet grid connection requirements and undergo a system impact study conducted by the National Grid Corp. of the Philippines (NGCP), which operates the country’s transmission network, or its accredited providers. The study will determine each proposed plant’s potential impact on the grid, including whether the system can accommodate its capacity without compromising reliability and security.

The ERC also directed the NGCP to review reserve requirements and power reserves in anticipation of larger generating plants entering the grid. Together, the system impact studies and the reserve review will help determine, project by project, how much additional generation the grid can take on.

The regulator said the reform aims to ensure sufficient power supply, reduce the risk of shortages, and boost competition to help moderate electricity prices over time.

“Our priority is not simply to add bigger generating plants, but to ensure that every additional megawatt contributes to a more dependable and efficient power system,” Mr. Juan said. “Consumers must benefit from adequate supply, fewer risks of power interruptions, and fairer electricity costs without compromising grid safety,” he added.

Since the enactment of the Electric Power Industry Reform Act (EPIRA), the 2001 law that restructured the country’s power sector, installed generation capacity has more than doubled to around 32,000 MW from about 13,000 MW, according to the Department of Energy.

Anne E. Montelibano, executive director of the Philippine Independent Power Producers Association, Inc., said the sector welcomed the ERC’s move, noting that the group had requested a review of the capacity limits in view of the country’s growing energy needs.

“We hope that the lifting of capacity limits is coupled with improvements in transmission and other infrastructure necessary to ensure the efficient delivery of energy from generation to distribution,” Ms. Montelibano told BusinessWorld.

Source: BusinessWorld