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March 31, 2026
Heavily contracted coal strains Philippines grid as outages surge in 2025
TZ-CAT data shows several heavily contracted units already exceed outage thresholds by 189%, posing risks to grid stability and electricity prices
Summary
Coal’s reliability record in the Philippines remains under pressure. Outages continue to be a recurring weakness.
New TZ-CAT data show outages rose in 2025, especially among heavily contracted units. Many of these plants set spot market prices, directly affecting what consumers pay.
Coal reliability risks are most acute during tight supply. As renewable momentum builds, stronger system flexibility and smarter procurement will be key to managing supply variability and price pressures.
Reliability under scrutiny as coal contracts rebound
Coal reliability concerns in the Philippines are not new. Previous TransitionZero Coal Asset Transition (TZ-CAT) analysis showed that forced outages challenge the idea of coal as dependable baseload supply.
Since 2024, coal Power Supply Agreements (PSA) have rebounded sharply. As more contracts are signed, the reliability of the coal fleet behind these agreements is coming under closer scrutiny.
The key question: is performance improving or getting worse?
The latest TZ-CAT data point to a different reality — one marked by technical failures, recurring outages, and growing reliability risks among heavily contracted units.
This analysis examines how coal’s operational performance affects grid stability and electricity prices for consumers. For a broader discussion of coal contracting trends, see our introductory blog incorporating the latest TZ-CAT dataset update: ‘Philippines’ emergency and long-term coal contracts are costing consumers.’
A sharp reversal: coal outages surge 200% in 2025
More coal contracting means distribution utilities (DU) continue to rely more on coal, even as reliability concerns grow.
Reliability concerns show up most clearly in how outages occur. These typically fall into three types. Forced outages result from unexpected equipment failures. Maintenance outages occur when units are taken offline for routine servicing or repairs. Planned outages are scheduled in advance for inspections or major overhauls.
Coal outage performance improved in 2024, as average forced outage days fell by around 57%. But 2025 has reversed that progress. Planned outages are already up more than 200% through the first three quarters. Boiler and equipment issues remain the most common causes, pushing planned outages to their highest level since 2020.
These patterns matter because outages can tighten available supply, especially during periods of high demand.
Stronger contract scrutiny has not fully addressed underlying system dynamics. Reliability risks persist despite regulatory pressure, with limited change in coal operating patterns. The system remains reliant on coal to manage supply gaps, increasing exposure to higher costs.
The worst performers are the most contracted
Reliability risks in 2025 are concentrated in a small group of heavily contracted coal plants.
Pagbilao’s TLI, one of the most contracted units, has already logged around 107 outage days as of September 2025.
Several coal units are already at or above regulatory outage limits. These include both circulating fluidised bed (CFB) and subcritical coal plants. Their ages range from 4 to more than 40 years.
This suggests reliability issues are not limited to aging plants, but affect a broader share of the coal fleet. Notably, relatively newer CFB units such as GNPD (~4 years old) and SLPGC (~10 years old) have continued to secure multiple coal contracts since 2024 (10 and 4, respectively).
As outages pile up, contracts tied to these plants carry rising risks. When these plants go offline, replacement power is used to fill the gap. Frequent reliance on replacement power, especially when reserves are tight, can further strain supply conditions and may push prices higher.
Coal plants set spot prices, despite unreliability
Coal units frequently set prices in the spot market in 2025, as they often appear at or near the dispatch margin.
This means a group of coal plants regularly influences electricity prices each month. Several of these price-setters, including TLI and GNPD, have also secured significant PSA volumes since 2024. They are both contracted supply sources and frequent price-setters. That dual role amplifies the risk.
TLI is one of the most frequent marginal resource, yet it has among the worst outage levels in 2025. A full-month dispatch price shows its influence in the spot market. Prices tend to be lower in the morning and rise from late afternoon into the evening. Peak prices usually occur between 16:00 and 21:00.
As demand rises and solar generation declines, lower-cost supply tends to become more limited. Higher-cost thermal plants are more likely to move to the margin and influence market prices.
Spot prices rise sharply during evening hours in July 2025:
Hourly prices of TLI show consistent spikes from midday to evening when system demand is highest.
Source: IEMOP, 2025.
These patterns do not explain every price spike, but they indicate how coal availability and costs can influence system prices when supply is tight. The current market design structurally advantages fossil fuel plants as price-setters, even when their reliability is poor.
Frequent coal outages tighten system reserves
When coal plants with PSAs go down, replacement power must come from the spot market or backup capacity.
If several coal units are offline or running at reduced capacity, available reserves can tighten, raising the likelihood of yellow or red grid alerts.
In 2025, months with high outage days often coincided with tighter reserves and alerts. This pattern shows how overlapping planned and forced outages can place pressure on system reliability.
Coal contracting has grown even as these operational problems persist. This raises a direct question: are reliability risks being properly weighed in new PSAs, and are existing guardrails sufficient?
Protecting consumers in a coal-reliant system
As coal continues to dominate supply portfolios, reliability standards and monitoring frameworks are becoming increasingly important.
In 2026, the Philippines’ Energy Regulatory Commission (ERC) is reviewing reliability performance rules, with proposals to refine outage metrics and set technology-specific standards. This reflects growing attention to operational performance as coal continues to meet a large share of near-term and long-term demand.
But reliability risks remain. Coal still provides a floor of supply for the grid. Its influence on prices will persist as renewables grow.
Replacement power provisions help manage supply disruptions. But frequent outages place pressure on grid operations and affect system stability. In contrast, healthier supply margins can help stabilise electricity prices, particularly when external cost drivers such as imported fuel prices are favourable.
Stronger supply margins help buffer price swings and reliability risks. But they won't remove the system's reliance on coal or imported fuels when supply is tight.
The key question is no longer whether to extend coal. It's how fast the system can bring in renewables, while keeping the lights on and costs in check.
Applying TZ-CAT insights: test these dynamics in Scenario Builder
The current analysis highlights reliability concerns and effects on grid operations. These dynamics can be further explored through the following use cases:
Persistent outages: In Scenario Builder, impact from outages can be modelled by reducing plant use. This helps test which power sources can fill the gap at the lowest cost across Luzon, Visayas, and Mindanao.
Early exit of unreliable coal: Coal units with persistent outage issues can be phased out in selected years to assess replacement needs and system impacts. This can be tested in Scenario Builder by adjusting residual capacity or limiting new capacity through targeted capacity constraints.
Explore Scenario Builder now and build your own scenario using TZ-CAT data.
Note: The above analysis is based on the latest TZ-CAT dataset to September 2025.
This is the second part of a two-part series analysing TZ-CAT data in the Philippines. Read the first part here.
