Expanded Philippine grid cuts curtailment by nearly two thirds in 2035 but risks more coal

Part 1 of 2: This piece uses dispatch modelling to assess how expanded interconnection changes power flows and generation. Part 2 uses capacity expansion modelling to examine longer-term impacts on costs, emissions, and investment needs across different futures.

Summary

Constrained transmission can limit how much renewable generation the grid can absorb. In 2035, expanded interconnection could cut solar and wind curtailment by 59%, recovering around 873 GWh of variable renewable energy and creating more room for higher renewable energy utilisation.

But expanding the grid is not inherently green. Access to more generation allows existing coal plants to run more frequently. Visayas coal utilisation rises from 51% to 80%, while the overall renewable share of the grid falls from 53% to 49%.

Seasonality also shapes corridor utilisation. Visayas to Luzon becomes heavily used in higher-demand months, while substantial headroom remains elsewhere. This shows where constraints may persist and where added capacity provides flexibility. These can be further stress-tested in Scenario Builder under different demand, renewable deployment, and coal retirement pathways.

Expanding the Philippine grid raises power-system trade-offs

The Philippines’ three main grids - Luzon, Visayas, and Mindanao - face changing operating conditions as electricity supply and demand evolve.

The Visayas grid illustrates one of these challenges. Persistent congestion and frequent coal outages have left the grid vulnerable to alerts and dependent on imports. Limited interconnection with Luzon also restricts how much electricity can move between the two grids during periods of shortage or surplus.

Transfer capacity is currently limited to 250 MW from Luzon to Leyte and 420 MW in the reverse direction. A bottleneck in the Cebu-Leyte submarine cable system prevents full use of the Leyte-Luzon high-voltage direct current line’s 440 MW capacity. The Visayas-Mindanao interconnection, meanwhile, has a rated transfer capacity of 450 MW in each direction.

The Philippines is pursuing major island interconnections and backbone upgrades to strengthen the national grid. Planned capacity expansions between the major island grids through 2035 are identified in National Grid Corporation of the Philippines (NGCP) latest Transmission Development Plan 2026–2050. The plan uses the Department of Energy’s (DOE) 2026 demand projections and generation outlook to assess future electricity supply and transmission needs.

Luzon to Visayas transfer capacity is expected to reach 880 MW in both directions through the Luzon-Visayas Bipolar Operation Project. Visayas to Mindanao capacity is also expected to reach 900 MW through the expansion of the Mindanao-Visayas Interconnection Project. Besides improving regional trade flows, these investments are intended to support the government’s renewable energy (RE) generation mix targets of 35% by 2030 and 50% by 2040 through 2050.

This raises a few key questions:

1. How does doubling interconnector capacity change renewable curtailment, generation dispatch, and power sharing across the Philippine grid?
2. Where does it relieve constraints, where do they persist, and what trade-offs emerge as generation shifts across regions?

We used Scenario Builder to find out.

Model and scenario set-up

We modelled the Philippines at a three-node level (Luzon, Visayas, Mindanao) using a least-cost capacity expansion (CE) framework. The model reflects committed capacities based on DOE 2026 reports, including projects awarded under the Green Energy Auction Program.

Each scenario’s optimised 2035 capacity mix is then fed into an hourly dispatch model to examine system operations.

The analysis considers two grid configurations: a no-upgrade base, and an interconnector upgrade.

Base case. The existing transmission constraints are retained, with transfer limits of 250 MW from Luzon to Visayas and 420 MW in the reverse direction.

Transmission (Tx) upgrade. The scenario removes the island interconnection constraints and reflects the backbone upgrades.

These projects are due to finish between 2030 and 2032, if all goes to plan with no delays. Given the history of delays in Philippine transmission projects, we use 2035 as a more conservative analysis year.

For full details on the input data, please download our documentation here.

Higher transfer capacity in 2035 enables higher coal dispatch

Expanded interconnection raises coal generation most visibly in Visayas, where circulating fluidised bed (CFB) coal utilisation rises from 51% to 80%. In the base scenario, Visayas already has substantial low-cost geothermal generation, while exports to Luzon and Mindanao are constrained by limited interconnector capacity. Once local demand is met and the links are saturated, there is little room for additional coal generation, pushing coal down in the dispatch order.

Luzon changes this dynamic. Its much larger demand base can absorb more generation from Visayas once transmission expands. Visayas net exports rose by about 4.15 TWh, closely tracking the 4.21 TWh increase in its coal generation and contributing to 5.74 TWh more coal generation across the system.

Mindanao shows a similar but weaker effect. Its relatively low demand is already served by substantial hydro, geothermal, and cheaper CFB coal, leaving higher-cost subcritical coal further down the merit order. Its utilisation therefore rises only from 8% to 18% after transmission expands.

When transmission is constrained, this export opportunity falls and the system relies more on local alternatives. This includes around 2.2 TWh more gas in Luzon and higher solar generation in Luzon and Mindanao.

This highlights a transition trade-off: greater grid integration can improve resource sharing while also increasing utilisation of existing fossil assets.

Restricted grid wastes 873 GWh of clean energy

Without the interconnection upgrade, an additional 873 GWh of solar and wind generation is curtailed in 2035. Expanded transfer capacity allows more of this clean energy to move across regions, cutting combined curtailment by 59%, from 1,476 GWh to 603 GWh. Of the 873 GWh recovered, 600 GWh comes from solar and 273 GWh from wind.

This happens because constrained interregional transfers force each grid to lean more heavily on local generation. Under the base scenario, Luzon and Mindanao have more solar capacity at 2,002 MW and 1,258 MW, respectively. Luzon also has an additional 374 MW of gas-fired capacity and 177 MW of oil-fired capacity to help meet peak demand and provide supply as solar output falls in the evening.

This dynamic shows up on Luzon's modelled high demand day. More transmission changes how the midday solar surplus is handled, but the evening picture stays largely the same, which implies the need for more flexibility with or without transmission.

Meanwhile, more solar capacity does not necessarily mean more usable solar. In the base scenario, Luzon records nearly four times as much solar curtailment.

Despite higher curtailment, the larger renewable fleet in the base scenario still generates more RE overall: 109.3 TWh, compared with 105.7 TWh in the upgraded scenario. As a result, the renewable share is 53% in the base case, 4.2 percentage points higher than the upgraded case.

Transmission expansion reduces wasted renewable generation in 2035 but does not necessarily increase the renewable share.

Doubling the interconnection ceiling leaves substantial headroom

Total energy traded across all four interconnector directions rises from ~6.25 million MWh/year (base) to ~11.14 million MWh/year (counter) — a 78% increase.

However, utilisation remains highly uneven. Visayas to Luzon is the only direction that approaches its expanded limit, leaving just 15–26 MW of headroom (roughly 97–98% utilised) from June to September. Mindanao to Visayas leaves 795–896 MW unused throughout the year, while Luzon to Visayas retains 730–875 MW.

Seasonal changes in electricity demand and available generation shape how the inter-island corridors are used. During wetter months, higher hydro output in Mindanao increases flows toward the Visayas.

At the same time, rising demand in Luzon reduces flows from Luzon to the Visayas, particularly in May. From June to September, the Visayas to Luzon corridor becomes more heavily used as wind output in the Visayas drops sharply.

Combined solar and wind output falls from around 1,200–1,370 MW in January and February to about 500–580 MW by June to August. Coal and geothermal generation increase to make up for the lower renewable output, leaving more power available to flow toward Luzon and putting greater pressure on the corridor.

Transmission adequacy depends on when and where constraints emerge, not corridor capacity alone. For operators and planners, seasonal bottlenecks such as Visayas to Luzon can guide targeted reinforcement while also highlighting where demand-side response, storage, and other flexibility measures could reduce peak transfer needs and improve use of existing capacity.

More transmission does not guarantee a cleaner system

Transmission is an energy carrier and therefore its environmental benefit often depends on the existing generation mix and enabling grid policies. This scenario analysis assumes no coal expansion beyond the committed pipeline, with renewable targets met organically rather than through model constraint.

Under the conditions tested, stronger interconnection reduces renewable curtailment but also increases fossil dispatch, raising the question of what policies would be needed to prevent locking in higher fossil utilisation.

Timely delivery also matters. Delays on grid upgrades can prolong reliance on costlier fossil generation while renewable projects remain constrained, undermining output and their bankability. This points to closer coordination between transmission development, project siting, and generation planning, as grid constraints can shape nodal prices and the value projects can realise.

Over the longer term, the outcome will depend on how the generation mix and demand evolve. Power planners should test transmission expansion across different transition pathways to assess whether it supports deeper renewable integration or reinforces fossil generation.

Part 2 explores this long-term view.

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