Supply and Demand Outlook

According to the DOE Powerstat 2007, the Philippine electricity market has a total non-coincident peak demand of 8,993 MW. This demand is divided into three major grids with Luzon being the largest at roughly 6,643 MW, the Visayas and Mindanao grids are smaller and have peak demands of 1,102 MW and 1,241 MW, respectively. Based on the latest DOE Power Development Plan, which previously used the econometric approach in forecasting peak demand growth, the annual average growth rates for peak demand from 2006-2014 are forecast to be 4.3%, 6.0% and 6.5% for the Luzon, Visayas and Mindanao grids, respectively, under the Bottom-Up approach which makes use of forecasts made by the different Distribution Utilities and Electric Cooperatives in the country.

In Luzon, electricity consumption of residential and industrial customers each account for roughly one-third of total electricity sales. The commercial customer segment accounts for about 25 percent of total electricity sales but has the highest annual growth rate at 4.6 percent. This growth can be attributed largely to the opening of new shopping malls in rural centers and the surge in the business processing outsourcing industry. The annual growth rate in residential and industrial sales is roughly 3.9% and 3.2%, respectively.

On the supply side, official forecasts predict a generation capacity shortage in 2011. This is based on projections from the DOE and historical peak demand and growth figures. The lack of construction of new major power plants especially in the Luzon grid also supports this forecast. Nonetheless, the recent success in the privatization of major power plants (e.g. 600-MW Calaca and 600-MW Masinloc coal plants) is expected to provide additional generation capacities. The new private owners are expected to upgrade and rehabilitate the power facilities resulting in increased net dependable capacities. This is expected to mitigate or delay the forecast shortage.