Green Tiger Markets: June Electricity Market Review
Dear Valued Client,
Philippine power prices moved sharply higher in June, as tight domestic supply collided with still‑elevated global fuel costs and lingering geopolitical risk from the Middle East. Even when the Philippines is only indirectly exposed to external shocks, they show up in familiar ways: higher and more volatile coal and LNG prices, tighter margins for generators, and more uncertainty for utilities and large users planning ahead. For market participants, the cost of risk remains high, and the penalty for being unhedged is getting steeper.
This time, the stress is not just on the fuel side but also within the local system itself. Spot prices in the Wholesale Electricity Spot Market climbed again in June, reflecting strong demand, plant outages, and thin reserve margins—especially in regions such as the Visayas, where yellow alerts and localized shortages quickly translated into higher bills. For end‑users, the result was another step‑up in tariffs, with distributors passing through sizeable increases in the generation component of their charges. When spot prices stay elevated for weeks rather than days, exposure stops being a tactical inconvenience and becomes a strategic risk.
In that environment, transparent, market‑based price signals matter more than ever. Active spot trading gives generators, retailers, and large users a real‑time read on where the system is tight, how long the stress might last, and what it is costing. Instead of discovering the impact of volatility months later in contract renegotiations or regulatory petitions, participants can see it immediately in the price and adjust behavior—whether that means rescheduling consumption, rebalancing procurement, or revisiting maintenance plans. Volatility remains, but it is visible and therefore more manageable.
June also brought a structural shift on the retail side. With the contestability threshold lowered, a larger slice of commercial and industrial load now has the option to choose its supplier and rethink how it manages price and volume risk. That opens the door for more sophisticated procurement strategies: blending contracts, calibrating spot exposure, and using market‑based hedges to shape a forward price path that fits budgets and risk appetite. In a system where fuel and spot prices can move quickly, this flexibility is becoming a necessity rather than a luxury.
For the Philippines power sector, the opportunity is not to eliminate price swings—June has made clear that is neither realistic nor desirable—but to use them intelligently. A live, liquid spot market provides the early‑warning system; a more open retail market provides more levers to respond. By layering in forward hedges through GTM on top of those price signals, generators, retailers, and large end‑users can go one step further: converting a volatile environment into clear, pre‑agreed price paths that protect margins, stabilize budgets, and turn short‑term shocks into manageable, modelable risks. If you are reassessing how you manage exposure after June’s moves, we’d be glad to connect and explore how GTM’s hedging solutions can help bring more predictability to your power portfolio.
Interested in learning more about how to improve supply/demand balance forecasting?
Areas of Focus for Hedging
Forward prices have been creeping higher in Luzon
Significant price appreciation is being observed in Visayas
1 year Baseload Luzon strips starting over the next few months have been in the lower 5's
Strong desire to sell Midday hours
Cal 27 4900 Bid @ 5300 Offered
We’re now seeing a powerful, sustained wave of participation, with a broad range of players stepping in to capture value at today’s forward levels before the market’s next push. Generators are methodically layering in hedges to monetize elevated prices, while consumers are proactively locking in protection to reduce their exposure should the Middle East conflict drag on and further unsettle the curve.
Live pricing levels:
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Market Data and Commentary
Philippine power prices are climbing, fueled by a potent mix of elevated fuel costs and mounting weather uncertainty. At the same time, optimism that a wave of new renewables will arrive quickly enough to push prices materially lower is starting to wane. The stage is set for real volatility—both to the upside and downside—as coal markets, geopolitical tensions, El Niño conditions, and the pace of renewable build-out shape the trajectory of the market through year-end.
Bullish factors
Longer-term energy disruption could keep the market tight and support prices.
Elevated coal prices for the balance of the year would raise marginal generation costs.
A strong El Niño adds upside risk as El Niño conditions are typically hotter and drier than normal, which can increase AC demand and reduce hydro output.
A reversion to strong load growth could keep prices supported.
Bearish factors
The Middle East conflict could end soon, which will put downward pressure on energy prices.
Forward prices moved up 20–25% above pre-conflict levels. Prior to the conflict, the market was fairly heavy and felt oversupplied.
Energy supply-chain disruptions may prove less severe than currently observed.
A significant amount of solar is already energized, and more is expected through year-end.
The CBK hydro complex should be more active, helping balance midday solar surplus against evening deficits.
#1 Baseload Prices by Region
Prices have exploded higher as tight supply margins and hot weather stress the system. Prices observed for Visayas and Mindanao were the highest that we have seen since the switch to 5 minute prices in WESM.
#2 Luzon prices by 8hr time block
In our second graph below, we have plotted the 8 hour time block contracts as well as Baseload.
Prices gapped higher with evening leading the way to the upside. Midday also diverged from Morning prices.
#3 Luzon monthly ratios by product
In our third graph below, we have plotted the ratios of the individual 8 hour products to Baseload.
Midday prices, though bouncing from last months levels, still appear to be on a steady decline. Evening price remain robust, a 60% premium to Baseload.
#4 Luzon and Visayas Baseload by year
Visayas was the real story this month, clearing over 14 PhP/Mwh. Outages combined with transmission constraints and strong demand left very few options for the grid.
Luzon, though elevated, was still inline with prices observed in 2023 and 2024.
#5 Hourly Prices by Region
Below we have plotted hourly prices by region. Visayas pricing, again, was something special. Nearly every day cleared the price cap for hour ending 7 pm.
#6 Final settles by segment
Strong pricing in all time periods and regions. An early look into July prices has more of the same.
If you are interested in learning more about our data analysis, please don't hesitate to contact us at [email protected].
New Market Participants!
We continue to add market participants and expand the number of approved counterparties for the GTM market.
As a reminder, all market participants must have net assets in excess of SGD$10mm to become approved market participants.
Market News
As per our usual practice, we have incorporated a selection of recent news stories and emerging trends in the PH electricity market. If there are any noteworthy events you would like us to share, kindly inform us! Enjoy!
Philippines becomes worlds largest panel buyer:
The Philippines imported over $400mm worth of solar panels.
The Philippines’ mid-merit gas auction: Right policy.
The critical decision is not whether to bid, but what to build.
Philippines prepares for post-Malampaya era:
The Philippines is accelerating efforts to secure its energy future
PHP 10.07-B geothermal derisking facility gets gov’t green light:
The Philippine government has approved a PHP 10.07-billion financing facility aimed at reducing exploration risks for geothermal projects
ERC eyes prior review of CSP:
The ERC is proposing a new framework requiring prior review of Terms of Reference
Tighter supply, generation costs push up electricity prices and Meralco bills:
Electricity prices rose in June as tighter regional supply conditions pushed up wholesale market prices
Coal price outlook:
Newcastle coal futures are around $130/ton and looking for direction.
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Stay safe and thank you for your business!
-John Knorring, CEO Green Tiger Markets
The views contained in this newsletter are my own opinion and should not be considered investment advice or relied upon to make investment decisions. Disclaimer.
