First Gen Corporation is calling for urgent reforms in the country’s energy market mechanisms, warning that current regulatory interventions are stifling investments in power generation, particularly during periods of high electricity demand. This comes as the company pushes ahead with major capital expenditures across its renewable energy portfolio.

Francis Giles B. Puno, President and Chief Operating Officer of First Gen, voiced concern during a recent stakeholder engagement, stressing that market rules—such as price caps imposed during peak demand—are distorting incentives and making revenue flows unpredictable for power generation firms.

“When San Gabriel expired in February last year, we were bidding in the spot market. The prices were good—except that, during a time of crisis, market intervention on pricing occurred,” Puno said. “So just when you’re supposed to generate revenue, you’re not being dispatched. That’s been challenging.”

He further warned that the viability of major facilities like the 1,000-MW Santa Rita plant is now under threat. “Without those contracts, the economic feasibility of Santa Rita will be jeopardized,” Puno added.

First Gen is urging regulators to establish clear and stable market mechanisms to encourage investor confidence in the power sector. “If you want more investments, you have to make sure there’s predictability in how you can earn a return,” said Puno. He added that merchant financing has become increasingly difficult as current market structures fail to adequately compensate the risks taken by power producers.

Despite these regulatory challenges, First Gen is forging ahead with its clean energy investments. The company has earmarked USD 600 million (PHP 35 billion) for capital expenditures focused on geothermal, solar, wind, and hydroelectric energy development.

Jerome H. Cainglet, Senior Vice President, revealed that First Gen drilled 24 geothermal wells last year and is currently in the middle of a three-year program targeting a total of 40 wells. Nineteen additional wells are scheduled for drilling in 2025. The program is aimed at expanding the company’s baseload renewable energy capacity to meet growing electricity demand.

“We’re aware of what we need to deliver,” Puno said, emphasizing that drilling must lead to actual steam production to support First Gen’s clean energy objectives.

Solar and wind initiatives are also gaining momentum. This year, the company is set to break ground on its first utility-scale solar project with an initial capacity of 50 MW, expandable to 150 MW. Wind feasibility studies are ongoing in Burgos, Ilocos Norte, and other concession areas.

In the hydro sector, First Gen is pursuing integration of the Kasiknan watershed with the Pantabangan-Masiway complex to enhance power generation, irrigation, and flood control. These initiatives are part of a broader strategy to align sustainable energy development with climate resilience and national infrastructure goals.

“We’re hoping to work with the government in being able to optimize the benefit of further investing in expanded flood management and irrigation,” Puno said.