El Niño risks mount for hydropower developers
HYDROPOWER DEVELOPERS are already feeling the effects of El Niño as prolonged dry spells lower reservoir levels, disrupting operations and critical maintenance activities.
Source: BusinessWorld Philippines · August 16, 2026 at 7:03 PM · AI-assisted report
KUALA LUMPUR, 17 AUGUST 2026 —
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El Niño Threatens Malaysia’s Hydropower Sector as Regional Dry Spell Looms
Market Impact
KUALA LUMPUR — Hydropower developers across Southeast Asia are bracing for disruptions as El Niño intensifies, with Malaysia’s energy sector monitoring potential impacts on water-dependent power generation. The phenomenon, declared by the Philippine Atmospheric, Geophysical and Astronomical Services Administration in June 2025, is expected to escalate into a "Super El Niño" by late 2026, persisting into 2027. Regional hydropower operators report reduced reservoir levels and operational constraints, raising concerns over power supply stability.
In the Philippines, where hydropower accounts for 12% of total installed capacity, companies are already experiencing efficiency losses. Repower Energy Development Corp. (REDC) president Eric Y. Roxas noted that El Niño cuts hydropower plant efficiency to 35–40%, forcing temporary shutdowns for maintenance. "During this period, we take advantage of lower water volume to conduct repairs on weirs, waterways, and dredging activities," Roxas told BusinessWorld. REDC operates nine run-of-river plants (35 MW total) in Luzon and Mindanao, with six projects under development.
The dry spell has also strained multi-purpose reservoirs like First Gen Corp.’s Pantabangan facility in Nueva Ecija, where output plummeted from 120 MW to just 20 MW by July 2025. Senior vice-president Dennis Michael P. Gonzales warned that a one-meter drop in reservoir levels reduces power generation by 3 MW. "Failure to recharge sufficiently will lead to low reservoir elevation for the next cropping season, affecting irrigation and power output," he said. Pantabangan, which also supplies irrigation to Central Luzon’s rice fields, faces a lagged impact—meaning effects will worsen in 2026 even if El Niño subsides.
Regional Vulnerability and Grid Alerts
The Luzon and Mindanao grids, with 2,500 MW and 1,200 MW of hydropower capacity respectively, are particularly exposed. Gonzales noted that El Niño could trigger "yellow alerts"—issued when grid reserves fall below contingency requirements—already observed in June–July 2025. In Mindanao, state-run National Power Corp. (NPC) is accelerating maintenance on the Agus-Pulangi complex (982 MW capacity) to restore full operations by August 20. However, only 700 MW is currently functional due to aging infrastructure.
NPC CEO Jericho Jonas B. Nograles emphasized the need to balance energy demands with water security: "Water has many competing uses, and with the possibility of a Super El Niño, energy requirements must be weighed against community needs." The Agus-Pulangi plants, spanning Lanao del Norte, Lanao del Sur, and Bukidnon, highlight the trade-offs between power generation and agricultural water supply.
Malaysia’s Exposure and Mitigation Efforts
While Malaysia’s hydropower sector is smaller—contributing roughly 5% of national capacity—state utility Tenaga Nasional Berhad (TNB) is monitoring reservoir levels in key dams like Temenggor and Bersia. Industry analysts note that prolonged dry spells could reduce hydro output, increasing reliance on gas and coal plants. The Energy Commission has yet to issue specific warnings but is reviewing contingency plans under the National Energy Transition Roadmap.
Regional hydropower-heavy economies like Laos and Cambodia face similar risks. Laos’ 1,272 MW Nam Theun 2 dam, a major exporter to Thailand, has seen reduced spillway releases due to low Mekong River levels. Cambodia’s 193 MW Lower Se San 2 project reported a 15% drop in generation during the 2023–2024 dry season.
Stakeholder Perspectives and Long-Term Risks
Hydropower developers in Malaysia and the Philippines are adopting dual strategies: accelerating dry-season maintenance while preparing for wet-season surges. REDC’s Roxas highlighted the paradox: "El Niño allows us to complete construction projects with minimal weather delays." However, First Gen’s Gonzales cautioned that multi-purpose dams like Pantabangan face compounded risks—irrigation demands may outpace power generation needs during droughts.
NPC’s Nograles underscored the systemic challenge: "A Super El Niño would test our ability to prioritize water allocation." The Philippines’ Department of Energy has not yet revised its 2025–2030 power development plan but is considering incentives for hybrid solar-hydro projects to offset volatility.
Outlook: Balancing Energy and Water Security
As El Niño’s peak approaches, Southeast Asia’s hydropower sector faces a critical test. Short-term measures—like prioritizing grid maintenance and diversifying energy sources—are underway, but long-term resilience will depend on climate adaptation strategies. The International Energy Agency projects that hydropower’s share in ASEAN’s energy mix could decline by 2% by 2030 if droughts intensify.
For Malaysia, the lesson is clear: diversify generation while safeguarding water resources. With Super El Niño projected to linger into 2027, the region’s energy-water nexus will remain under strain—demanding coordinated policy and infrastructure responses. Details on Malaysia-specific hydropower adjustments remain unavailable as of August 2025.
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