DOE draft policy reclassifies PSH as energy source and ancillary service

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THE Department of Energy (DOE) has drafted a policy that will classify pump-storage hydropower plants (PSH) as both energy source and ancillary service (AS), with plans to auction the capacity and trade this at the electricity spot market.

Ancillary services are stand-by power in the event that baseload power plants bogged down. The system operator  (SO), which is the National Grid Corporation of the Philippines (NGCP), is required to maintain a certain level of AS to support the transmission of power from generators to consumers.

Based on the approved 2023-2032 Ancillary Services Agreement Procurement Plan, the required Regulating Reserve (RR), Contingency Reserve (CR), and Dispatchable Reserve (DR) for 2023 are 729 megawatts (MW), 959 MW, and 959 MW, respectively. On the other hand, the awarded AS per the recently concluded Competitive Selection Process (CSP) for the said AS requirements are 396 MW for RR, 985 MW for CR, and 866 MW for DR, respectively.

“To increase the portfolio of existing ESS [Energy Storage System] units and facilities and thereby achieve a desirable, sustainable, reliable and efficient level of generation capacities and AS [ancillary service] in the Philippine grid, there is a need to issue additional policies and mobilize key government agencies and entities,” the DOE draft circular stated.

Thus, the agency proposed that PSH will serve as “both Energy and AS and will complement the Energy Transition Program of the DOE.”

The DOE said it will conduct simulations of the Philippine Grid to include and assess PSH/ESS capacities needed to achieve the 2030-2040 RE (renewable energy) targets, integrate a larger percent of variable RE, and transition the grid from a thermal fuel-based energy mix to a flexible higher RE energy mix design.

Further, the DOE will integrate the ESS roadmap in the Philippine Energy Plan, Power Development Plan, and National RE Program. After which, capacities from PSH facilities and RE plus ESS integrated system shall be auctioned.

“The DOE shall include PSH facilities and other RE+ESS integrated system in the GEA (Green Energy Auction), subject to further guidelines for each GEA round. Towards this end, the DOE hereby extends to all PSH and RE+ESS integrated system the Preferential Dispatch status in the Wholesale Electricity Spot Market, pursuant to DC2022-10-0031,” the draft circular stated.

There will be amendments in the WESM (Wholesale Electricity Spot Market) rules to cover the capacities from PSH and RE+ESS integrated system in the spot market.

“Other than the GEA, PSH and other RE+ESS integrated system may choose to participate in the CSP [Competitive Selection Process] of DUs [distribution utilities] and of the SO, respectively, in the Green Energy Auction Program, and other markets and platforms existing and to be established by the DOE,” it added.

The Energy Regulatory Commission (ERC) will issue the rules in order to implement the proposed DOE circular.