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Drop in power demand cuts spot market prices–IEMOP

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The average Wholesale Electricity Spot Market (WESM) price dropped to P6.53 per kilowatt hour (kWh) from June 1 to 20 as demand for electricity eased compared to last month.

“For the first 20 days of June 2021, a decreased demand and a slight improvement in  supply was observed which reflected a decrease in the resulting market prices with an average of P6.53/kWh,” said WESM operator Independent Electricity Market Operator of the Philippines (IEMOP).

The trend is expected to continue for the remaining days of June. As such, the Effective Spot Settlement Price (ESSP)—effective rate paid by the customers for their respective WESM transactions for each billing month—is expected to be lower than May’s P8.31 per kWh.

IEMOP reported that the ESSP recorded in May was double than that of the April ESSP of P4.04 per kWh.

Last month, supply was greatly affected by generator outages and deratings. The outages, which reached as high as 2,396MW and deratings of 4,984MW, triggered yellow and red alert warnings, particularly on May 31 and June 1.

Market interventions were also called for several intervals by the National Grid Corporation of the Philippines (NGCP), due to manual load dropping as a result of generation deficiency.

With the tight supply conditions, the Secondary Price Cap was imposed as the average price breached the P9 per kWh threshold. Moreover, the total generation for the May market transactions was recorded at 7,236 gigawatt hours (GWh) which is higher than the previous month’s record of 6,818 GWh.

The Secondary Price Cap is a price-mitigating mechanism imposed when there are persistent high market prices.

The generation mix for the month of May continued to be dominated by coal power plants which generated 56.1 percent of the supply. This is a slight increase from its generation last month of 54.6 percent. Likewise, an increase in the generation of oil-based power plants, which are usually dispatched only during peak hours, was observed from 1.1 percent to 3.1 percent. Meanwhile, the generation from natural gas, geothermal, hydro, wind, and solar plants declined.

IEMOP, meanwhile, announced that the launch of the Enhanced WESM Design and Operations (EWDO) will take place on June 26. A key feature of the EWDO is the transition to a 5-minute interval for WESM from one hour.

“For the Luzon and Visayas market participants, this entails the implementation of a five-minute scheduling pricing, and market settlement. However, dispatch compliances will be relaxed for the first three months or until September 25, in order to provide market participants ample time to adjust to the new trading interval,” it said.

For Mindanao, a WESM Central Scheduling will initially be implemented for one month in order to provide time for some participants to complete the registration process. After which, a relaxed compliance period of three months will be implemented to enable the Mindanao participants to adjust as well to the market based scheduling and pricing mechanisms.

Read full article on BusinessMirror

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