IEMOP: Lower demand pulls down WESM prices

By Lenie Lectura @llectura

BARRING unforeseen circumstances, the downward trend in electricity spot market prices may prevail towards the end of the year.

According to the Independent Electricity Market Operator of the Philippines (IEMOP), operator of the Wholesale Electricity Spot Market Prices (WESM), there was a decline in electricity spot prices in the Luzon and Visayas grids from June to the first half of July due to decreased power demand as a result of the rainy season and tropical depression “Dodong.”

D espite intermittent hot weather caused by El Niño weather conditions, overall demand for electricity went down, leading to an 8.9 percent decrease in spot prices or P6.07 per kilowatt-hour (kWh) for the Luzon and Visayas markets compared to the

LGUs

previous month’s P6.67 per kWh.

A s the energy sector adapts to the cooler weather, market data for July reveals a decrease of 155 megawatt (MW) in average electricity demand for Luzon and Visayas, dropping from 11,641 MW in June to 11,486 MW.

D espite the decrease in demand, however, a new peak demand record of 12,522 MW was set in Luzon on July 6, 2023, at 2:15 p.m., which was 3.5 percent higher than the previous year’s peak recorded on May 12.

IEMOP Corporation Strategy and Communications Department Head Isidro Cacho Jr. said during an online news briefing on Wednesday that June WESM prices was a good indication of stable power supply. “Hopefully, that will continue then possibly we can further see lowering of prices. There are improvements in terms of the outages and plant performance,” Castro said.

Supply margins for Luzon-Visayas stood at 2,935 MW, while Mindanao averaged 1,261 MW. The generation supply mix in Luzon and Visayas for June 2023 was also boosted with increased contribution from the natural gas plants at 17.1 percent.

Mor e notably, Castro said the driver of lower WESM prices was the decline in demand. “In the supply side, we did not see any event for the past three months since summer. Our supply level is good and there wasn’t much forced outage incidents, which could mean possible improvement in terms of plant maintenance and plant operation,” he said.

“If we will not experience any unforeseen outages, I think we will see further downtrend especially towards the end of this year since we have a cold weather, unless El Niño will be more intense toward the end of this year and until first quarter of next year,” added Castro.

D uring the briefing, IEMOP provided an update on the ongoing trial operations program (TOP) for the Reserve Market.

The Reserve Market TOP is scheduled to run for three months, ensuring the preparedness of market participants, the System Operator, as well as the Market Operator.

IEMOP said the remaining tasks for the Reserve Market include the approval of the price determination methodology and necessary software certification audits. These tasks are expected to be accomplished in the coming months resulting in the anticipated commercial operations of the Reserve Market towards the end of this year.

The Reserve Market is expected to enhance the reliability and security of delivering power from generators to consumers through its optimal and responsive mechanism for scheduling regulating, contingency and dispatchable reserves.