PH POWER SUPPLY SEEN TIGHT SANS NEW CAPACITY

THE country’s power supply may be strained if no new capacities will come in by next Electricity Market Operator of the Philippines Inc. (IEMOP) said.

“If our current capacity will be constant but demand will continue to rise as we have seen in the past years, the demand for electricity has been constantly increasing, we will find ourselves in a situation where the supply margin will be already thin,” IEMOP president Francis Saturnino Juan said.

He said the thinning supply margin, or the difference between available electricity and power demand, may subsequently lead to higher prices at the Wholesale Electricity Spot Market (WESM).

“If there will be no [new capacities to be built] in [the] succeeding years, if the capacity will not increase, then we’ll see WESM prices also being affected,” he said at the sidelines of the Energy Outlook: Supplying Rising Demand at Lower Cost held recently at Joy-Nostalg Hotel & Suites in Pasig City.

If supply margin ranges between 2,000 megawatts (MW) and 3,000 MW, WESM rates tend to be stable.

“But if the supply margin will be already reduced to around 1,500 MW, then we see prices reacting to as high as P0.4 and then P0.7 per kilowatt-hour (kWh),” Juan explained.

During his presentation at the forum organized by the Stratbase ADR Institute (ADRi) and CitizenWatch Philippines, the IEMOP official said that everytime the supply gap decreases to about 100 MW, there is a corresponding price increase of P0.4 per kWh.

If the gap is further reduced to below 1,000 MW, the spot prices will rise by more than P0.7 per kWh. Currently, the average WESM price is P4.31 per kWh.

“As we have seen in the past, whenever supply margins are narrow, WESM prices tend to react,” Juan noted.

It is now up to government to make sure new capacities are built and to the private sector to respond to WESM price signals.

“This is something our market participants should be looking at in terms of the needed capacities that will have to be put in place, taking into account the growing demand of our country,” Juan said.