Higher demand pushes electricity prices up

ELECTRICITY prices went up in March, caused by higher power demand and forced outages in February and March, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

IEMOP said the average price of electricity climbed from P4.03 per kilowatt hour (kWh) to P5.46 per kWh based on preliminary data for March this year.

Regionally, the average spot price surged in Luzon from P3.97 per kWh in February to P5.26 per kWh in March. For the Visayas, the price hike was from P4.58 per kWh to P6.26 per kWh, and for Mindanao from P3.71 per kWh to P4.20 per kWh for the same month.

“As we can see, from February to March, we have seen some increase in prices from P4 pesos to around P5.46. This is attributable to a thinner margin and there were some spikes, particularly in the first week of March,” IEMOP Assistant Manager for Market Simulation and Analysis Chris Warren Manalo said.

“The said spikes are attributable to some planned and forced outages in Luzon and Visayas region,” he added.

IEMOP also said that electricity supply was stable for the given period, averaging around 18,900 megawatts (MW).

However, the same period saw a notable surge in average demand, jumping from 12,372 MW in February to 13,185 MW in March.

This increase was observed across regions, with Luzon showing a 6.1-percent increase, followed by the Visayas with 6.4 percent, and Mindanao with 8.4 percent.

The higher demand levels eventually resulted in a lower supply margin, dropping by 19 percent from 4,757 MW last February to 3,860 MW as of March 24, 2024.

This drop occurred despite an average supply increase of 138 MW for the given period.

IEMOP likewise reported planned and forced outages from several power plants during the first week of March.

The combined planned outages, mainly from large conventional generators such as coal, natural gas, geothermal and hydroelectric plants totaled 2,724 MW.

Additionally, there were capacities that went on forced outage, totaling 1,062 MW largely from coal and natural gas plants during the same period.

Despite the price increases, the period had some positive developments, such as the Mindanao-Visayas Interconnection Project (MVIP) significantly improving supply security in the Visayas and Luzon grids, allowing excess power of up to 450 MW to be exported from the Mindanao grid.

On average, the MVIP has allowed an average of 341 MW to be exported to the Visayas, while the Leyte-Luzon High Voltage Direct Transmission link connecting the Visayas to Luzon provided an average of additional 296 MW to support demand in the Luzon grid.