Electricity spot-market rate falls in March due to ECQ

Independent electricity Market Operator of the philippines Inc. (IEMOP) reported Thursday that spot market prices last month dropped to p2.47 per kilowatt hour (kwh), from p3.45/kwh in February, mainly due to low demand consumption from industrial facilities and commercial establishments.

“In light of the ECQ [enhanced community quarantine], the total energy and reserve requirements started to drop significantly,” it said.

This resulted in a drop in the system energy requirement of Luzon and Visayas grids by an average of 2,350 megawatts (MW), or around 19.8 percent lower as compared to pre-ecq levels.

“The significant drop in demand translated to a lower Effective Spot Settlement Price [ESSP] for customers at PP2.47/KWH for March 2020. This ESSP is 28.4 percent lower compared to P3.45/kwh in February 2020,” it reported.

The lower spot market prices were reflected in the March billing period for the electricity volumes bought from the WESM (Wholesale Electricity Spot Market). In the same month, 12.97 percent of the total energy requirement was settled at spot market prices.

IEMOP said the spot market prices further dropped until April 15. It added that this trend is expected to persist until April 30.

From April 1 to 15, IEMOP said spot market prices ranged from P0.0/kwh to P2.973/kwh, as the total demand for the Luzon and Visayas grids averaged only 9,541 MW while generation supply averaged at 13,911 MW.

During the first half of April, IEMOP said spot market volume was cut to an estimated 10.98 percent of the total energy requirement, which was likely due to the further reduction in energy consumption during the Holy Week.

If and when the ECQ is lifted after April 30, IEMOP said the average market prices are projected to be P1.83/kwh for April and P6.68/ kwh for May.

If the ECQ is further extended up to May 10, IEMOP said there is still ample generation supply, but this could result in slightly lower prices of around P4.30/kwh for May.

IEMOP also said that there could be “restriction of coal generation by about 600 megawatts [MW]” as a result of logistical delays in the transportation and delivery delays of coal brought about by the ECQ.

“If this happens, power plants utilizing available indigenous fuel [i.e., geothermal, hydro, and natural gas] will be maximized. The result of the simulations indicates that supply will continue to be sufficient. However, increase in market prices were observed,” said IEMOP.

To ensure continuity of WESM operation under ECQ, IEMOP has coordinated with the Department of Energy, the Energy Regulatory Commission and with Inter-agency Task Force on Emerging Infectious Diseases prior to the start of the ECQ and relayed its Business Continuity Plan.

“The WESM continues to operate smoothly and efficiently,” it said.