As summer approached in the country under the pandemic, the Wholesale Electricity Spot Market (WESM) encountered an increase in its spot prices during the previous month which was largely attributed to the higher frequency of unplanned generator outages and rise in demand. Averaging at P4.16/kWh, the March 2021 spot prices substantially increased in comparison to Php2.22/kWh last February billing.
From the original planned daily outage capacity of 996 MW for the month, the average generator outage capacity increased to 2,575 MW. As a consequence, the clearing of diesel power plants in the spot market also increased. Notably, 75.44% of outage capacity for March is traceable to coal power plants, resulting to a drop of generation from coal from 54.3% to 53.9% in comparison to the previous month. Generation from geothermal plants also dropped from 11.4% to 10.5% while output from natural gas plants increased from 22.3% to 23.5%. Meanwhile, given the onset of the dry season in the country, hydro and wind plants’ generation decreased from 6.6% to 5.9% and from 2.2% to 1.6%, correspondingly.
For the March market transactions, total generation was recorded at 6,162 GWh which is noticeably higher than the 2020 level by 0.8% or approximately 51 GWh. Spot percentage for the month also slightly increased from 10.6% to 11.3% from the preceding month, while the Effective Settlement Spot Price (ESSP) cleared at 4.51 P/kWh. Thus, the higher spot price will impact only 11.3% spot percentage or 695 GWH of the total requirement for electricity in the Luzon and Visayas grids. Prices for the remaining 88.7% of the requirement in the grids will be settled based on the Power Supply Agreement between the Customers (Distribution Utilities, Suppliers and Bulk Users) and their contracted Generator suppliers.
During its monthly media briefing, the Independent Electricity Market Operator of the Philippines (IEMOP) stated that the movement in demand also contributed to the resulting spot prices. Last March, the average demand increased by 11% or around 997 MW. The System Peak Demand was recorded at 12,582 MW last 18 March – a difference of 9.6% or 1,097 MW compared to last month’s data. Consequently, the regional peak demand increased for both grids during the months of February and March – 9,544 MW to 10,487 MW for the Luzon grid and 1,941 MW to 2,146 MW for the Visayas grid.
As portions of Luzon experienced stricter restrictions as a safety precaution to the global pandemic, the Market Operator also observed a decrease in demand following the announcement of the varying levels of community quarantines. Furthermore, a significant drop in demand was recorded during the imposition of the Enhanced Community Quarantine, which incidentally fell on Holy Week during the last week of March and onset of April.
