Power spot market prices plunge to 5-year low in Dec

MANILA, Philippines - Electricity spot market prices plunged to a five-year low in December, keeping the annual average on the downtrend in the last three years, based on data from the Philippine Electricity Market Corp. (PEMC).

In a statement yesterday, PEMC said effective settlement spot prices (ESSPs) in the wholesale electricity spot market (WESM) plunged to P2.28 per kilowatt-hour (kwh) for the December 2016 billing period, the lowest since January 2011.

ESSPs refer to the average prices paid by wholesale customers for energy purchased from the spot market.

“The drivers were low demand due to cold weather and more available capacity from generating companies,” PEMC president Melinda Ocampo said in a text message.

On average, distribution utilities and customers sourced 21 percent of their requirements from the electricity bourse.

Meralco, the largest distribution utility in the country, procured 21.96 percent of its supply from WESM benefiting from the low prices.

For the month, market data showed coal accounted for 45.5 percent of the electricity generated in the Luzon and Visayas grids. Natural gas contributed 25.5 percent and diesel/oil with 0.5 percent.

Meanwhile, renewable energy resources made up 28.5 percent of the total generation mix. There was a slight increase from the output of geothermal resources at 13.9 percent and wind resources at 2.8 percent. Solar accounted for 1.4 percent, hydropower at 9.5 percent and biomass at 0.9 percent.

For the whole of 2016, ESSPs averaged P3.32 per kwh, continuing the annual decline in the last three years. ESSPs averaged P4.46 per kwh in 2015, P5.58 per kwh in 2014 and P8.37 per kwh in 2013.

Ocampo said the downtrend in market prices is a result of commercial forces.

“These market prices send signals to investors to make sound investment decisions on the timing of installation, capacity and type of resources. We see that WESM plays a pivotal role in a liberalized and deregulated market environment,” she said.