IEMOP: Power spot market prices likely to increase amid tight supply

MANILA, Philippines — The country’s electricity spot market operator sees a repeat of elevated spot market prices this year due to anticipated tightness of supply amid an expected increase in demand as well as slow development of new power plants.

In a briefing yesterday, Independent Electricity Market Operator of the Philippines Inc. (IEMOP) said effective settlement spot prices (ESSPs) averaged P5.43 per kilowatt-hour (kwh) last year, higher than the P3.69 per kwh in 2018, P3.37 per kwh, in 2017, and P3.33 per kwh in 2016.

In the past year, the highest ESSP was recorded in June at P8.38 per kwh while the lowest was registered at P2.18 per kwh in September.

IEMOP said last year’s average price was 57 percent higher than the average prices of the previous three years.

It attributed the increase to “thinning supply margins as available generation capacities are now unable to adequately support the increasing demand given the heightened occurrence of forced and maintenance outages and insufficient development of new generation capacities.”

IEMOP chief operating officer Robinson Descanzo said the series of unplanned plant outages should be a signal to check the operating efficiency of power plants.

Meanwhile, natural calamities and delayed entry of additional capacity into the grid also played a major role in the rise in spot market prices, he said.

Several power plants and transmission lines were affected by the 6.5-magnitude earthquake in Zambales in April, and by typhoons Tisoy and Ursula in December.

On the other hand, the commercial operations of  the 355-megawatt (MW) Unit 3 of the Masinloc power plant and the 455-MW San Buenaventura power plant, which were expected to come in during the hot months, only started operations in the second half.

For this year, IEMOP expects peak demand to grow by 5.6 percent to 14,191 MW. This means an additional of 700 MW capacity is needed to be injected into the grid—around 500 MW in Luzon and nearly 200 MW in Visayas, Descanzo said.

“But we don’t have additional power plants coming in before summer. They  will come in only after summer,” Descanzo said.

He was referring to the entry of the GN Power Dinginin coal power plant with 668 MW, which is expected to be online in June.

“With the expected increase in demand, tight supply conditions and price spikes are likely to happen particularly during the summer period. This underscores the need for new generation capacities to meet increasing demand and to help prevent recurrence of high market clearing prices,” Descanzo said.

IEMOP’s findings will be reported to the Department of Energy (DOE) in preparation for the summer period.

‘We’ll just highlight the impact of tight supply, so maybe they can accelerate the plants that are commissioning,” Descanzo said.