Higher spot market prices expected

By Jordeene B. Lagare – May 29, 2020
from The Manila Times

Spot market prices for electricity are seen to increase on the assumption that quarantine restrictions in parts of Luzon and the Visayas would be eased further in June, resulting in slightly higher power demand, the Independent Electricity Market Operator of the Philippines Inc. (IEMOP) said on Thursday.

In a virtual briefing, IEMOP Chief Operating Officer Robinson Descanzo said Wholesale Electricity Spot Market (WESM) prices could fall as low as P1.85 per kilowatt hour (kWh) or rise as high as P4.27 per kWh next month.

He told reporters that, in some intervals, WESM prices could hover a little over P8 per kWh. “But in most of the intervals nasa (it will play around) between P3 to P6” per kWh.

Although the May power billing is yet to be finalized, Descanzo said the effective spot settlement price (ESSP) is projected to hit P1.96 per kWh. “Pero although estimated iyan, whatever the result is, hindi na lalayo diyan (Although it is only an estimate, the actual settlement price will not be far from our forecasts).”

Once areas under modified enhanced community quarantine (MECQ) transition to general community quarantine (GSQ), the WESM operator anticipates electricity demand to gradually pick up as commercial and industrial establishments and activities resume.

In the first scenario, it is assumed that the power demand of the commercial and industrial sectors are 60-percent level of operations with MECQ in place. Demand is seen to steadily increase during GCQ until it peaks at 12,153 megawatts (MW).

But in the second scenario, demand of commercial and industrial sectors are at 70-percent level of operations. Once the GCQ is declared, peak demand is expected at 13,368 MW.

In both simulations, Descanzo said, the residential sector has maximized its electricity consumption as nearly all residents are staying at or working from home.

The IEMOP made the simulations on the presumption that power plants are operating round-the-clock before and during the enhanced community quarantine, which lasted from March 16 to May 15.

It also took into consideration the 1,113 MW taken out of the system due to multiple outages of power plants during this period.

Descanzo reported that during the first month of the coronavirus lockdown, or from March 16 to April 15, the system energy requirements of Luzon and the Visayas dropped by an average of 2,187 MW, or 21.1-percent lower than the pre-quarantine levels (February 26 to March 15).

But in the second month of the ECQ, the system energy requirement began to surge by 867 MW.

“Despite this, the system energy requirements of the Luzon and Visayas grids during the ECQ period still dropped by an average of 1,761 MW, such that the system energy requirements during the ECQ period was approximately 17- percent lower compared to the pre-ECQ levels,” said IEMOP.

As a result, the ESSP registered P2.47 per kWh and P1.50 per kWh in March and April, respectively, lower than the February figure of P3.45 per kWh.

WESM prices ranged from P0 per kWh to P5.07 per kWh, resulting in an average price of P1.58 per kWh.

Last year, WESM prices reached P5.20 per kWh in March and climbed to P8.18 per kWh in April.