WESM to start power reserves trading this year
By Myrna M. Velasco – May 31, 2021, 7:00 AM
from Manila Bulletin
As a remedy to the recurring problem of scant power reserves that subsequently results in higher electric bills or brownouts, the Wholesale Electricity Spot Market (WESM) will start integrating ancillary services (AS) or power reserves in its trading activities by December.
According to Assistant Secretary Redentor E. Delola of the Department of Energy (DOE), “our target is to have the commercial operations of the reserve market by the end of the year.”
He qualified though that “there are still a number of requirements that we need to fulfill,” prior to concretizing the long envisioned AS market that will be co-optimized with the offer of energy capacities in the spot market.
Delola indicated that at this stage, “the policy is already published, and we already wrote all the involved entities of their responsibilities under the policy.”
Once the reserve market in the WESM moves from concept to a functioning entity, specified ancillary services – chiefly regulating reserve, contingency reserve and dispatchable reserve – will already be traded in the spot market and this provides an avenue for system operator National Grid Corporation of the Philippines to already purchase the reserves it will be needing at competitive prices.
The energy official explained that the reserve market due for implementation this year will just be the initial phase; while the full or more mature design will be due in 2026 and that will already accommodate the trading of secondary and tertiary reserves that the country’s power system will be requiring for power reliability and in rendering efficient services to consumers.
“Once the reserve market starts its operations, the contracted AS will be reduced to a minimum of 50-percent,” Delola said, entailing then that the other half will have to be sourced from spot-traded AS offers of the qualified power generators.
Among the policy underpinnings still sorted by the DOE, the energy official emphasized, are those on: accreditation of third party AS testing entities as well as the proposed conduct of competitive selection process (CSP) for the system operator’s procurement of AS contracts.
Reserve requirements of the power system had been one of the concerns being prodded for firm solution – primarily by the energy department, because this is becoming an oft-repeated problem in the power system especially on peak demand months of summer.
If there is a well-functioning reserve market, power generators can co-optimize their capacity offers for both energy and ancillary services via the trading platform of the WESM.
The DOE promulgated in March this year the Department Circular that prescribes the general framework, design as well as the corresponding role of each party or industry player in the operationalization of the reserve market. (MMV)
