Stiff competition seen in power sector

THE Wholesale Electricity Spot Market (WESM) recently reflected an increase in registered capacities of generating units in the Visayas Grid, signaling stiffer competition within the power sector.

Melinda Ocampo, president of the Philippine Energy Market Corp. (PEMC), said that lower electricity rates would come as a consequence of greater competition in the market.

“Lower electricity costs would also encourage investors, such as those from the manufacturing sector, to put up businesses here,” she said in a press briefing on Thursday.

PEMC is the entity that governs the WESM, a centralized venue for buyers and sellers to trade electricity where prices are based on actual supply and demand.

“Since WESM reflects real prices, it sends a good signal for investments,” Ocampo added.

The WESM saw a 29 percent increase in generating capacities in the Visayas from 2,213 megawatts (MW) in July 2015 to 2,854 MW as of July 31 this year.

Market records showed that this increase could be attributed to the influx of emerging renewable energy sources such as solar, wind and biomass facilities.

These included the opening of a 59-MW solar power plant in Negros Occidental in April, which could deliver more than 80 gigawatt hours of clean and renewable energy to the Visayas Grid.

The entry of two coal-fired power plants in Iloilo this year was also seen to bolster the capacity of the grid.

The close to 3,000-MW generation capacity in the Visayas formed part of the 17,120 MW total registered generators within the WESM, majority of which are based in Luzon.

WESM data further showed that during the first half of 2016, customers in the Visayas sourced around 17 percent of their energy requirements from the electricity market while the remaining 83 percent were from power supply agreements.

As of June this year, the WESM now has a total of 272 participating members, with 101 generating companies and 171 customers.

Robinson Descanzo, PEMC vice president for corporate planning, said that the average generation offers in the market was 10,506 MW in the first half of the year.

This is against an average actual demand of 8,435 MW for the same period, he added.

“The interaction of the demand and supply resulted in an average spot price of P2,913 per MWh for the past six months,” said Descanzo.

He explained that the difference between the supply and demand creates a margin which comprises the reserve capacities meant to be used in case committed generating units bog down.

Descanzo said that the smaller the margin, the higher the spot price will be.

Read more...