Electricity market prices expected to increase post-ECQ

THE market operator of the Wholesale Electricity Spot Market (WESM) is expecting spot prices of electricity to increase in May, as demand is also projected to gradually rise soon after the enhanced community quarantine (ECQ) is lifted on April 30.

In a market report released Thursday, the Independent Electricity Market Operator of the Philippines (IEMOP) said spot prices are projected to average of P6.68 per kilowatt-hour (kWh) in May, while generation capacity is deemed adequate.

The operator noted that the “significant” drop in power demand during the ECQ brought down the effective spot settlement price (ESSP) to P2.47 per kilowatt-hour (kWh) in March from P3.45/kWh in February.

The ESSP is the rate paid by customers for their WESM transactions each billing month.

The National Grid Corp. of the Philippines (NGCP) earlier noted a decrease in demand for electricity of around 20%-30% during the quarantine period.

With industries and commercial businesses shut down during the ECQ, the system energy requirement of Luzon and Visayas grids decreased by around 19.8% compared to pre-quarantine levels to an average of 2,350 megawatts (MW).

In the first half of April, market prices ranged from P0.0/kWh to P2.973/kWh with an over 4,300 MW supply margin. Spot market volumes also fell to an estimated 10.98% of the total energy requirement.

“A new trend in the demand profile was even observed wherein spot prices were mostly higher during the night as opposed to the afternoon,” IEMOP said.

The continued drop in spot market prices since March is expected to persist until the end of April. The market operator expected spot prices to settle at an average of P1.83/kWh this month.

Should the ECQ period be extended to May 10, IEMOP said that generation supply will still be adequate, bringing down prices slightly around P4.30/kWh for the month. — Adam J. Ang