Electricity market prices nearly doubled in March, reaching P5.34 per kilowatt-hour (kWh), up by almost 96 percent from P2.73 per kWh in February, according to the Independent Energy Market Operator of the Philippines (IEMOP).

The market operator said the sharp increase was driven by a 4.4 percent decline in supply and a 5.9 percent rise in demand, leading to tighter conditions in the energy market.

IEMOP attributed the price surge to the combination of lower available supply and higher consumption due to extreme heat.

According to IEMOP, the system-wide average supply fell to 19,611 megawatts, a decrease of 901 MW from February’s 20,512 MW, mainly due to forced outages and derations of power plants.

Demand on upswing

On the other hand, demand climbed to 13,670 MW, up by 767 MW from February’s 12,904 MW, as extreme temperatures in early March drove electricity consumption higher.

With supply dwindling and demand rising, the market’s operating margin — the difference between available supply and demand — contracted to 3,957 MW, a significant drop from 5,725 MW in February.

The tight reserves contributed to sustained price increases, prompting the imposition of the Secondary Price Cap 6.39 percent of the time during the first week of March.

The strain on the system also led to a Yellow Alert declaration across the Luzon grid on 5 March after reserves fell below-required levels.

As the dry months approaches, IEMOP said it will continue to monitor market conditions, especially the impact of plant outages and seasonal demand fluctuations on electricity prices.