Supply gaps push WESM prices higher

Wholesale Electricity Spot Market (WESM) prices rose in December as tighter supply conditions in the Visayas and Mindanao pushed prices higher, offsetting lower prices in Luzon.

In a report on Wednesday, the Independent Electricity Market Operator of the Philippines (IEMOP) said the system-wide average WESM price increased to P4.38 per kilowatt-hour (kWh) in December from P3.98 per kWh in November.

System-wide supply increased by 1.2 percent to 20,233 megawatts (MW) in December, while demand fell by 0.5 percent to 13,440 MW, lifting the overall supply margin to 4,798 MW from 4,572 MW, IEMOP said.

However, supply margins fell in the Visayas by 136 MW and in Mindanao by 245 MW, pushing WESM prices higher.

In Luzon, higher supply and lower demand brought the average WESM price down to P2.98 per kilowatt-hour (kWh) from P3.52 per kWh.

In the Visayas, supply rose by 106 MW but demand increased by a larger 181 MW, tightening the supply margin. In Mindanao, supply dropped by 245 MW due to a forced outage, while demand went up by 25 MW. IEMOP said these conditions led to price spikes in both regions.

Because prices stayed high, the secondary price cap was triggered for 213 intervals in the Visayas and 216 intervals in Mindanao, resulting in capped WESM prices of P7.22 per kWh and P7.82 per kWh, respectively.

The Effective Spot Settlement Price rose to P5.55 per kWh in December from P4.57 per kWh in November. Spot market volume increased to 13.2 percent of total traded electricity from 12.3 percent, while total trading value rose to P14.19 billion from P13.13 billion.

IEMOP said renewable energy made up 26 percent of total generation during the month. Coal’s share increased to 56.4 percent from 53.6 percent, while wind rose to 2.3 percent from 1.7 percent. 

Solar and geothermal edged up to 4.1 percent and 8.6 percent, respectively. Hydro fell to 8.8 percent from 11.1 percent, oil-based generation increased to 0.8 percent from 0.5 percent, and natural gas declined to 17 percent from 19 percent.

About 25 percent, or 2.25 terawatt-hours, of total customer transactions during the billing period were sourced from the retail market.