The Independent Electricity Market Operator of the Philippines (IEMOP) expects prices at the electricity spot market to increase to a range of P5 to P7 per kilowatt-hour in the dry months starting April 2024.
It said average prices at the Wholesale Electricity Spot Market, the trading floor of electricity, started to go up in March amid higher temperature exacerbated by the El Nino dry spell.
System-wide WESM prices averaged P5.46 per kWh in March, up from P4.03 per kWh in February amid a surge in demand.
Data showed that power demand rose from 12,372 megawatts in February to 13,185 MW in March.
It said that in the Luzon grid, the average WESM prices surged to P5.26 per kWh in March from P3.97 per kWh in February.
“In terms of the WESM prices, I think it will increase at around P5 to P7 [per kWh], as the demand from February going to March is increasing [and] the hot weather [rises],” IEMOP assistant manager for market simulation and analysis Warren Manalo said.
Manalo said the increased power demand was driven by higher temperature, coupled with the El Nino weather phenomenon that translates to higher electricity prices.
“As the demand increases, the prices also increase, and it is also noteworthy some of the plants like the hydro plants are in the limit of the water level. Technically, the generation of our hydro capacity will be limited or in total no generation during those summer months,” he said.
IEMOP expects peak demand to reach 13,273 MW for Luzon, 2,628 MW for Visayas and 2,650 MW for Mindanao this year, but the agency said several new power plants may also come online to help secure supply.
IEMOP vice president for trading operations Isidro Cacho they were expecting a demand growth of 6 percent for Luzon, 7 percent for Visayas and 8 percent for Mindanao this year.
“Last year, Luzon had a peak demand of 12,522 MW from our record. If we’re applying 6 percent of that, we expect peak demand in Luzon to reach as high as 13,273 MW,” Cacho said.
Cacho expressed hope there would be no unplanned power outages during the dry months, as it would also affect WESM prices.
“As you all know, there is policy of no maintenance during April, May, June. No plant maintenance. Hopefully, if there is no forced outage, we don’t see any significant increase in prices,” Cacho said.
“But with the increased demand, most likely, there will be a slight increase in price,” he said.
Cacho said that based on IEMOP’s simulation “if there are forced outages of large plants, that would contribute to the possibility of yellow alert.”
He said the completion of critical transmission project would hopefully help address the increased demand and mitigate impact on prices.
“The 450 MW through the submarine cable between Mindanao and Visayas really helped a lot in augmenting the supply not just in Visayas but also in Luzon,” he said.
He said the completion of the Cebu-Negros-Panay phase 3 transmission project on March 31 would also significantly improve the reliability of supply in Negros and Panay.
