Infrastructure NewsPart 3 News: Seven Winning SectorsPower News

Power price spikes, brownouts seen likely



In this year’s summer months, Filipino consumers are being warned this early that they will be assaulted anew with double whammy of electricity price spikes and power supply tightness that may be coupled with worst case scenario of rolling brownouts.

On a written report that the operator of the Wholesale Electricity Spot Market (WESM) had submitted to the Department of Energy (DOE) and the Senate committee on energy, it was stipulated that “with the expected increase in demand, tight supply conditions and price spikes are likely to happen particularly during summer period,” or from March to June this year.

Independent Electricity Market Operator of the Philippines (IEMOP) noted that last year, consumers had to bear the brunt of more than 50 percent hike in prices of spot market-procured electricity because of tight supply conditions.

“The average price in 2019 was higher by 57 percent compared to the average prices of the previous three years. This can be attributed to the thinning of supply margins as available generation capacities are now unable to adequately support the increasing demand given the heightened occurrence of forced and maintenance outages and insufficient development of new generation capacities,” the WESM operator has emphasized.

The unfortunate scenario in the country’s power system now, it added, “underscores the need for new generation capacities to meet increasing demand.”

With sufficient power supply or ample flow of investments in additional power capacity, it stressed that such could “prevent recurrence of high market clearing prices,” which in the process redounds to higher pass-on costs in the consumers’ electric bills.

The same IEMOP report was presented to the industry stakeholders on Thursday (January 23) – including with the power generation companies (GenCos) of which dilemmas of plants’ forced outages emerged as a major stress in the electricity system last year.

According to Isidro E. Cacho Jr., chief of IEMOP’s Corporate Strategy and Communications Officer, the demand increase projection for this year is at 690 megawatts, hitting a high of 14,191 megawatts by June this year.

As assessed, while demand is increasing, supply addition is being beefed up way slower than it should have been, hence, the power system is already on a very rigid catch-up mode.

Compounding the situation, Cacho expounded, are the forced outages of the power plants that are happening both in the array of older and newer fleets of electricity generating assets.

“Demand is definitely increasing; and we are increasing at the rate of 500 to 600MW; or at 5.0 and higher annually. But the thing is we lack new development of supplies of generating capacity,” he said.

IEMOP further indicated that this year’s demand uptick “follows trends in previous years, such as in 2019, when demand level increased by 4.0 percent compared to previous years.”

The power system can expect the entry this year of new power capacity from the 668MW Dinginin coal-fired power plant, but this is scheduled on stream by July which would already be beyond the summer months.