The Independent Electricity Market Operator of the Philippines (IEMOP), the operator of the Wholesale Electricity Spot Market (WESM), reported a decline in WESM prices during the first two weeks of June billing month.
The decrease in prices can be attributed to several factors, including a reduction in demand and a modest increase in supply. According to IEMOP’s data, the average WESM price in Luzon and Visayas experienced a drop of 1.73 pesos per kilowatt-hour during the initial two weeks of the June billing period, dropping from 8.83 PhP/kWh in May to 7.10 PhP/kWh in June. This decline coincided with a notable increase in the average supply margin, which reached 2,833 megawatts. This represents a substantial 595-megawatt rise from the previous month’s figures. The increased supply margin indicates improved market conditions, with an adequate electricity supply available to meet consumer demand. Similarly, Mindanao exhibited a comparable trend, with the average WESM price decreasing to 3.29 PhP/kWh in June from 6.21 PhP/kWh the previous month.
Additionally, IEMOP reported a significant development in the transmission system with the energization of the Balsik-San Jose 500kV Transmission Line. This new addition has alleviated previous constraints in power flow from Bataan to Bulacan, which had caused limitations in supplying power to Metro Manila. With the energization of this 1195-Megawatt line, congestion in the area has been addressed, and market participants can expect a more stable and predictable pricing environment. Since its implementation, there have been no recorded instances of congestion in the area.
Furthermore, progress continues with the testing of the MVIP (Mindanao-Visayas Interconnection Project), which commenced on April 30, 2023, at an initial load of 22.5 megawatts. The load test will gradually increase until it reaches its full transfer capacity by the third quarter of this year.
To further augment the energy supply for June, operations have resumed at the Ilijan Power Plant in Batangas, utilizing liquefied natural gas. This comes as a response to the rapidly increasing demand, ensuring a more robust energy supply for June and beyond.
In May, the Effective Spot Settlement Price (ESSP) in Luzon and Visayas stood at PhP 9.30/kWh. This reflected a peak demand increase of 2.6 % in Luzon, and 6.9% in Visayas compared to 2022. Coal accounted for 64.4% of the generation mix, followed by natural gas and geothermal sources. Additionally, due to tight supply margin conditions, there was an increased contribution from oil-based plants to meet the region’s energy demands. Meanwhile, in Mindanao, the ESSP rose to PhP 7.08/kWh compared to PhP 5.80/kWh in April. This also represented an increase of 11.5% versus the 2022 peak demand level in the region. The energy mix in Mindanao primarily consisted of coal, hydro, and geothermal power sources.