By Lenie Lectura - August 2, 2017
The Department of Energy (DOE) has approved changes to the Wholesale Eletricity Spot Market (WESM) rules enhancing the market’s design and operations.
The approved enhancements are 1) shortening of dispatch interval from one hour to five minutes to lessen intra-hour deviations and imbalances; 2) single-pricing mechanism as a result of the shortened dispatch interval that will no longer require ex-post runs; 3) automatic pricing re-runs that will yield to availability of prices in real-time; 4) reduction of gate closure from one hour to 30 seconds or less that will provide trading participants flexibility in managing risks for unplanned events; and 5) co-optimized energy and reserves that will ensure optimal scheduling of energy and ancillary services.
These enhancements, the Philippine Electricity Market Corp. (PEMC) said, will address market operational audit findings and introduce new features and functionalities, such as simplified compliance-reporting process and demand-side bidding.
“The DOE’s timely action shows the confidence in the WESM in its role in encouraging efficiency and transparency in the power industry,” said PEMC President Melinda Ocampo.
Enhancements in the WESM design and operations were based on the WESM design study commissioned by the DOE, and results of the yearly independent audits of the system and procedures of the market operations.
“We had initial coordination with the DOE, ERC [Energy Regulatory Commission] and the National Grid Corp. of the Philippines to ensure the seamless deployment of the enhanced market design and operations. We will be holding several information drives for our WESM members and relevant stakeholders to engage them in this market milestone,” Ocampo said.
The amended WESM rules will be used for the development of the new information-technology (IT) infrastructure, and improvements in design will be, in effect, contingent on the approval of the market manuals by the DOE and pricing-related methodologies by the ERC.
PEMC now readies itself for the rollout of activities geared toward the deployment of new market infrastructure.
It has also streamlined processes in the approval of market membership. Processing time of market membership upon completion of requirements has been reduced from 15 days to five days.
PEMC has also complied with its task in changing the market rules to reflect the preferential dispatch status for emerging renewable-energy (RE) resources, as mandated by the Renewable Energy Act of 2008.
It reported registered capacity of preferential dispatch resources in the WESM totaling 1,356.6 megawatts (MW).
Preference in the dispatch of emerging RE resources has been implemented with solar, wind and run-of-river hydro resources classified as must-dispatch generating units, while feed-in tariff-entitled biomass are considered priority dispatch generating units.
With a surplus of about 1,000 MW of power-generation capacity in the southernmost grid, the time for Mindanao to have a spot market is now.
“Mindanao has experienced excess generation supply starting in the first half of 2016, which increased even further with the entry of other large generation capacities in the latter part of 2016, and shall increase even further in 2017,” the DOE said.
The new power facilities contributing to Mindanao’s additional capacity include the coal plants of Therma South Inc.’s Unit 2 (150 MW) in Davao del Sur, Saranggani Energy Corp.’s 118 MW in Sarangani, San Miguel Corp.’s Units 1 and 2 (150 MW each) in Davao del Sur, and FDC’s three units of 135 MW in Misamis Oriental.
The flood of new capacity is causing an oversupply of power in Mindanao, the country’s second-largest island that suffered up to eight hours of power curtailments daily not too long ago.
Mindanao recorded 748 MW of new generation capacity in 2016, and the figure is expected to increase further by 1,260 MW until 2018.
With an oversupply of power, a power spot market in Mindanao will provide a venue for efficient scheduling, dispatch and settlement of energy withdrawal and injections in the Mindanao grid. More important, it will ensure a reliable and stable
supply of electricity.
supply of electricity.
“We are pleased that WESM is finally in Mindanao. It’s a big move in Mindanao, but this is the best time to roll out a WESM in Mindanao. So consumers are in for a significant upside in Mindanao,” AC Energy Holdings Inc. President John Eric Francia commented.
Aboitiz Power Corp. President Antonio Moraza said a WESM in Mindanao would ensure that additional supply coming from new power projects would be dispatched economically.
“A spot market in Mindanao would benefit everyone. The sooner the WESM in Mindanao is implemented, the better. There are a lot of new power plants coming in. The new capacity must be dispatched economically.”
Joseph Nocos, Alsons Power Group vice president for business development, said a WESM in Mindanao would optimize the utilization of various generating assets, thus, ensuring system stability.
The Mindanao Development Authority (MinDA) urged electric cooperatives’ (EC) distribution utilities to take advantage of the excess power supply.
“It is now all about achieving a balanced mix of their sources. Electric cooperatives and distribution utilities must now take advantage of the abundant supply and cheap hydro power but, at the same time, utilizing their coal- power supply contracts,” MinDA Deputy Executive Director Romeo Montenegro said.
“Power distributors must balance reliability, sustainability and, most important, affordability of power,” he added.
The MinDA official said the oversupply must also be balanced, as some ECs have overcontracted. He encourages ECs to properly plan their demand forecast to better manage their supply.
PEMC pointed out that a WESM in Mindanao will address the supply concern and clamor from the generation sector in setting up a mechanism that will foster transparency and rationale pricing of electricity in the region. “This will be proven beneficial, as this will obviate additional costs in setting up a separate infrastructure for Mindanao,” Ocampo added.
Over the course of many years, PEMC’s reliable performance as the administrator of the country’s sole electricity spot market has steered the power industry into greater efficiency and transparency.