By Lenie Lectura- January 18, 2017
The Department of Energy (DOE) has
formally declared the start of Wholesale Electricity Spot Market (WESM)
operation in Mindanao by June this year.
In a draft circular, the agency
“declares the launch of the WESM in Mindanao grid on June 26, 2017.”
Established under the Electric Power
Industry Reform Act of 2001, the WESM serves as the country’s
electricity-trading market.
Glut
With an oversupply of power in
Mindanao, 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.
“Mindanao has experienced excess
generation supply starting 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.
A power spot market in Mindanao, the
agency added, will ensure a reliable and stable supply of electricity.
Aboitiz Power Corp. (AboitizPower)
President Antontio Moraza said a WESM in Mindanao would ensure that additional
supply coming from new power projects would be dispatched economically.
Beneficial
“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,” Moraza said in a text message when sought for
comment.
AboitizPower is one of the largest
power producers in the country. Along with partners, it currently has 44
generation facilities with an attributable net sellable capacity of 2,402
megawatts (MW). Most of the company’s power facilities are in Mindanao.
Another power firm based in Mindanao
welcomed the DOE’s issuance of a draft circular on WESM Mindanao.
Alsons Energy Development Corp. of
the Alcantara Group also noted an oversupply in Mindanao.
Mindanao has a peak requirement of
about 1,300 MW to 1,400 MW. Supply is seen to almost double, with 1,000 MW more
of additional capacity that would come from power producers, including
AboitizPower, Alsons Power, SMC Power and FDC Misamis Corp. This new capacity
adds to Mindanao’s installed capacity of 2,414 MW as of 2015, of which 2,044 MW
are considered dependable.
‘Lesser evil’
Energy Secretary Alfonso G. Cusi is
aware of Mindanao’s oversupply situation. He,
however, downplayed the possible disadvantages.
“I just had a meeting in Mindanao.
The generation companies there see that Mindanao already has excess power. The
latest peak demand is 1,600 MW and Mindanao is now running at 2,800 MW of power
supply, and another 1,000 MW more forthcoming up to late-2017. So they are
saying that there could be excess capacity. But I asked this. Which is a better
problem? Having a power shortage or excess in power?” Cusi said.
From the point of view of the
consumers, having excess power supply, Cusi said, is a “welcome development”.
Alsons Power Group Vice President
for Business Development Joseph Nocos said a WESM in Mindanao would optimize
the utilization of various generating assets, thus ensuring system stability.
“WESM is not yet operational in
Mindanao, thus, its generating capacity that is not yet contracted could end up
being stranded. The challenge is how to optimize these assets so that Mindanao
would be assured of stable, reliable and affordable electricity,” he
said.
Short-lived
Alsons Executive Vice President
Tirso Santillan, meanwhile, commented that an oversupply in Mindanao will last
for up to three years at most.
“Historically, demand growth in
Mindanao is about 3 percent per annum. Mindanao has been one of the
fastest-growing regions in the Philippines so we think that 3 percent is very
small even with GDP growth rate of 7 percent, it’s still small,”
Santillan said. “We think, there will be an oversupply, but it will probably be
short-lived,” he said.
WESM operator Philippine Electricity
Market Corp. (PEMC), for its part, said it is “very much prepared” to comply
with the DOE’s directives.
“In fact, we are just waiting for
the DOE’s formal announcement,” PEMC President Melinda Ocampo said in a text
message when sought for comment.
Her office, Ocampo added, will
comply with the tasks involved in the preparation and commercial operation of
WESM in Mindanao.
Among others, PEMC shall conduct
trial operations with the Mindanao WESM participants and system operator to
ensure their readiness for the WESM commercial operations. PEMC shall submit a
readiness assessment to the DOE at least 15 days before the launch date.
Based on the draft rules, all power
firms in Mindanao shall be considered registered WESM members and must register
to ensure proper accounting of capacities in the Mindanao grid.
All embedded generators with
installed capacity of 10 MW and above and those with installed capacity below
10 MW that have a contract outside its host distribution utility, intends to
sell to the WESM, or injects power to the grid shall, likewise, be registered
in the market and shall be required to submit the necessary information to
assist PEMC in providing optimal dispatch schedule and pricing in the market.
Criteria
The DOE said the commencement of the
commercial operations of the WESM Mindanao shall be subject to the fulfillment
of certain criteria.
PEMC shall submit a certification to
the DOE on the status of the criteria at least 15 days prior to the launch
date.
The following are the criteria:
All systems and procures are in
place and pursuant with the requirements set under the WESM rules.
The forecasting, scheduling,
dispatch, pricing, metering and settlement processes of the WESM are fully
operational in the Mindanao grid.
Training programs shall have been
conducted for the WESM Mindanao trading participants.
The price determination methodology
for the enhanced WESM design has been approved by the Energy Regulatory
Commission and duly published.
The Market Dispatch Optimization
Model has been certified as compliant with the WESM rules by an independent
auditor.
A WESM is being implemented in Luzon
and the Visayas. As a temporary measure, an Interim Mindanao Electricity Market
(IMEM) was set up as a trading floor for electricity in Mindanao in 2013.
The IMEM was designed as a binding
day-ahead market where only the uncontracted or unutilized contracted
quantities are traded to enable to immediately address the power-supply
shortage in Mindanao.
However, IMEM was suspended in
February 2014 following a grid-wide power interruption in Mindanao, preventing
power companies with excess generating capacity to offer their output to
distribution utilities.
No comments:
Post a Comment