Electricity prices decline as demand softens

Prices at the Wholesale Electricity Spot Market (WESM) are at their lowest since May as the cool weather persists and pushes down peak demand in the Luzon and Visayas grids by more than 500 megawatts below 2019 levels.

According to the Independent Electricity Market Operator of the Philippines (Iemop), which manages the WESM, effective settlement spot prices were continuing to fall in the first week of trading in December, averaging at P1.75 per kilowatt-hour.

From October to November, there was a 10-percent drop to P1.86 per kWh from P2.07 per kWh along with a 9-percent drop in WESM transactions.

At a press briefing, Iemop said this happened as ample generation supply and col­der weather conditions persist on top of the continuing implementation of community quarantine in several high-demand areas in the Philippines.

John Paul Grayda, manager for pricing validation and analysis at Iemop, said market results for November showed a decrease in monthly peak demand of 4.7 percent year-on-year or 580 MW to 11,589 MW from 12,439 MW in the same month of 2019.

Grayda said that as of Dec. 10, peak demand showed a year-on-year decrease of 4.5 percent or 539 MW to 11,485 MW from 12,024 MW previously.

In Luzon alone, peak demand also slid by 4.9 percent or 509 MW to 9,839 MW in November, and by 4.4 percent or 440 MW to 9,537 MW in the first week of December.

Similarly, in the Visayas, peak demand dropped by 5.3 percent or 113 MW to 2,040 MW in November, and by 6.4 percent or 137 MW to 2,013 MW in December.

“For market transactions, colder weather conditions and frequent occurrence of typhoons in November resulted in a drop in energy consumption by 9.2 percent, which is equivalent to 636 gigawatt-hours [compared to the level in] November 2019,” Grayda said.

With the persistence of cooler temperature, the contribution of hydropower plants in the spot market rose to 8.9 percent of transacted volume in November from 6.2 percent in October. Also, wind power plants accounted for 2.1 percent, rising from 1.3 percent.

Meanwhile, the contribution of coal-fired plants declined to 54.7 percent from 57.6 percent.