Renewable plants get priority in power spot market

The Department of Energy (DOE) has ordered the preferential dispatch of all renewable energy (RE) plants in the Wholesale Electricity Spot Market (WESM), the centralized venue for trading electricity as a commodity.

Under Department Circular (DC) No. 2022-10-0031, all power generation plants that use renewable resources will be classified as either “must dispatch” or “priority dispatch” in the WESM.

This means geothermal and hydroelectric power plants are included on the list of generating units that will be given priority in the current bidding order in the spot market.

In a statement, Energy Secretary Raphael Lotilla said the new policy would further promote the use of renewables in the country and reduce the dependence on imported conventional energy sources such as coal.

The government wants to increase the RE share in the energy mix to 35 percent by 2040 and raise it further to 50 percent by 2040.

To date, coal-fired power plants account for more than half of the power generation mix at 58.48 percent as of last year, followed by renewables at 22.40 percent, based on the latest figures from the DOE.

“This will minimize the country’s exposure to price fluctuations in the global market, making the supply and delivery of electric power more stable and secured from international geopolitical conflicts,” said Lotilla.

“Giving preferential dispatch to RE-generating plants will also encourage investments for additional capacities in geothermal, biomass or impounding hydroelectric power plants because of guaranteed dispatch in the grid at their full available capacities under merchant pricing, allowing recovery of investments,” he added.

As per DC No. 2015-03-001, “must dispatch” is facilitated in the WESM by qualified and registered intermittent RE-based plants, including wind, solar, run-of-river hydro and ocean energy power plants, according to the preference in the dispatch schedule whenever generation is available.

Priority dispatch, meanwhile, is giving preference to biomass plants under the feed-in tariff scheme pursuant to Section 7 of the Renewable Energy Act of 2008.

Further, the circular mandates the market operator, the WESM Governance Arm, system operator and distribution utilities to make the necessary adjustments to the WESM Rules and Manuals to ensure the efficient and effective scheduling and dispatching of preferential dispatch generating units.