Power reserve market opens

MANILA, Philippines  —Power reserves may now be sold and bought on the spot market after regulators approved the start of full commercial operations of the reserve market, assuring consumers of ample supply even when demand spikes.

The Independent Electricity Market Operator of the Philippines (Iemop), which operates the Wholesale Electricity Spot Market (WESM), officially launched the reserve market on Friday after seven months of trial operations.

The launch of the reserve market ushers in the trade of power reserves, or ancillary services, in the WESM. Power reserves are immediately tapped in cases of power interruptions.

Distribution utilities, including Manila Electric Co., buy power from WESM, whose prices can be volatile depending on supply and demand.

In a statement, the Department of Energy (DOE) explained that generation companies capable of providing reserves “may now offer and sell [ancillary services] even without an ancillary service procurement agreement with the National Grid Corp. of the Philippines (NGCP).”

READ: Power reserves may soon be purchased on the spot

Prior to the launch of the reserve market, reserves were secured solely through contracts with ancillary service providers.

These contracts are submitted to the Energy Regulatory Commission (ERC) for approval.

NGCP, the country’s lone grid operator, remains the sole buyer of reserves, according to the DOE and Iemop.

Efficient dispatch of capacities

“The full commercial operations of the reserve market is a significant step forward for the energy sector,” Energy Secretary Raphael Lotilla said. “This will bring efficient dispatch of all available capacities by co-optimizing the capacity and price offers for energy and reserve to ensure that the required levels for both services are always met.”

The DOE likewise stressed that the reserve market would ensure that NGCP had “sufficient levels of reserves” that may be dispatched “whenever needed.”

READ: NGCP ordered to explain lack of power reserve deals

In 2022, the ERC flagged NGCP for the apparent lack of power reserve deals that could support the uninterrupted transmission of power from power plants to consumers.

The following year, NGCP warned of power outages after the ERC denied its request for “month on month” extensions of expiring ancillary service agreements. Meg J. Adonis

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