Market for AS power enters pilot operations

THE pilot stage of the market for reserve power has been launched, with full commercial operations targeted for later in the month, the Independent Electricity Market Operator of the Philippines (IEMOP) said.

In a statement on Wednesday, the IEMOP said pilot operations began on Dec. 26, 2023.

The pilot stage will allow the optimization of the market operator and system operator interfaces and automated real-time dispatch of committed ancillary services (AS). AS contracts are entered into in order to ensure that the grid will have sufficient power should supply be disrupted unexpectedly.

The pilot stage will trial central scheduling and dispatch of contracted ancillary services using enhanced systems of the market operator and system operator, or the National Grid Corp. of the Philippines.

IEMOP operates the Wholesale Electricity Spot Market (WESM), the trading floor for electricity.

With the set integration of the reserve market for AS power into the WESM on Jan. 26, the system operator will be able to procure reserves from the spot market to meet the reserve requirements of the system.

The IEMOP said that the reserve market provides a venue for generators to offer reserve capacities competitively. “These reserve offers are co-optimized with energy offers to determine the best mix of energy and reserve supply that will result in the most competitive prices for electricity.”

“Ultimately, the co-optimization of the scheduling of reserves and energy has the objective of reducing the overall cost of both energy and reserves,” the IEMOP said.

“The operation of the Reserve Market in the Philippine WESM is a testament to our shared commitment to the growth of the Philippine Energy Sector; a growth that ensures reliability, embraces innovation, and promotes competition, all leading to transparency and reasonableness of our power rates,” Energy Regulatory Commission (ERC) Chairperson Monalisa C. Dimalanta said.

Asked to comment, Bienvenido S. Oplas, Jr., president of Minimal Government Thinkers said that the reserve market will expand power supply by encouraging generation companies (gencos) to build more power plants.

“Most of new generation capacity will be contracted by DUs (distribution utilities), RES (retail electricity suppliers) and ECs (electric cooperatives). But some generation capacity will be for reserves by the system operator or embedded with DUs themselves,” Mr. Oplas said in a Viber message.

“The market for new capacity has expanded so more gencos will be encouraged to put up more new power plants,” he added.

In an advisory last week, the Department of Energy said that the WESM Governance Arm has yet to issue a certification on the completeness of the preparations.

The software certification by the independent auditor is still pending while the ERC is still reviewing the simulation results for additional constraints submitted by the IEMOP for the approval of the price determination methodology. 

Meanwhile, the Philippine Electricity Market Corp. (PEMC) said in a statement that it will assess and monitor the co-optimized market once fully operational to ensure the delivery of its commitment and intent of the enhanced WESM design.

“Our commitment to fulfill PEMC’s responsibility to facilitate the readiness certification for the full commercial operations of the co-optimized Energy and Reserve Market have remained steadfast,” PEMC President Elvin Hayes E. Nidea said. — Sheldeen Joy Talavera