Cooler Temperatures Trigger Drop in Electricity Prices

The Independent Electricity Market Operator of the Philippines (IEMOP) reported a decline in system-wide electricity prices at the Wholesale Electricity Spot Market (WESM) during the first half of December 2024. The drop was attributed to reduced temperatures and lower demand.

Preliminary data showed average electricity rates dropped to P3.99 per kWh, down 9.6% from P4.42 per kWh in late November. Luzon saw the largest decrease, with rates falling 10.6% to P3.79 per kWh, while Visayas and Mindanao posted declines of 8.9% and 6.3%, respectively.

IEMOP Vice President Isidro Cacho attributed the lower prices to reduced demand, stating, “Historically, December and January have the lowest prices for the market.” Supply across grids rose, with Luzon supply increasing by 4% and Visayas by 2.3%, although Mindanao supply dipped slightly.

“The supply-demand scenario in Mindanao decreased due to some baseload plants that [have] undergone outages. This resulted in a minimal increase in price,” IEMOP’s Corporate Planning and Communications Manager, Arjon Valencia, explained.

IEMOP expects the low pricing trend to continue through December.

Declining Electricity Prices Since July

Electricity prices on the spot market began a significant decline in July, driven by the onset of the rainy season, which brought cooler temperatures and reduced demand.

In September, the average systemwide electricity spot price continued its downward trend, plunging by 34.7% to P3.88 per kWh from P5.94 in August. The reduced demand across all major islands and an increase in supply in Luzon and the Visayas contributed to the price drop.

Again, in Mindanao, a decline in supply was noted (4.2%) despite a 1.3% decrease in demand. Valencia explained, “Compared to the prior billing month, the supply margin in Mindanao is lower for September.”

In an interview in December, the Department of Energy emphasized the need for additional baseload generating capacity to meet the region’s future demand increases. “Our supply may be alarming and good for only three years…if there is no added generation and the trend of demand will continue to increase,” Rapha Julysses Perez, DOE Mindanao senior science research specialist, said.

Perez said that indicative and committed power projects in Mindanao are in progress and projected to materialize over the next two to three years.

Sources:

https://mindanaotimes.com.ph/doe-mindanao-power-supply-sufficient

https://business.inquirer.net/473010/cooler-weather-pulled-down-electricity-spot-prices-in-july
https://manilastandard.net/business/314537255/spot-market-power-prices-decline-on-softer-demand-cooler-weather.html

https://business.inquirer.net/473010/cooler-weather-pulled-down-electricity-spot-prices-in-july
https://www.bworldonline.com/economy/2024/10/02/625478/sept-power-spot-prices-fall-as-weather-cools/

https://www.philstar.com/business/2024/09/04/2382638/wesm-rates-take-slight-dip-august