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Manila Bulletin devider Business devider WESM Mindanao finally reaches commercial operation

WESM Mindanao finally reaches commercial operation

Published Jan 26, 2023 04:13 pm

After roughly eight years of delay and three government administrations, the Wholesale Electricity Spot Market (WESM) in Mindanao finally gained traction on its commercial operations phase on January 26 this year.

In an advisory to the trading participants, the market operator indicated that the spot market in the southernmost power grid got on commercial stream at 05:00am dispatch interval on Thursday, Jan. 26, and has moved on to its live trading since then.

According to the Independent Electricity Market Operator of the Philippines (IEMOP), it will “oversee the market operations of WESM-Mindanao,” and it will be employing its two main systems for this function, namely its market management system (MMS) and its central registration and settlement system (CRSS).

The MMS, in particular, “will determine the optimal dispatch schedule of all generators and customers in the grid – including their respective locational prices.”

The CRSS, on the other, delves with facilitating the registration of market participants in the grid as well as the settlement of traded capacities in the spot market.

The conceptualization as well as the design process for WESM-Mindanao started during the term of former Philippine Electricity Market Corporation (PEMC) President Melinda L. Ocampo and the IEMOP creation under the past Duterte administration just took cue from what she started following her departure in 2017.

And while there had been several attempts to bring the Mindanao spot market to commercial operations in the past five-six years, those initiatives did not turn out successful.

Multiple obstacles and challenges needed to be resolved when it comes to the concerns raised by relevant stakeholders in Mindanao – including the humongous level of indebtedness of some electric cooperatives (ECs) in the grid.

The embedded generation of some power utilities, which they resorted to as stop-gap measure during the power supply crisis in the grid from 2010-2015, had also been taken into consideration in the overall functioning of WESM-Mindanao so they will not distort market signals.

As explained, if these capacities would be unaccounted for, there would be massive deviation in forecasts for capacity trading in the WESM and could also impact heavily on prices in cases that the embedded facilities will be taken out from the system.

It was expounded that the dilemma lies in the fact that if these embedded generating facilities will experience outages, there’s a tendency that the concerned DU will procure its requirements from the WESM, and that will have a knock-on effect on supply as well as prices in the spot market.

To deal with that, the Department of Energy (DOE) previously issued a Circular directing the enlistment of embedded facilities with 5.0-megawatt and up capacities that can be included in forecasts for capacity trading in the spot market. Based on data, these embedded facilities have aggregate capacity of 200 to 300 megawatts.

On the whole though, the long-wished for commercial kick-off of the spot market in Mindanao is still viewed by investors as a "very positive development" because this could provide alternative market to uncontracted capacities, as well as the planned renewable energy (RE) investments in the grid.

Related Tags

#WESM #MINDANAO #OPERATIONS #SPOTMARKET #LIVETRADING
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