Prior to trading resumption in the reserve market, the Department of Energy (DOE) has instructed the operator of the Wholesale Electricity Spot Market (WESM) to issue guidelines on the synchronization of dispatch intervals for both traded energy capacities and ancillary services for an efficient working of a co-optimized market.

In market co-optimization, the trading of capacity for both energy and ancillary services or reserves can be done together – instead of having them managed separately – because it is within that precept that participants could draw more efficient and cost-effective outcomes; and in the end, that will also come cheaper for the consumers.

The DOE, in particular, has directed the Independent Electricity Market Operator of the Philippines (IEMOP) to adjust the one-hour dispatch interval currently being enforced for the reserve market so it can be aligned with the five-minute interval for capacity traded in the energy market.

In line with that mandate, IEMOP has been ordered by the energy department “to submit relevant guidelines to the DOE, for its approval” – and the adjustment must also comply with the conditions set by the Energy Regulatory Commission (ERC) on its ruling related to the lifting of suspension in settlements for the reserve market, primarily on the prescriptions of the price determination methodology (PDM) for the WESM.

“Once the MO submits the guidelines, the DOE will issue an official advisory to resume the reserve market by August 5, 2024,” the department stipulated.

It added “since energy is already scheduled in 5-minute dispatch intervals, reserve must also be scheduled in the same time interval for co-optimization to work.”

As emphasized by Energy Undersecretary Rowena Cristina Guevara, “the ERC's action to lift the suspension of Section 8 of the billing and settlement of the PDM will lead to the resumption of the reserve market which is eagerly awaited by both the power sector industry and the DOE.”

For targets to advance on the re-opening of the reserve market, the energy official asserted that the coordination of relevant entities, primarily IEMOP as market operator of the WESM as well as system operator National Grid Corporation of the Philippines (NGCP), would be “crucial for the necessary adjustments to the WESM systems and processes to ensure the smooth implementation of the reserve market.”

Guevara reiterated “we aim for all generating capacities to operate and sell in the WESM to enhance grid reliability, minimizing potential yellow and red alerts, to avoid what occurred when the reserve market returned to trial operations in March of this year.”

To recall, settlements in the reserve market was suspended by the ERC in March because the resulting prices from trading of capacities had been observed to be generally high. The suspension of settlements had been enforced for four months and had just been lifted last week.

For the market to finally work coherently this time, Guevara advanced call on relevant stakeholders for “support and cooperation”, noting that the resumption of the reserve market will ensure the availability of capacity needed for the reliable operations of the country’s power system.