Minda sees priority selling for renewable energy surplus

Minda sees priority selling for renewable energy surplus

THE establishment of a spot energy market in Mindanao will promote Renewable
Energy (RE) sources and level the playing field among power players in
Mindanao, an official said.

Mindanao Development Authority (Minda) deputy executive director, assistant
secretary Romeo Montenegro told reporters on Wednesday, December 7, during
the Habi at Kape press conference at the Abreeza Ayala Mall that they are
pushing for the market as it will place RE in a priority dispatch.

As defined, a spot energy allows producers of surplus energy to instantly
locate available buyers for this energy, negotiate prices, and deliver
energy to the customer in just a few minutes.

"So if there is a 700 Megawatts (MW) excess in coal and a 5 MW excess RE in
the market, the RE will be utilized first before the fossil, that is how the
spot market works," he said adding that it enables the small RE sources
commercially viable.

The Philippine Electricity Market Corp. (PEMC) and Department of Energy is
now looking at pursuing the long-planned operation of an electricity spot
market in Mindanao as the island-region entered a power surplus regime
following the influx of power projects.

Presently, Mindanao's energy landscape has a supply of some 2,300 MW with an
average power demand of 1,600 to 1,700 MW.

The energy market or Wholesale Electricity Spot Market (WESM)-type of market
is a venue for trading electricity as a commodity, a package of electric
power industry reforms mandated in Republic Act 9136, or the Electric Power
Industry Reform Act of 2001 (Epira).

Engineer Katrina Garcia-Amuyot of PEMC said earlier that "WESM is where the
generators sell their excess capacities covered by contracts and where the
customers buy additional capacities on top of their contracts." It is seen
to create options for electric cooperatives and distribution utilities in
terms of buying power at any given time of the day, acknowledging the need
of intermittent and unscheduled supply which they can easily get if there is
a market rather than being locked up solely to long term bilateral contracts
that spans up to some 25 years.

At present, only Mindanao does not have an electricity spot market. The
market, Montenegro said, is eyed to be operational in Mindanao by June next
year.

Requisites of WESM

Monetenegro said that a working and effective energy spot market in Mindanao
is premised on the readiness of the electric cooperatives and availability
of infrastructure to be able to participate in the market, apart from having
excess capacity.

He said all the 33 electric coops in Mindanao need to have the required
capacity and sophistication "to be able to play actively with the rules of
the market regime."

"So what is required for the electric coops is the effectiveness of being
able to forecast their requirement, if not, penalties under a market regime
shall be incurred," he said.

Asked if the existence of the market will lead to higher electricity rates,
Montenegro explained that it depends on how the electric coops and
distribution utilities will source their needed power capacity.

He said if all requirements will sourced from the market without entering
any long-term bilateral contracts, it will be risky as the electricity
market's price is fluctuating. One electric coop can source power of 50
percent from the market.

Where are we?

DOE, PEMC, and other involved agencies are going around Mindanao for series
of consultations, capacity building, and trainings among stakeholders,
players as well as consumer groups to be able to provide an indicative
scenario for the rules of the market and have a common understanding of
market operations.

Montenegro also underscored that the market is a requisite for a viable
Visayas-Mindanao power grid interconnection. Once interconnected, generating
companies can sell beyond Mindanao.

"It is going to be more viable if we are all be part of the larger market
which is Luzon and Visayas so that our generating companies can sell beyond
Mindanao. But I think there is a moving forward to that because National
Grid Corp. of the Philippines (NGCP) had already proposed for the
interconnection project," Montenegro said.

The National Grid Corporation of the Philippines already applied with ERC
the feasibility study for another identified viable route (Cebu - Dapitan,
Zamboanga del Norte). Once the feasibility study is approved, the study will
run for more than a year. The interconnection is targeted to be completed by
2022.

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Link to Original Article:
http://www.sunstar.com.ph/davao/business/2016/12/09/minda-sees-priority-sell
ing-renewable-energy-surplus-514123

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com