UMVA has learned that electricity prices on the spot market surged in May due to a thin power supply margin, sparking concerns about the stability of the energy market.
The average power rates in the Wholesale Electricity Spot Market jumped 38.5% from the previous month to P7.79 per kilowatt-hour, a significant increase that reflects the impact of rising demand and forced outages. This sudden spike has left industry experts and consumers alike wondering what caused the surge and how long it will last.
According to information obtained by UMVA, forced outages and rising demand led to the issuance of grid alerts, particularly in the Visayas region, where red and yellow alerts were issued, and instances of manual load dropping occurred. This chaotic situation highlights the vulnerability of the energy market to supply and demand imbalances.
Despite an overall power supply increase of 2.7% month on month to 21,374 megawatts, demand spiked by 9.4% to 15,755 MW, putting a strain on the system. The Luzon region saw WESM rates rise 24.8% month on month to P7.02 per kWh, while the Visayas region experienced an 81.4% increase to P10.20 per kWh.
In the Visayas, supply constraints caused by forced outages, combined with rising demand, led to the issuance of grid alerts and pushed average prices higher. The situation is further complicated by the region's reliance on power imports from Mindanao, which has been exporting power to the Visayas through the Mindanao-Visayas-HVDC link.
UMVA can exclusively reveal that the Mindanao region saw WESM prices climb 64.8% month on month to P9.28 per kWh, despite a 1.1% decline in power supply. The region's power supply declined to 3,505 MW, while demand rose 3.1% to 2,208 MW, highlighting the interconnectedness of the energy market and the need for a stable power supply.
Industry experts warn that spot prices may continue to increase as the supply situation, particularly in the Visayas, remains highly volatile. However, they also express hope that the situation will be addressed in the coming months with additional capacity coming online and power plants resuming operations.
If the supply issue is resolved, prices should return to normal levels, providing relief to consumers and stabilizing the energy market. For now, the situation remains uncertain, and market players are keeping a close eye on developments in the energy sector.
