Philippine Wholesale Electricity Spot MarketAPEx Regional Meeting Perth, Western Australia March 2010
Presentation OutlineWESM Overview Luzon WESM Operations Results Market and Industry Outlook Challenges Ahead
WESM OverviewGoals and StrategiesWholesale Competition IPPA Reserve Market Integration of RE Law Privatization
Market Derivatives
Visayas WESM
Open Access/ Retail Competition
Demand Response
WESM OverviewGovernanceOversight RegulationDepartment of Energy (DOE) Policy Making PlanningEnergy Regulatory Commission (ERC) Energy Regulatory Commission (ERC) Enforcement Enforcement Pricing Pricing
GovernancePEMCMarket Assessment Group
PEM Board
PEM Auditor Rules Change Committee Dispute Committee Market Surveillance Committee Technical Committee
Market Operator
Enforcement and Compliance
Generators/ Generators/ Reserve Providers Reserve Providers Suppliers/ Suppliers/ Aggregators Aggregators
GROSS POOL / LMP MARKET
Distribution Utilities Distribution Utilities Electric Cooperatives Electric Cooperatives Bulk Customers Bulk Customers
Network Service Providers Network Service Providers (NGCP & DUs/ECs) (NGCP & DUs/ECs)
Metering Metering Services Services
Market OverviewMarket DesignGross pool/Net Settlement Locational Marginal Pricing (LMP) Reserve Co-Optimization Demand Bid Mandatory Market
Market ProductEnergy Reserve (regulating, contingency, dispatchable and interruptible load)
Designed to operate Luzon and Visayas regions as a single market Energy market operating in Luzon only since June 2006
WESM OverviewTrading Participants: GENERATORS NIA-BALIGATAN NWPDC TAPGC AHPI SNAP-BENGUET FGHPC SNAP NPC SPDC QPPL FGP Corp PANASIA MPPCL SCPC APRI TLI PSALM ETD 3 PSALM ETD 2 FGPC SMEC PSALM ETD 1 CUSTOMERS KAELCO MOPRECO SORECO I CASURECO III NEECO II AREA I TARELCO I TARELCO II INEC DECORP CELCOR CASURECO II ISELCO I BENECO ALECO BATELEC I PENELCO MERALCO I/U Registered Capacity (MW) 11,331 6 27 50 76 100 122 380 396 400 459 526 620 640 660 730 763 769 875 1,043 1,294 1,395 6,686 4 4 6 14 21 22 29 30 31 32 35 39 41 45 46 52 4,855 1,380
H ydroPSALM ETD 1 SMEC FGPC PSALM ETD 2 PSALM ETD 3 TLI APRI SCPC MPPCL PANASIA FGP Corp QPPL SPDC NPC SNAP FGHPC SNAP-BENGUET AHPI TAPGC NWPDC NIA-BALIGATAN
G eo
C oal
N G at as
D /O
W ind
0
200
400
600
800
1000
1200
1400
2,015
MW70 60 50
4,855 1,380
MW
40 30 20 10 0
Operational Results7-Day Moving Averages - Supply, Demand & LWAP8000 7000 6000 5000 30000 25000 20000 15000 10000 5000 0 -5000 -10000 D J F M A M J J A S O N D J F
MW
4000 3000 2000 1000 0
2009Generation Offers Actual Demand Hourly LWAP
2010
P/MWh
Operational ResultsMonthly Peak DemandFebruary 2010 Peak demand 6,877 MW 2009 Luzon Peak demand 6,932 MW
7000 6500 6000 5500 5000 4500 4000 3500J
7.1% 5.6%
3.8%
Increased electricity requirement (load-growth) El Nio climate phenomenon (hot weather condition)
MW
F
M
A
M2008
J2009
J2010
A
S
O
N
D
Operational ResultsGenerator Average Offers7500 7000 6500 60003.7% 6.3%
MW
5500 5000 4500 4000 3500 J F M
Reduce Energy Offer resulted to Tight Supply Condition El Nio climate phenomenon (Low dam water levels) Natural gas supply facility maintenance Maintenance outages Forced outages Turn-over of Gen asset to new owners
A
M2008
J
J2009
A2010
S
O
N
D
Operational ResultsEffective Settlement PricesEffective Buying Price20,000 18,000 16,000 14,000
Effective Selling Price
Cumulative Ave. Buying Price
Price, P/MWh
12,000 10,000 8,000 6,000 4,000 2,000 J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J
P4,209/MWh (US$91.5/MWh)
2006
2007
2008
2009Effective Buying Price with 100% surplus Effective Selling Price without surplus
2010
PhP / MWh10000 20000 30000 40000 50000 60000 0 -10000
Operational Results
Jan Feb 2010 Daily Market Clearing Price
AVE PRICE MAX PRICE MIN PRICE
P55,000/MWh
Dec-26 Dec-27 Dec-28 Dec-29 Dec-30 Dec-31 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 Jan-26 Jan-27 Jan-28 Jan-29 Jan-30 Jan-31 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18
Operational ResultsCustomer Market Transaction Volumes4,000 3,500Energy Volumes (GWh)13% 10% 15% 13% 16%
4,000 3,50013% 14%
3,000 2,500 2,000 1,500 1,000 500 0
17% 11% 13% 14% 12%
11% 12%
11% 14% 14% 16% 17% 21% 23% 17%
12%
13% 15%
3,000 2,500 2,000 1,500 1,000 500 0Spot Transaction Value
J
F
M
A
M
J
J 2008
A
S
O
N
D
J
F
M
A
M
J J 2009
A
S
O
N
D
J 2010
Average Spot Quantity Jan - Dec 2009 Jan - Dec 2008 15% 14%
(Millions)
Spot Market Volume
Bilateral Contract Volume
Spot Market Value
Operational ResultsGeneration Mix
Year 2008 2009 Jan-10 Feb-10
Hydro 12.5% 12.7% 9.6% 8.2%
Geo 10.3% 9.1% 9.8% 8.0%
Coal 28.8% 29.8% 30.5% 42.7%
Nat Gas 45.3% 45.3% 45.9% 32.7%
D/O 2.9% 2.9% 4.0% 8.3%
Wind 0.1% 0.1% 0.3% 0.1%
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
2008D/O Nat Gas Coal Geo Hydro Wind
2009
2010
Operational ResultsTransmission CongestionPeak Demand Luzon MERALCO Franchise Area MW 6,877 4,490 (65% of Luzon demand) Land-area (sq km) 105,000 9,337 (9% of Luzon land area)
San Jose Substation
MERALCO Interchange Substations
Congestions due to N-1 Contingency requirement Subject to Pricing Error Notice Market Re-run Price Substitution Methodology (PSM)
Market OutlookSupply and Demand SituationLuzon Power Outlook12000
Tight Supply ConditionCapacity on Maintenance Outage
Supply Improvement
10000
8000
Hydro Limitations Capacity De-ratings
MW
6000
4000
2000
Demand
Supply improvement beginning April 2010 Completion of Malampaya natural gas supply facility maintenance Completion of maintenance outages Registration and active trading of new plant owner
0
Reserve Requirement
Gross Reserve
Market OutlookLong-Term Pricing Impact12 11 10
*
Generation Price, PhP / KWh
9 8 7 6 5 4 3 2 1 0 Jan-03 Jan-04 Jan-05 Simulated Blended Rates Jan-06 WESM ESP Jan-07 NPC Effective Rate Jan-08 Price Trend Jan-09 Jan-10
* - Preliminary Feb2010 Effective Settlement Price (ESP) Rate with 19% Spot exposure
Industry OutlookPrivatization of Assets and ContractsIndependent Power Producer AdministratorNPC Generation Assets sold Power Plant3,952 MW
4500 4000 3500 3000Capacity, MW
Contracted Winning Winning Bid Cap. (MW) Bidder Price (US$)Amlan Power $145 Million Holdings Corporation Strategic Power $450 Million Devt. Corp. San Miguel Energy $1.07 Billion Corporation Therma Luzon Inc.
Year 2009 2008 2007 2006 2004 Total
MW 1,949.30 747.5 1,135 112 8.5 3,952.30
Million US$ 632.34 446.9 1,785 129 5.21 2,998.45 Bakun-Benguet Hydro plants San Roque Multipurpose Hydro Sual Coal-Fired Power Plant Pagbilao CoalFired Power Plant 2009 Total 100.75
345
2500 2000 1500 1000 500 02004 2005 2006 2007 2008 2009
1,000
700 2145.75
$691 Million $2.356 Billion
Industry OutlookSystem Planning and Operation On-going Projects: San Jose Substation upgrading Transmission line reinforcement/upgrading projects Proposed Projects (2010-2015) US$ 1,955.22 M Generation Associated Load Growth-driven Projects Reliability and Power Quality Projects Indicative Projects (Beyond 2015) Load Growth-driven Projects Power Quality and Reliability Projects Island Interconnection
Industry OutlookSystem Planning and Operation- Impact of El NioCurrent Reserve Levels Yellow AlertInsufficiency due to plant maintenance, forced outages and reduced Hydro capability Ample reserves due to the energization of Unit 1 (82 MW) of the 246 MW CEDC Coal plant in Cebu. Deficit generation due to unavailability of Hydro plants which accounts for 52% of the generation capacity
Red Alert
Industry OutlookRenewable Energy Act of 2008Paves way for development of alternative energy sources Provide fiscal and non-fiscal incentives for RE investors7 year Income Tax Holiday 10% Corporate tax (upon termination of tax holiday) Duty free importation of RE machinery Priority for the purchase, grid connection and transmission
On-grid Renewable Energy DevelopmentEstablishment of Renewable Portfolio Standard (RPS) Feed-in Tariff (FIT) Renewable Energy Market Green Energy Option Net-Metering
PhP90 billion worth of Renewable Energy contracts signed with at least 18 groups of foreign and local investors in 2009
Market Challenges (2010-2011)Expansion of WESM in VisayasOperational readiness by 3RD Quarter of 2010
On-going compliance to Market Audit Results and better practice recommendations Migration of Market Management System (MMS) Enhancement of MMS to address Audit issues Operation of Reserve MarketOn-going Regulatory hearings on phased-in implementation
Transition to Independent Market OperatorOn-going Study expected to be completed by September 2010
Integration of Interruptible Load program
End of PresentationThank You!
Top Related