WESM prices could drop by P3 due to new RE generation

MANILA, Philippines - Wholesale Electricity Spot Market (WESM) prices can drop by as much as P3 per kilowatt-hour as soon as generation from renewable energy sources comes in.

In a study, the National Renewable Energy Board reviewed the historical “bid” prices for 2010 available from the Philippine Electricity Market Corp. (PEMC) and calculated the actual reduction in WESM prices with the introduction of 200 MW of generation from renewable energy sources composed of solar, wind, hydro and bio-mass.

The team found an average actual reduction of P3/kWh in WESM prices.

This translates to savings of up to P1.2 billion for February 2010 alone. It is estimated that for a similar year, the FIT allowance differential or the amount to be paid by all consumers will be actually “paid for” by the savings from the WESM price reduction which will translate to a lower generation charge for consumers.

In effect, the timely inclusion of RE generation will force generators to “moderate” their WESM price “bids” and act as price stabilizers.

It is a fact that WESM price “spikes” cause increases in electricity bills. As with any market, a shortage in supply causes higher prices.

With the recent pronouncements of an impending shortage, these spikes are inevitable and the RE generation will mitigate such sharp increases.

In fact, this reduction in WESM prices has happened in other countries and has been verified through numerous technical studies in Germany, France and Demark.

“RE generation is not only clean, it is actually a cheap resource since the fuel is free – the wind, sun, water – these resources are abundant in our country. The WESM benefits just strengthens the already strong case for implementing RE NOW. Further delay only commits the Filipino consumer to a dirtier environment, continued dependence on imported and expensive fossil fuel leading to high prices said Pete Maniego, NREB chairman.