DOE pushes dispatch of renewable energy plants in spot market

MANILA, Philippines — The Department of Energy is pushing for the preferential dispatch of all renewable energy (RE) plants in the wholesale electricity spot market (WESM) to lower electricity prices.

Under a draft department circular, the DOE has added geothermal and impounding hydro plants in the priority dispatch of generating units in WESM.

In the previous circular,  only biomass under the feed-in tariff system was included in the priority dispatch.

The DOE now defines priority dispatch as giving the option of preference to all qualified and registered RE plants that are not must dispatch, such as biomass, geothermal and impounding hydro plants.

Meanwhile, the must dispatch is facilitated in the WESM by qualified and registered intermittent RE-based plants, which include wind, solar, run-of-river hydro, and ocean energy power plants, according to the preference in the dispatch schedule whenever generation is available.

Both are collectively referred to as preferential dispatch.

The development and utilization of indigenous RE resources and preferential dispatch in the grid and in the WESM of RE-based power plants will reduce dependence to importation of conventional energy resources.

This will make “the country’s supply and delivery of electric power more stable and secured from international setbacks such as the recent decision of Indonesia, the world’s biggest exporter of thermal coal, to ban coal exports starting January 2022.”

According to the DOE,  the development and full utilization of RE will support the country’s efforts to achieve its nationally determined contribution (NDC) targets that are primarily based on RE policies and programs, among others.

The market settlement prices would  be reduced when all generating units utilizing RE resources are given preferential dispatch in the WESM, based on the study conducted by the DOE, in partnership with the Clean, Affordable and Secure Energy for Southeast Asia (CASE) project.

In the study, RE sources that generate at peak load have effectively reduced the cost of electricity by 28 percent during peak hours in 2019.

This is because they displace expensive power plants like diesel based on WESM’s least cost generation dispatch mechanism.

The study cited that the reduction in WESM settlement prices was achieved even as the variable RE  plants only accounted for less than three percent of the energy mix.

“This shows the significant cost-saving potential of more CRE plants in the energy mix and that it has a large potential to further reduce the price of electricity at higher RE penetration in the energy mix,” the said.