WESM prices tipped to rise, but summer demand ‘tamer’

The prices of electricity traded in the spot market may rise again in summer months as Filipinos are expected to consume more power, but the demand may not be as high as last year when El Niño struck, according to officials at the Independent Electricity Market Operator of the Philippines (IEMOP).

“We can see that there will be an increase in demand. So therefore, there are increases in the prices during summer months,” Chris Warren C. Manalo, assistant manager of IEMOP’s market simulation and analysis division, said at a recent briefing.

IEMOP serves as the operator of the Wholesale Electricity Spot Market (WESM), an avenue where energy is traded between producers and distributors.

It was early in 2024 when the Philippines’ power grid was placed under supply alerts several times due to the spike in demand amid heat waves caused by El Niño.

Under a yellow alert, available supply can still meet demand, but it will serve as a warning that when a plant breaks down one way or another, it will result in brownouts.

A red alert, meanwhile, means that supply is no longer sufficient to meet demand. Brownouts could happen if demand is not managed.

But the situation for 2025 will be different from last year given the presence of La Niña, which can trigger above-normal rainfall or an increase in tropical cyclones, according to IEMOP head of trading operations Isidro Cacho Jr.

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“So that means compared to last year, [this year’s] demand might be tamer,” Cacho said.

He also expects power supply to be “stable” and “much better” as additional facilities would come online, particularly those committed under the green energy auction program.

Cacho also said power plant operators are more prepared this year to avoid unplanned outages. He likewise noted the improvement in the grid network with more transmission lines activated.