WESM Prices Drop 7.8% in February Amid High Supply

System average prices at the Wholesale Electricity Spot Market (WESM) fell by 7.8% in February, settling at PHP 2.73 per kilowatt-hour (kWh), the lowest level since January 2023, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

The decline was driven by higher supply margins and stable demand, which kept market prices subdued, said IEMOP Corporate Planning and Communications Manager Arjon Valencia.

The system margin remained stable at 5,725 MW despite a 3% increase in demand, Valencia noted.

For Luzon, supply grew by 3.7% to 14,475 MW, while demand decreased by 3.8% to 9,071 MW.

This supply-demand dynamic led to a 9.1% drop in Luzon’s average market price, which settled at PHP 2.71 per kWh.

In the Visayas, supply rose by 1.1% to 2,397 MW, while demand remained steady at 1,876 MW.

The region’s supply margin increased by 14.5% to 458 MW, which pushed prices lower to PHP 2.81 per kWh.

Mindanao, however, experienced a 3.6% supply decline, coupled with a 1.3% rise in demand.

This resulted in an 11.9% drop in the region’s supply margin and a 2.6% increase in power prices, which reached PHP 2.72 per kWh.

March Prices Surge Due to Rising Demand

Despite the February price drop, Valencia cautioned that energy prices spiked from February 26 to March 3 due to increasing temperatures, which drove up energy consumption.

“Average supply during this period dropped to 19,441 MW, while demand climbed to 13,105 MW, with peak demand reaching 16,210 MW, surpassing February’s levels,” Valencia explained.

He added that the average price during this period surged to PHP 5.22 per kWh, with prices on March 2 and 3 hitting PHP 6.64 per kWh and PHP 12.15 per kWh, respectively.

“The higher demand was mainly driven by warmer temperatures experienced lately, leading to increased use of cooling systems,” Valencia said.

Coal Remains Dominant in Energy Mix

Coal-fired power plants continued to dominate the country’s energy mix, contributing 55.8% of total power generation.

Natural gas accounted for 17%, while oil-based generation contributed a minimal 0.4%.

Renewable energy sources showed mixed results. Geothermal energy contributed 8.7%, down slightly from 9.2%, and hydropower generation fell to 9.6%.

Solar energy increased to 4.1%, while wind energy remained steady at 1.8%. Battery storage accounted for 0.2%, and pumped storage generation declined compared to previous months.

WESM recorded a total metered quantity of 8,941 GWh in February, with spot market transactions accounting for 19.96% of the volume.

The Effective Spot Settlement Price (ESSP) dropped to PHP 2.81 per kWh, reflecting subdued market activity.

Overall trading values also declined to PHP 8.78 billion, mirroring the lower market prices and reduced trading activity.