Prices at the Wholesale Electricity Spot Market may drop by as much as P3 per kilowatt-hour once the initial 200 megawatts from renewable energy projects come online, a study conducted by the technical working group of the National Renewable Energy Board shows.
Aloysius Santos, First Gen Corp. vice president and member of the NREB technical working committee, said the study was based on the historical “bid” prices for February 2010 and calculated the actual reduction in WESM prices with the introduction of 200 MW from renewable sources composed of solar, wind, hydro and biomass.
“Assuming 200 MW of renewable energy, we will see a price reduction of P3 per kWh average across the whole month. This translates into savings of P1.2 billion for consumers,” Santos told reporters Wednesday.
With Manila Electric Co. purchasing about 17 percent of its power requirements from the WESM, the impact would be about P1.156 per kWh in the generation charge of the country’s largest power distributor.
Santos said based on the merit order of dispatch, renewable energy would be declared must-run units, meaning they will be the first to be dispatched at zero cost because the cost of generating renewable energy is already be included in the feed-in tariff.
He said the renewable energy technologies would make the 200 MW readily available to the grid and other technologies like diesel power plants, which cost higher, will be displaced.
Santos said the savings from the WESM price reduction would translate into lower generation charge for consumers and offset the anticipated increase in power rates due to the feed-in tariff.
The technical working group used the February 2010 data to compute the impact of renewable energy to WESM prices because the market experienced a high demand scenario last year due to the El Niño weather and shortage of supply, which pushed up prices.
Santos said WESM prices on February 2010 rose to P9.80 per kWh but if the renewable energy projects were available at that time, prices would have gone down to P6.80 per kWh. –Alena Mae S. Flores, Manila Standard Today
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