Technical Reason Why Price of Electricity in WESM is High at High Demand Periods

Date

We should know by now that price of electricity in the spot market is not dictated with the commercial aspects alone but also, with the technical aspects of the system, specifically, the constraint in transmission system.

Ideally, the transmission system should not drastically affect the spot market price. However, in the Philippines, transmission line constraints usually posed price spikes in the market.

Based on some reliable data that I’ve been simulating for a while, there is some unwanted characteristic is our system that could result to high price of power. Please study the “very simplified” diagram of the Luzon Grid below:




Majority of low cost power plants in Luzon are sparsely located far outside of Metro Manila (Load center). And during high power demand, dispatched of these low cost plants is constrained by the limited capacity of lines and equipments in the entry points towards Manila Area. Such lines which limit the dispatch of plants in Northern and South Luzon, as well as plants connected to the 500kV line backbone are; Binan – Sucat Line, San Jose Transformers and San Jose – Balintawak Lines.

The deficiency of supply due to the constraint of the said lines is filled-up by Limay and Subic Enron (and Malaya, as well) diesel-fueled plants. Thus, these plants would set the clearing price.

The location of Limay CCPP and Subic Enron plants in the Grid is better than other plants since it is not constrained by the mentioned lines and also, in close proximity to the load center (Manila). Unfortunately, these plants are two of the most expensive plants in Luzon. Once Limay and/or Subic were dispatched, clearing price in the WESM usually spiked to more than Php 8.00 per KWh.

On technical point of view, electricity rate in the spot market could be lowered by either one of the following;
1. Build low cost plants in Subic – Bataan Area that could displace Limay and Enron Plants.
2. Upgrade the capacity of the critical lines mentioned above to allow higher utilization of low cost plants.



Category Filed in: Electricity Market
Local date: March, 2010

« Expect a Higher Electric Bill this Christmas