NGCP prepares to source ancillary services via firm contracts


The National Grid Corporation of the Philippines (NGCP) is eyeing the conversion of 35 “non-firm” contracts to firm-based arrangements for the provision of reserves or ancillary services (AS) to the power grid, according to the Energy Regulatory Commission (ERC). 

At the House Committee on Energy’s hearing last week, ERC Chairperson Agnes Devanadera said the grid operator is re-negotiating its non-firm AS contracts to firm contacts.

As of now, NGCP is procuring AS from a mix of firm and non-firm contracts, which the Department of Energy (DOE) previously flagged. Based on the DOE’s AS policy issued in 2019, NGCP is required to obtain regulating, contingency, and dispatchable reserves only through firm contracts.

Devanadera added that NGCP is giving the ERC weekly updates on the re-negotiation process. The commission also set a streamlined process for the conversion of contracts.

The DOE had said that non-firm contacts for reserves can compromise the reliability of the grid since AS providers under these agreements will decide when to provide reserve power.

Based on a BusinessWorld report, NGCP currently has 35 non-firm contracts. Among them were with government-run Power Sector Assets and Liabilities Management Corporation; Lopez-led First Gen Hydro Power Corporation and Energy Development Corporation; Aboitiz’s AP Renewables, Inc., SN Aboitiz Power (SNAP)-Benguet, and SNAP-Magat; and Global Business Power Corporation of Manny V. Pangilinan.

Meanwhile, NGCP President and CEO Anthony Almeda said the grid firm is assessing all the existing contracts and required capacities in light of the DOE’s pronouncement. The grid operator is also looking to bid out all the 35 non-firm contracts through a competitive selection process.

Based on data from the DOE, NGCP only contracted regulating, contingency, and dispatchable reserves of 237 megawatts (MW), 180MW, and 145MW respectively from firm contracts for the Luzon grid during the fourth quarter of 2020. In the same period, the Luzon Grid’s reserves stood at 491MW, 647MW, and 647MW.