​​WESM Prices Drop 7.8% in February Amid High Supply and Low Demand

System average prices at the Wholesale Electricity Spot Market (WESM) declined by 7.8% in February, settling at P2.73 per kilowatt-hour (kWh), the lowest level since January 2023, according to the Independent Electricity Market Operator of the Philippines (IEMOP). 

The decline was attributed to higher supply margins and stable demand, keeping market prices subdued.

According to IEMOP Corporate Planning and Communications Manager Arjon Valencia supply-demand balance improved as system margin remained stable at 5,725 MW despite a 3% increase in demand.

For Luzon, Valencia said, supply grew by 3.7% to 14,475 MW, versus a 3.8% percent decrease in demand to 9,071 MW. This led to a 9.1% drop in Luzon’s average market price to P2.71 per kWh. 

Visayas, on the other hand, recorded a 1.1% supply increase to 2,397 MW, against a steady demand of 1,876 MW. The region’s supply margin, Valencia said, went up by 14.5 percent to 458 MW, resulting to lower prices at P2.81 per KWh.

Mindanao, meantime, faced a 3.6% supply decline, while demand grew by 1.3%, resulting in an 11.9% drop in its supply margin and pushing power prices up by 2.6% to P2.72 per kWh.

Despite the February price decline, Valencia warned energy prices from February 26 to March 3 have gone up due to rising temperatures, driving increased energy consumption. Average supply, he said have gone down to 19,441 MW, while demand climbed to 13,105 MW, with peak demand reaching 16,210 MW, surpassing February’s levels.

“The average price recorded was P5.22 per kWh, mainly affected by March 2 and 3 prices, reaching P6.64 per kWh on March 2 and P12.15 per kWh on March 3. The higher demand was mainly driven by warmer temperatures experienced lately, leading to increased use of cooling systems,” Valencia added.

In terms of power generation, 55.8% of total generation came from coal-fired power plants, maintaining its role as the country’s dominant energy source.  Natural gas, meanwhile contributed 17% to the energy mix. Oil-based generation contributed 0.4 percent.

Renewable sources, meanwhile, recorded mix results. Geothermal energy contributed 8.7%, down slightly from 9.2%, and hydropower generation fell to 9.6%. Solar generation increased to 4.1%, while wind remained steady at 1.8%.

Battery storage accounted for a small share at 0.2%, and pumped storage generation declined compared to previous months.

WESM recorded a total metered quantity of 8,941 GWh, with spot market transactions accounting for 19.96% of the volume. The Effective Spot Settlement Price (ESSP) dropped to P2.81 per kWh, reflecting subdued market activity and lower overall trading values, which declined to P8.78 billion.

How will the expected rise in temperatures impact electricity prices in the coming months? Should businesses and households adopt energy efficiency measures to reduce demand surges? Share your thoughts in the comments below and follow Power Philippines for more updates on energy market trends!