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DOE to draft auction terms for power reserves procurement

By Myrna M. Velasco

The Department of Energy (DOE) has created a technical working group (TWG) that shall guide it in the formulation of auction terms under the competitive selection process (CSP) for the procurement of ancillary services (AS) or reserves for the country’s power system.

Ancillary services or reserves are critical component of electricity system operations because insufficiency or the lack of it could shove consumers into suffering rate spikes when reserves would run tight; or brownouts when reserves would tumble into zero or negative level.

The AS-TWG, as stipulated in the new Circular issued by the department, shall be co-chaired by designated officials from the DOE and the Energy Regulatory Commission (ERC); while memberships are from the National Electrification Administration (NEA), National Transmission Corporation, Philippine Electricity Market Corporation, Independent Electricity Market Operator of the Philippines, National Grid Corporation of the Philippines, Manila Electric Company, Philippine Electric Plant Owners Association, Philippine Independent Power Producers Association Inc., and other officials of the DOE and ERC.

On DOE’s part, it named Energy Assistant Secretary Redentor Delola as co-chair and Director Mario Marasigan as his alternate; while for ERC, the designated co-chair is Nestor Padilla and his alternate is Eloisa Gipa.

Beyond the CSP framework on power reserves’ procurement, the TWG shall also develop technical specifications and testing for the accreditation process of the AS providers; and must render technical assistance and advice to the DOE in developing further AS policies.

Further, the body has to “review the existing methodology for determining the appropriate AS categories and the required level for each AS category and recommend revisions to applicable rules to the ERC as necessary.”

The classifications of power reserves required by the power grids include: contingency and regulating reserves which are classified as primary and secondary reserves; dispatchable which is tertiary reserve; then reactive power support and blackstart as other types of reserves.

A contingency reserve is the power plant that will be ready to plug any capacity loss in the system – and often, this is equivalent to the biggest unit in a power grid; like the Sual power plant for Luzon.

A dispatchable reserve, on the other hand, is a plant that is not scheduled for regular energy supply or for the other type of AS requirements, and can immediately be dispatched to replenish the contingency reserve.

Reactive power support service accounts for the type of ancillary service to ensure technical reliability of a power system; while blackstart is needed to let the grid quickly recover from a partial or total blackout.

Further, the AS-TWG shall develop guidelines for the long-planned operation of a reserve market via the Wholesale Electricity Spot Market.

As targeted, once the WESM-underpinned reserve market is already in place, primary and secondary reserves shall still be procured via firm contracts; while tertiary reserves may be done either through contracts or through trade or purchase from the market.


Source: Manila Bulletin (https://business.mb.com.ph/2020/06/27/doe-to-draft-auction-terms-for-power-reserves-procurement/)

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