Following the Department of Energy’s orders to beef up firmly contracted reserves, the National Grid Corporation of the Philippines (NGCP) will start a competitive bidding process for its ancillary services (AS) requirement
But NGCP said contracting reserves on either firm or non-firm basis is not a solution to the recurring brownouts in the country since additional power supply generation is needed.
Ancillary energy serves as the available generating capacity for dispatch to meet contingency reserve requirements when a generating unit trips or a transmission interconnection problem occurs.
NGCP currently maintains ancillary reserves with both firm and non-firm contracts. Those with firm contracts are charged with higher rates as the electricity produced by a generator would solely be reserved for the use of NGCP regardless if it will be utilized or not.
“We want to guarantee the best pricing for AS, especially since this is a pass-on cost to consumers. With an open and public bidding process, we ensure full transparency and comply with internal governance imperative of accountability, which all our stakeholders deserve,” said Anthony Almeda, NGCP president and chief executive officer.
Almeda said the current situation is caused by a supply problem as the firm contracting being mandated by the Department of Energy (DOE) will not result in additional supply but will lead to a change in payment terms that will be shouldered by the public.
“For the grid to effectively address imbalances between supply and demand, we need to increase the power capacity of the country to meet rising demand as we start to recover and fully reopen the economy,” Almeda said.
NGCP added the country’s annual power consumption is expected to grow by 14.09 percent from pre-pandemic levels when economic activity is expected to catch up and normalize.
The DOE maintains its position that the power interruptions in the Luzon Grid this month was partly caused by NGCP’s non-compliance with the mandate to make all ancillary services under firm contracts.
Meanwhile, in a separate statement, the Philippine Independent Power Producers Association, said that it supports policies that will result in stability, security and reliability in the energy system.
The group said that there is an urgent need to fill in the ancillary services requirement of the grid but emphasized that it must be complemented with additional capacity with the entry of new power plants. -J. Macapagal
