Online stockbroker Colfinancial.com expects power demand to continue to grow this year as the economy expands, pegged by consensus estimate at 5.7 percent.
This could stimulate power consumption to expand by 5 percent this year, it said. Peak demand is expected to exceed last year’s.
“We estimate the projected added capacity from new renewable plants will be sufficient to meet the projected increase in demand even as no new large baseload capacity is expected to be added to the country’s grid,” Colfinancial.com said.
“However, we expect supply tightness during the critical summer months in May and June as the impact of El Nino could disrupt, diminish the capacity of the country’s hydroelectric power generation plants,” it added.
Colfinancial.com said the projected depletion of the Malampaya gas field could put a strain on baseload plants with the aging of the country’s existing baseload plants that could potentially result in more unplanned outages.
It cited the Department of Energy’s forecast that power supply will grow by 20 percent in 2024, although almost all the new added capacity will be from renewable energy (RE) generation, as no new baseload capacity from coal or natural gas is expected to be added.
“Note that RE generation has a significantly lower capacity factor of 18 percent vs 75-85 percent for baseload plants, indicating that a higher level of capacity is needed for renewable power generation to generate the desired level of output that will be at par with thermal baseload plants. Furthermore, the output of renewable plants is also subject to resource availability (solar-irradiance, wind speed and water), making them less reliable compared to thermal baseload plants,” Colfinancial.com said.
Due to fewer instances of baseload plant outages, lower coal and oil prices, and the first full year operation of the 1,200 megawatts Dinginin coal plant last year, the spot market price for electricity at the Wholesale Electricity Spot Market (WESM) declined by 12 percent to P6.20/kwh during the first nine months of last year, it added.
“For 2024, we estimate that WESM prices will average P5-6/kwh. However, there could be temporary surges in prices during episodes of power plant outages and Malampaya curtailment. The risk of large baseload plants suffering from unplanned outages is significant given that 65 percent of the country’s power generation capacity is already 10 years or older,” Colfinancial.comsaid.
Such scenario favors power companies with “high level of contracted capacity,” it added.
