IEMOP starts pilot stage for reserve market

MANILA, Philippines — The Independent Electricity Market Operator of the Philippines (IEMOP) has commenced with the pilot stage of the reserve market in preparation for its nearing full commercial operations.

IEMOP said the pilot stage is pursuant to the Department of Energy (DOE)’s advisory last Dec. 22, which aims to ensure continuity of final preparations for the full commercial operations of the reserve market.

The pilot stage of the reserve market will allow for the optimization of the market operator and system operator interfaces, central scheduling and dispatch of contracted ancillary services and automated real-time dispatch of committed ancillary services.

IEMOP, as the market operator, started in June last year the trial operations program for the reserve market, a mechanism where generation capacities for power reserves are auctioned off.

IEMOP commenced on Sept 28 last year the preparations for its commercial operations.

IEMOP said that upon declaration of the full commercial operations of the reserve market, where transactions will become financially binding for settlement through the market, the system operator will then be able to procure reserves from the spot market to meet the reserve requirements of the system.

IEMOP is hoping that by Jan. 26, the reserve market will be in full commercial operations, with binding financial transaction through the market.

According to IEMOP, the reserve market is expected to benefit the nation by ensuring sufficient and reliable power supply.

It likewise provides a venue for investors to venture into new generating capacities for both energy and reserves.

Ultimately, IEMOP said the co-optimization of the scheduling  of reserves and energy has the objective of reducing the overall cost of both energy and reserves.

The reserves, specifically the frequency control ancillary services, are the main products that will be traded in the reserve market.

IEMOP explained that these services provide a safety net to ensure the reliable and stable supply of electricity to meet unexpected changes in the demand and supply of electricity by balancing power generation and consumption dynamically, acting promptly during sudden generator outages to ensure consistent grid functionality, and stepping in as the subsequent line of action during grid challenges.

“Like the energy market, the reserve market provides a venue for generators to offer reserve capacities competitively. These reserve offers are co-optimized with energy offers to  determine the best mix of energy and reserve supply that will result in the most competitive prices for electricity,” IEMOP said.

“The co-optimized scheduling of generators to provide energy and reserve, coupled with the dynamic determination of reserve requirements, will result in an optimal mix of contracted and spot reserve capacities that promises stakeholders and end users a more reliable supply of electricity,” it said.

The DOE, in an advisory dated Dec. 22, 2023, said final preparations for the commercial operations of the reserve market have been substantially completed.

“To ensure the continuity of the preparations, particularly the familiarization of the trading participants, and the system operator with the reserve market environment, the market operator, the system operator, and all trading participants are hereby directed to continue the final preparatory activities in accordance with the operating procedures for the central scheduling and dispatch of contracted ancillary services,” the advisory stated.