MANILA, Philippines — The Department of Energy (DOE) is re-studying the timeline for the establishment of a power reserve market, indicating that the June 2012 deadline given may be waived.

“The bigger objective now is open access by third quarter. We may have to re-calibrate the reserve market,” Energy Secretary Rene D. Almendras has noted.

He added that a new timeline for the reserve market will be determined once open access is already in place.

Specifically for the requirements on reserve, the energy chief noted that there is also a need for DOE and concerned industry players “to study the impact of solar.”

Asked what are the factors or parameters being looked at, Almendras said, “to be honest with you, that is being studied right now. I am also trying to understand the dynamics of that.”

He emphasized that the energy department already requested the Philippine Electricity Market Corporation (PEMC) “to study the interaction” of solar to the other technology options in the power system.

Stakeholders in the power industry indicated though that the integration of solar may not necessarily merit major adjustments in the calculation of required reserves.

The energy secretary similarly intimated that they are re-assessing the efficacy of the reserve market when the open access regime kicks in; and in cases when the appointed supplier of last resort (SOLR), which are the distribution utilities, would not have other sources of supply.

The latest ruling issued by the Energy Regulatory Commission (ERC) enjoins WESM operator PEMC to establish an “automatic default reserve price substitution mechanism” as a way also to cushion price impact on consumers.

Power reserves are critical component in the efficient and reliable provision of electricity supply, because they address the need for capacity when there are shortages or other upsets in the system.

Industry players have always asserted that the creation of a “power reserve market” is essential because this will help ensure reliable power supply in the system.

It will also set clear delineations as to capacities being traded in the market -- either as reserve or as energy being part of the normal supply curve. The two could be differently-priced, with the reserves offer generally getting a premium.

In a deregulated power market, customers have the freedom to purchase their spinning reserves requirement directly with power suppliers or via the electricity spot market.

PEMC itself explained that “”if there is a reserve market, ancillary services can be traded in the market instead of individually contracting them” and still seek rate approval with the ERC.

It must be noted that system operator National Grid Corporation of the Philippines (NGCP) has been taking that contracting route for its ancillary services needs. But if the reserves market would finally be established, the power providers can just offer their capacities as such in the electricity spot market.