A PROPOSED law that removes heavy permits and fees for homes and businesses setting up rooftop solar panels for personal use could trigger a massive drop in electricity demand from the main grid, hurting the profitability of power distribution utilities (DUs).
‘That has a direct impact on our distribution utilities [DUs], and it affects the market as well. Essentially, instead of market demand increasing, it will shrink; self-generation-such as distributed energy resources-will offset the load, meaning that demand won’t register in the market.
‘The direct market impact is a drop in demand. Similarly, for the DUs, their demand will also decrease,’ said Isidro Cacho, Jr., vice president for the trading operations department at the Independent Electricity Market Operator of the Philippines (Iemop).
Iemop is operator of the Wholesale Electricity Spot Market (WESM), thecountry’s trading floor for electricity.
The proposed Sariling Kuryente Act (House Bill 10431) aims to remove unnecessary barriers to rooftop solar panels and BESS to make installation simple, easy, affordable for consumers.
The Energy Regulatory Commission (ERC), for its part, will soon release soon a compendium. ‘We are fully supportive of these bills. We’re preparing the matrix of comments,’ said ERC chairman Francis Saturnino Juan.
Likewise, the Department of Energy (DOE) is expected to issue a policy related to the proposed measure.’ There’s a new policy that were drafting. There are households that want solar and battery without the intent of selling the excess capacity to the distribution utility,’ said DOE Secretary Sharon Garin.
The shifting dynamics of self-generation are reshaping the energy landscape as consumers install rooftop solar systems to generate their own electricity, ultimately offsetting their reliance on traditional power grids. This puts a strain on DUs as they will likely observe a direct, measurable drop in electricity consumption.
Regarding the WESM, Cacho pointed out that the broader energy market will also feel an immediate ripple effect. A portion of the DUs’ power requirements is sourced from WESM. Cacho explained that energy procurement volumes will experience a noticeable decline as total market demand shrinks. As such, prices could also drop.
‘Ultimately, a drop in demand will be observed in the market. That is the direct impact. If demand is low, our supply margin increases, which could lead to more competitive pricing and affect price spikes-especially if the impact is significant.
‘Even with the rise of self-generation, many are now installing rooftop solar systems-five kilowatt [kW], six kW, or 10kW. The direct result is a reduction in market demand, and with that drop in demand, one can expect prices to go down,’ he explained.
The Iemop has yet to assess actual impact of solar power generation on the
WESM rates. ‘We don’t have specific figures yet; although it is being studied, we haven’t fully quantified it. What we can quantify is the impact of solar power at the grid level. At that level, we observe a significant impact-sometimes even resulting in negative demand, particularly on weekends or holidays. While the negative pricing is minimal, we do see prices dropping as low as P2,’ he said.
The Manila Electric Company (Meralco) has recognized the challenge posed by the increasing number of its customers utilizing rooftop solar.
Meralco chief operating officer Ronnie Aperocho said the 2.2-percent customer growth does not translate to a higher energy sales volume. ‘We’re growing by 2.2 percent, but sales are still tempered. It’s because of the fact that of the new customers that are coming in, 50 percent of them are from the residential segment . . . Some of these new residential customers that we’re energizing also have their own rooftop solar, so that’s really the challenge. The counter-effect is from the solar panels that they are putting up,’ he said.
Meralco has MSpectrum
On the other hand, Meralco is targeting the rooftop solar market through its subsidiary, MSpectrum, Inc., by offering fully financed solar installations with no out-of-pocket costs for customers possibly under power supply agreements (PSAs).
‘But maybe you’re aware also that Meralco is also into solar through our MSpectrum, so that’s why we’re trying to capture that market also by, of course, providing our services. We will be the ones who will install the rooftop solar. We’ll be financing it and then subject to, like a PSA, things like that,’ Aperocho said.
He acknowledged observations that higher electricity rates have driven residential and commercial customers to adopt energy conservation measures, directly reducing Meralco’s sales. Shopping malls, for instance, have reduced their operating hours, while some steel companies have shut down completely, further hurting energy sales.
‘But of course, we know that during these times when electricity bills are high, energy conservation efforts on the part of our customers also have a big impact on us. Not only in the residential segment, but even in the commercial,’ he said.