The Energy Regulatory Commission (ERC) said Monday it granted provisional approval for the Ancillary Services Procurement Agreement (ASPA) between the National Grid Corp. of the Philippines (NGCP) and East Asia Utilities Corp. (EAUC), allowing a battery energy storage system in Mactan, Cebu, to provide additional reserves to the Visayas grid.

Approval of additional backup capacity

The Visayas power grid is set to gain additional backup capacity after regulators cleared the deal, which could help reduce recurring power alerts and ease electricity costs.

The provisional approval was issued on 9 October and remains subject to final evaluation, with hearings scheduled for 3 and 10 November.

What the agreement covers

Under the five-year agreement, EAUC's 44.72-megawatt (MW) battery facility will provide NGCP with up to 13 MW of firm Regulating Reserve and 13 MW of firm Contingency Reserve to help maintain grid stability during generation outages and fluctuations in electricity demand.

"The Visayas needs additional capacities now, not months from now. We gave this application priority because every additional firm, reliable reserve in the grid helps reduce the chance of yellow alerts and the disruption they cause," ERC Chairperson and CEO Francis Saturnino C. Juan said.

The Department of Energy estimated that deploying additional battery storage capacity in the region could cut power alerts by roughly half. Earlier this month, the Visayas grid was placed under yellow and red alerts from Tuesday afternoon into the following day, underscoring the pressures the agreement is intended to address.

Lower rates for reserve services

Apart from improving grid reliability, the agreement could also help lower electricity costs. The ERC approved a provisional rate of USD 0.084 per kilowatt-hour (kWh) for both reserve services, significantly below the roughly USD 0.335 per kWh average price in the Visayas Reserve Market.

The lower contracted rate could help reduce ancillary services costs passed on to electricity consumers.

Cost safeguards imposed on NGCP

To ensure cost efficiency, the ERC directed NGCP to schedule the contracted capacity at the least cost and to submit monthly reports on ancillary services costs passed on to consumers.

The commission's decision to prioritize the application reflects its assessment that additional firm, reliable reserves in the grid reduce the chance of yellow alerts and the disruptions they cause, according to Juan.

The deal now proceeds to final evaluation, with the scheduled hearings in November to determine whether the provisional approval will be made permanent.

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