Feeding a power-hungry economy


FOR an economy that has been growing at an annual average of 6.3 percent (2010-2014), demand for electric power is expectedly hard to match with adequate supply.

The imbalance becomes even starker if economic growth steps up to 7 to 8 percent as forecast for the next two years (2016 and 2017) while development of infrastructure has been more than long overdue and recent projects have been wracked with corruption-related delays.

Oxford Business Group, an international consultancy firm producing annual investment and economic reports on more than 30 countries, says while electricity sales in the Philippines rose by an annual average of 3.89 percent over the past decade, as reported by the Department of Energy (DOE), power generation capacity growth has lagged behind, at 2.2 percent.

“In reality, much official installed capacity is offline or unreliable due to planned maintenance and antiquated facilities,” the company says, referring to old thermal power plants.

The Asian Development Bank (ADB), which helped the government solve the country’s power crisis in the 1990s, says reliable and secure electricity services at competitive rates are essential, if only to improve the investment climate in the country. The ADB laments that the Philippines has one of the highest electricity prices in Southeast Asia—not a good picture in the face of the impending economic integration of the region’s 10 member-nations.

Challenge: sustainability, affordability of supply
“The challenge in the energy sector is to ensure sustainable and reliable supply at reasonable cost,” the ADB said in its Country Operations Plan for the Philippines for 2013-2015.

The Manila-based multinational lender acknowledges the government’s goal, though, to achieve universal access to modern electricity services, citing the state’s ambitious energy development plan, with energy independence and market reform as the main focus.

“The interim target of 90 percent household electrification by 2017 entails connecting over three million additional households,” the bank says in a report.

The ADB forecasts that by 2030, almost 68 percent of the country’s population would be living in the cities, more than doubling household consumption of electricity. By then, the country would need to add 16,550 megawatts of generation capacity, based on the DOE’s own forecast of an average annual electricity demand growth of 4.6 percent under its 2009-2030 energy plan, it says.

Last year, there were scary forecasts of hours of crippling, massive power outages in the entire archipelago during the summer of 2015. The anticipated El Niño phenomenon and maintenance shutdowns of some aging power plants were the reasons given.

Luckily for Luzon, which accounts for majority of national power consumption, this did not come to pass.

Mindanao hardest hit
Tough luck for Mindanao, which had up to two hours of rotating brownouts daily early this year, again due to plant shutdowns.

But the government seems undaunted.

Even at the onslaught of El Niño, the DOE said power supply should be manageable, given enough reserves and the expected commissioning of some power plants.

DOE officer-in-charge Zenaida Monsada says El Niño will only have a minimal impact on the Luzon and Visayas grids, but is bound to greatly affect Mindanao, which depends mainly on hydroelectric power plants for electricity.

“Recent rains helped hydroelectric power plants in Luzon, so the impact of El Niño is not much,” says Monsada. “Overall supply, including reserves, can meet demand.”

DOE data shows that as of August 2015, Luzon had a power reserve of 994 megawatts (MW) as the estimated power supply of 9,883 MW exceeded the island’s peak power consumption demand of 8,889 MW.

The Visayas grid has a power reserve of 125 MW and got a boost from the operation of the new 164-megawatt (MW) coal-fired power plant of Panay Energy Development Corporation in Iloilo City.

The main source of power in the Visayas is geothermal power, accounting for 39 percent of installed capacity and 54 percent of gross generation. Coal-fired power plants provide 33 percent of the installed capacity and 42 percent of gross generation.

In Mindanao, however, the people rely on hydroelectric plants for 52 percent of electricity supply, and 31 percent on coal-fired plants.

To wean Mindanao away from overdependence on hydropower, private firms on the island are pushing for the development of more coal-fired plants, so that by 2020, the power mix would be 56 percent coal and only 24 percent hydro.

The DOE says by the 2020s, as many as 23 coal-fired power plants may come online, which should provide the projected need for 500 MW of power by 2016 and 8,100 MW by 2030. Included here are two 300 MW plants in Davao City that will start producing power in 2016 and 2017.

Renewable energy
For sustainability, the government, with the help of the private sector, is now looking up to the sun, wind, and other renewable sources of electrical energy.

As of August this year, the DOE has awarded a total of 682 power projects nationwide with a potential generation capacity of 13,574.68 MW under the Renewable Energy Law.

The bulk of the awarded renewable energy projects consisted of 411 hydro power plants with a total potential generation capacity of 8,853.81 MW.

Solar power plants come next, with 92 projects promising to deliver generation capacity of 2,510.79 MW.

Wind projects ranked third, with 50 awarded projects that are expected to generate 1,168 MW.

Geothermal projects followed, with 43 projects awarded, offering some 750 MW of electric power. Forty biomass power plants were also approved, promising to supply some 249.07 MW of electricity.

The DOE, likewise, gave the go-signal to eight ocean energy projects with potential capacity of 31 MW.

In addition, the DOE has yet to approve 167 hydro projects with potential capacity of 1,900 MW, 51 solar projects with 1,694.66 MW, and nine projects with 200 MW.

Still in the pipeline are nine biomass projects with capacity of 32 MW, two geothermal projects with 60 MW, and two ocean energy projects with yet undetermined capacity.

Passed in 2008, the Renewable Energy Law ushered in renewable energy projects and put the Philippines on the renewable energy investor map.

The law provided for the feed-in tariff (FiT) scheme, an incentive that provides for a fixed per kilowatt-hour rate to renewable energy projects for a 20-year period.

Earlier, the DOE approved a 50 MW installation target for solar and 200 MW for wind projects. But as this attracted investor interest, the government raised the targets to 500 MW for solar and 400 MW for wind.

The Energy Regulatory Commission (ERC) has approved a feed-in tariff rate of P8.69 per kWh for the additional 450 MW installation target for solar projects.

The other approved installation targets are 250 MW for run-of-river hydro, and 250 MW for biomass.

If a developer becomes eligible for the installation target, it can avail of the feed-in tariff rate of P5.90 per kWh for run of the river hydro and P6.63 per kWh for biomass projects.

To make sure that these projects come on line by their target dates, there should be close coordination among stakeholders, who include electric cooperatives, consumers and generation companies, according to former Energy Secretary Carlos Jericho Petilla.

Petilla urged all stakeholders to regularly monitor existing generating capacity and determine if new power plants would deliver at the committed time.

Electric cooperatives
The National Electrification Administration (NEA) is also speeding up its program on providing electricity to far-flung areas in the country.

The NEA says it has done 78 percent of its target under the Sitio Electrification Program (SEP) as of end-June.

According to NEA, it spent P14.61 billion to energize a total of 25,257 sitios, or an average of P578,411.72 per sitio.

In the first quarter, NEA and its partner-electric cooperatives (ECs) powered 4,744 more sitios, benefiting initial consumers of 142,329 or 711,600 Filipinos nationwide through the SEP.

During the year’s first half, Region VI (Western Visayas) had the most number of energized sitios, specifically, 680 sitios.

Among the ECs, Cebeco I electrified the most number of sitios with 237, followed by Zamsureco I (173); Dasureco (158); Noneco (145); Quezelco I (140); Cenpelco (140); Anteco (136); Sukelco (123); Noreco I (122); and Panelco I/Kaelco (119).

In October 2011, the NEA has committed to electrify 32, 441 sitios until the end of President Benigno S. Aquino 3rd’s term in June 2016.

So far, Regions III (Central Luzon) and IV-A (Calabarzon) have posted the highest SEP accomplishment at 89 percent.

The Ecs, which have energized the most number of sitios are Ormeco (895); Cebeco I (845); Ifelco (687), Dasureco (623); and Camelco (566).

Meanwhile, 11 ECs have accomplished their SEP targets, namely Inec (18); Panelco I (335); Batanelco (15); Penelco (44); Pelco II (15); Pelco III (3); Zameco II (30); Batelec I (28); Aleco (39); Banelco (147); and Lasureco (62).

Last year, a total of 7,567 sitios were energized, surpassing the target of 7,073 sitios by 6.98 percent, even with the massive power restoration needed in the aftermath of Typhoon Yolanda in late 2013.

“Various strategies are being instituted to fast-track SEP implementation for all Filipinos to enjoy the benefits of electricity,” says NEA Administrator Edita S. Bueno.


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