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Is the PH power supply ready for the AEC?


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Power infrastructure capability of the Philippines to support more economic activities with the coming ASEAN Economic Community (AEC).

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Is the PH power supply ready for the AEC?

  1. 1. 28 Dec 2014 infrastructure Workers check a damaged electric post in Cagayan de Oro, southern Philippines
  2. 2. 29Dec 2014 Ready for the AEC? Is Our Power Supply the philippines I t is generally understood that growth in electricity production in the Philippines has been slower than that of its neighbors in the Asean countries. China, South Korea, In- donesia, Malaysia and Vietnam have ex- panded their electricity production by five times or more in just two decades, causing some anxiety mixed with optimism, over the potential impact of the region’s fast- approaching economic integration. In the Philippines, a number of re- ports have claimed that rotating brown- outs and power outages will be in- evitable in the hot months of March to May 2015, when electricity demand is high and power reserves are thin. The Department of Energy (DOE) has asked Congress to grant President Benigno Aquino the authority to deal with the projected power supply deficit in an emergency. The above medium-term supply-de- mand outlook for Luzon, the largest island in the Philippines, is based on the assump- tion that the Required Reserve Margin is a 4% regulating reserve, as well as a contin- gency and dispatchable reserve require- ment. It also assumes that there will be a 4.2% peak demand growth rate in 2015, com- pared with the current year, based on the observed 0.6 elasticity ratio of demand for electric power, with a projected GDP rate of 7% in 2015. Also, there will be a 4.8% peak demand growth rate in 2016-2020, based on a pro- jected 8% GDP growth rate for this period, and assumed average forced outage or scheduled maintenance, while the monthly percentages of the total available capacity are as follows. However, available capacity calculations and committed projects do not deliver 100% of their rated capacity. Old conventional power plants tend to require more frequent maintenance or scheduled shutdowns, or they suffer from more unscheduled shut- downs. For new renewable sources of en- ergy, such as wind and solar power, their dependable capacity is only some 20% of their rated capacity. Country 1990 2011 2011/1990 Multiple* Country 1990 2011 2010/1990 Multiple* A. Developing East Asia B. Developed Asia China 621.2 4,715.7 7.6 Japan 835.5 1,025.8 1.2. Indonesia 32.7 182.4 5.6 S. Korea 105.4 528.4 (2012) 5.0 Thailand 44.2 156.0 3.5 Taiwan 51.0 252.4 (2013) 4.9 Malaysia 23.0 130.1 5.7 Singapore 15.7 46.0 2.9 Viet Nam 8.7 99.2 11.4 Hong Kong 28.9 39.0 1.3 Philippines 26.3 69.2 2.6 Laos 0.8 12.8 16.0 C. Developing South Asia Myanmar 2.5 7.3 2.9 India 289.4 1,052.3 3.6 Brunei 1.2 3.7 3.1 Pakistan 37.7 95.3 2.5 Cambodia 0.2 (’95) 1.1 5.5 Bangladesh 7.7 44.1 5.7 Figure 1. Electricity production in Asia, 1990 vs 2011 in billion kWh * The multiple is not part of the ADB Report; it has been added for this article. The Asean Economic Community is to begin operations by the end of 2015, when trade, investments, tourism and cultural exchanges are expected to see further increases among the member economies. However, ensuring an adequate and stable supply of electricity at affordable or competitive rates will pose a significant challenge to the economies. By Bienvenido ‘Nonoy’ Oplas, Jr
  3. 3. 30 Dec 2014 Figure 3. Figure 2. Power supply-demand in Luzon, 2014-2019, as of November 2014 Source: Department of Energy (DOE) abridged version Thus, a 100 MW solar or wind plant can deliver only around 20 MW, on average. When there is little to no sunlight or wind, the energy output from these plants is zero or minimal. The DOE’s outlook fails to adequately reflect future dependable supply (FDPS), and so, the true gap between peak demand and available capacity/committed projects cannot be effectively addressed. For its part, the National Grid Corpora- tion of the Philippines issues alert levels in cases of power deficiencies. “Red Alert,” for instance, means the contingency reserve is near zero, if not negative. Red alerts have already been issued a number of times between June and September 2014, well ahead of the launch of the AEC. Here are some critical periods in 2014, they can give a preview of supply outlook in 2015. Actual peak demand this year was 8,717 MW, made in May 21, 2014. “Red Alert” have been issued on June 17 (natural gas restriction), June 25 (3 coal plants have unscheduled shutdowns, 1 has derated power), and July 12-13 (natural gas pipeline problem). Thin reserves were also experienced last September 8-11 (natural gas restric- tion), last August 30 - September 28 (Sual coal unit 2 maintenance, 647 MW), Sep- tember 26 - October 25 (Sual coal unit 1 maintenance, also 647 MW). Thin reserves, if not power supply defi- cit, will be most critical on April-May 2015. But big industrial and commercial consum- ers have back up power. Metro Manila and Luzon provinces are heavily dependent on a number of power facilities, many of which are already more than 20 years old; hence, they either re- quire more frequent maintenance shut- downs or are prone to unscheduled shut- downs. From 2002 to 2013, only one new power plant was commissioned: the Mariveles GN Power coal plant. The oil barge by TMO is an old power plant that had remained inactive for at least five years and was re-commissioned in late 2013, purely to help prevent brownouts during last year’s Christmas season. So, is the Philippines ready for the an- ticipated energy demand surge when the AEC begins operations? If existing and committed power plants are to be relied on, then the answer is no. Many of them are old, and many new plants utilize intermittent sources, such as wind, with low dependable power capacities. The warehouse grounds of Aboitiz-owned Visayas Electric Company (VECO) in Cebu City, central Philippines. infrastructure
  4. 4. 31Dec 2014 Figure 4. Detailed view of 2014 and 2015 Power Plant Capacity (MW) Year Com-missionedInstalled Dependable Total Coal 4,530.6 4,219 Sual 1,294 1,294 1999 Pagbilao 764 764 1996 Mariveles 651.6 495 2013 Masinloc 630 630 1998 Calaca 600 510 1984 Quezon Power 511 460 2000 Total Oil 1,775.1 1,585.8 Malaya OilThermal 650 610 1995 Limay CCGT 620 540 1993 Bauang Diesel PP 235.2 180 1994 TMO 242 150 2013 Nov. Subic DPP 116 110 1994 Total Nat Gas 2,861 2,759 Ilijan 1,271 1,200 2001 San Lorenzo 530 523 2002 Santa Rita 1,060 1,036 1997 Total Big Hydro 2,444.8 2,129.2 Kalayaan PSPP 739.2 720 1982 San Roque 411 411 2003 Magat Dam 360 360 1983 Angat Dam 246 135 1967 Pantabangan - Masiway 132 132 1977 Binga 125 125 1960 Ambuklao 105 105 1956 Casecnan (NIA) 165 39 2002 Bakun 70 36.4 2001 Caliraya 35 28 1942 Botocan 22.8 22.4 1946 Total Geothermal 824.2 599 MakBan 442.8 333.9 1979 Tiwi 234 207.9 1979 BacMan 130 45 1993 Figure 5. Existing major power plants in Luzon, early 2014 (Smaller plants not included in this list. Marked in red are power plants that are 20 years or older.) Source:DOE If large industrial and commercial consumers use back-up power, as part of the Interruptible Load Program, then the answer is yes. However, the latter would drive up the price of elec- tricity, as these large consumers would use their own generators, and the reduced demand in the national grid would have to be compensated. This would come in the form of higher “universal charges” in succeeding months or direct payments by the DOE, using taxpayers’ money. Still, there are a few solutions that could help expand the country’s power supply capacity. First, power companies should bring in more peak- load plants, similar to mobile diesel power barges. The drastic decline in global oil prices presents an opportunity to lower the cost of fuel for these power plants and, in turn, lower their power-generation prices. Second, large industrial and commercial consumers can enter the pow- er-generation business, as well. Third, media campaigns can be run to request the public, households and com- mercial offices to reduce their power demands by using more energy-efficient lights and appliances. Further, government agencies should limit the bu- reaucratic red tape involved in getting the permits re- quired to commission and build new power plants. DOE Secretary Jericho Petilla once said that for some projects, about 100 signatures are needed to launch and maintain a single large power plant. Over the medium term, the government should re- duce taxes and royalties for power generation, as these impositions significantly contribute to high electricity prices. The natural gas tax, for instance, amounts to 60% of the net price of gas. It is equally important to ensure that the trade of liq- uefied natural gas, coal and oil among Asean countries is further assisted to help boost national and regional power supplies. The writer is the president of the Minimal Government Thinkers Inc, Manila. the philippines