The Department of Energy is looking at a flexible energy mix based on the country’s energy needs to stimulate competition and to maintain reliable and adequate power supply.
Energy Secretary Alfonso Cusi said that the department has formulated an energy mix with 70 percent baseload, 20 percent mid-merit and 10 percent peaking, instead of establishing a cap per technology.
“What we see is we want it to be competitive so we’re not putting a quota per technology,” Cusi said.
Under this scenario, technologies will compete with one another and may bring down electricity costs, Cusi said. The choice of technology to invest on will depend on the power developers as long as it meets the country’s power requirements.
“We want an energy mix where there will be competition so coal, gas, geothermal, hydropower or nuclear can compete in that 70 percent baseload. They are going to compete with each other and then you will really experience the CSP (competitive selection process) aimed to lower power rates,” Cusi added.
The secretary added that this will assure ample power supply for the country in preparation for industrialization.
The energy mix is not permanent and may change depending on the country’s need.
“But of course, along the way, that could change depending on technology development so they just have to adjust,” Cusi said.
Under the Philippine Energy Plan for 2016 to 2030, the country is seen to have a demand and reserve requirement of 30,189 MW by 2030. 17,925 MW is already installed while about 12, 000 is still needed.
The DOE long-term energy policy from 2016 to 2030 will not result to lower power rates. The main reasons for this are the following: a) The projected demand by 2030 of additional 12,000 MW will not materialize as residential customers and some commercial user will be forced to generate their own power due to excessive power cost i.e. PV solar, wind, etc., b) The target 70% of power to be sourced from coal by 2030 will result to less incentive in investing in LNG except for the Lopez group who already operates gas fired power plant (and as backup to Malampaya decline) and the Pagbilao LNG which is now under construction, and lastly c) Cheap and poorly operated power generation plants. Since Mr. Cusi is bent on pushing for more coal plants more money shall be required in building new transmission lines for these new coal plants as these plants will be located away from the main users. This means the customer will not only pay for the additional transmission line but also pay for the power loss from the system. With this scenario I am not sure if power rates can be lowered in the future. My recommendation to lower the power rate is for DOE/ERC to exercise their power as a regulating body to impose the limit for a reasonable return on investment for the utility companies.