DOE: Future energy supply stable despite increasing demand from “Build, Build, Build”

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Will the Build, Build, Build program hurt the future energy supply of the country?

Despite fears expressed by stakeholders, the Department of Energy (DOE) assured that the agency is prepared and ready to support the energy needs of the administration’s infrastructure program.

“We can say it’s more stable, yes, we have a more stable supply now, enough to meet the present demand. We are building our capacity for the future requirements, like these future requirements under the Build, Build, Build and our GDP (gross domestic product) growth,” Energy Secretary Alfonso Cusi said to Manila Standard reporters.

According to the energy chief, in 2022 the Philippines is projected to need an additional 10,000 MW to avoid a power crisis.

In anticipation, President Rodrigo Duterte signed last year Executive Order (EO) No. 30, creating the Energy Investment Coordinating Council that would streamline the regulatory procedures and prioritize energy projects of “national importance.”

As mandated in the EO, member agencies of the council are required to act upon and issue their respective permits for qualified energy projects within a 30-day period upon submission of complete documents.

“The EO will help to meet the timeline… Now power is more stable and we would like to continue improving that and we are inviting investors into energy both local and foreign, and we want to have a wider, more investors in the field,” Cusi said.

According to DOE data, the Philippines has a total of 22,728 MW of installed generation capacity as of end of 2017. 8,049 MW comes from coal-fired power plants; 7,079 MW comes from renewable sources; 4,153 MW from oil; and 3,447 MW from natural gas.

Meanwhile, the country’s dependable generating capacity in 2017 was much lower at 20,515 MW. Power consumption reached nearly 95 million GWH in the same year, up four percent from 90.798 million GWH in 2016.

Residential customers posted the highest consumption in 2017 with 26.792 million GWH. Industrial customers followed at 25.573 million GWH and commercial at 22.767 million GWH.

Luzon generated the highest power supply with a capacity of 68.512 million GWH;  Visayas with 14 million GWH; and Mindanao at 11.8 million GWH.

Luzon’s power reserves were placed at 3,337 MW as of August 11, 2018, around 30 percent of the system capacity of 11,348 MW.

Pending with ERC

With the growing demands for power supply, industry players fear that the situation with the Energy Regulatory Commission (ERC) would harm future investments if the issues with governing body is left unsolved.

Four commissioners of the ERC were suspended by the Office of the Ombudsman until October. Since then, two of the commissioners have retired, and the Office of the President has not announced their replacements.

As a result of the suspension, pending power supply agreement (PSA) applications of Manila Electric Co. were left pending since 2016. The PSAs include seven generators that offer over 3,000 megawatts of supply.

Power plants take three to five years to build.

Renewable energy developers have showed interest to help address the increase in power demand. However, industry officials said the market cannot handle too much intermittent supply, given that RE technologies cannot run continuously for 24 hours.

“We are seeing a surge in demand for power, which is happening as well for other goods and services, putting an increasing strain on our electricity distribution and generation infrastructure,” Manuel Pangilinan, chairman of Manila Electric Co. (Meralco), said.

AC Energy Inc., a unit of conglomerate Ayala Corp. sees an oversupply as reserve margins stay above the 20 percent requirement.

“Barring any force majeure event, this is more than adequate for the system. With over 3 GW (gigawatts) of power plants currently under construction all over the country, our supply should be enough to meet the growing demand for the next 4-5 years,” AC Energy Chief Executive Officer Eric Francia said.

GE Philippines Chief Executive Officer Jose Victor Emmanuel De Dios said power supply today was “still healthy,” but expressed concern about the energy stability from future demands “because there are no new PPA’s being approved.”

“My view is that the greater the reserve margin the better since it can easily take five years to develop large-scale power projects. Some of our Asean neighbors have much greater reserve margins than the Philippines, ensuring energy supply security,” De Dios said.


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