Archipelagic Nation Needs Archipelagic Generation – Part I

David Celestra Tan

Updated July 4, 2016

One fundamental strategic issue in Philippine power development that maybe revisited by newly appointed Energy Secretary Alfonso Cusi is the long time thinking that the nation should build big and bigger plants wherever the private sector generators want and to just string all these plants together with HV transmission lines.

This is expensive for consumers, takes too long, and does not really result to an efficient power grid.

Our country is archipelagic with 7,107 islands (okey in low tide!), at least 15 of them are major that are occupied by 85% of our 100 million population. We should have archipelagic generation where we build island-centric generating plants and only build medium voltage and strategic inter-island submarine connections for supplementary peaking and reserve power. There is a big jump in technology and cost from a 69kv submarine system to 138 and 230kv. Major high voltage lines of 138 and 230kv can be built for strategic reasons like connecting the major island of Mindanao to the Visayas and Luzon grid.
In the big island of Luzon the idea of locating large base-load plants and building transmission lines is not so bad although many experts believe that some better thinking should have been made before they allowed the 1,200mw Sual coal plant to be built as far north in Pangasinan, 300 kilometers away from the load center of Metro-Manila.

We need some serious rethinking in the Visayas where the government owned monopoly Napocor decided to rely on the geothermal plants of Leyte to power Panay Island, Negros, and Bohol with high voltage lines overland in Cebu and make them cross to those islands with high capacity submarine cables.

Not only did the Cebu-Negros-Panay submarine cable system cost a lot, it also proved to be too slow to upgrade to keep up with growing demand in the islands of Panay and Negros. This is why Boracay which is at the northwestern tip of Panay island had been suffering from brownouts and low voltage problems for many many years. So did many cities of Panay island.

The problem of Panay island was solved only when the private sector started building 300mw base-load coal plants in Iloilo. Another generator is building a 275mw coal plant also in Iloilo province. Since the Panay Island only has a 300mw demand, the rest will need to be exported to Negros and Cebu. And the burden of upgrading the Negros-Panay submarine cable falls on the national grid concessionaire NGCP, who also will need to upgrade its overland transmission lines across Negros island (Right of Way problems and all) so that those Panay based power can be delivered to their customers in Cebu and Negros.

This creates congestion in the Visayan grid and increases the transmission wheeling charge to consumers to whom all those submarine cable costs will be passed on.

We need an archipelagic strategy where each large island must be made self-sufficient in their base-load power and only draw from the other islands and use the submarine cable lines for their peaking and reserve requirements. This is also called sharing of resources. This cannot happen unless the Department of Energy uses its authority to make sure there is rhyme and reason for the locations of the large base-load plants and not leave it all to the private sector to decide.

The private power generators will build plants where it is safer and more profitable for them. The way it is, the NGCP has the burden of building more and more transmission lines to connect those private generators wherever they are. Unfortunately, all those connection costs are passed on to the consumers. The more disparate the locations are the more it costs consumers.

If Negros island is made more self-sufficient in base-load power, then we don’t need the expensive submarine cable upgrades from Panay to Negros and from Cebu to Negros.
Our PEMC and DOE try to justify this by saying the free-flow of power from any island to the Visayan Grid will create competition and off-set the heavy costs of upgraded submarine cables. If they do the math they will realize that the price impact of competition in generation sector will not justify the additional transmission line charges.

Bringing down generating cost to consumers can better be achieved by creating true competition in the bilateral contracting stage.

This is also relevant in the strategic plan for Mindanao. The current plan is to connect Mindanao to the national grid by building a submarine cable system from Northern Mindanao to southern Negros island. Such Mindanao-Visayas connection is advantageous but should it be so big in capacity? It is being designed to transfer the 3,000mw of coal projects announced in Mindanao instead of building only enough for Mindanaos own use plus some capacity to supplement the peaking and reserve requirements of the Visayas and Luzon? Or if the strategy is to allow Mindanao to be a main source of base-load power for Visayas and Luzon, why should we also build high capacity submarine lines between Panay and Negros and Negros to Cebu and make consumers pay for it?

Shouldn’t those Cebu-Negros-Panay submarine lines be limited to peaking and reserve capacity?

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