DOE plans grid integration of 94GW capacity

The Department of Energy (DOE) is eyeing grid integration of up to 94 gigawatts or 94,000 megawatts of additional power capacities that are already on the roll of projects undergoing pre-development phases.

Energy Undersecretary Sharon Garin told a Congressional budget briefing that these planned power facilities comprise of 176 targeted wind farm installations; 162 hydropower ventures; 108 solar projects; 21 geothermal projects; and one ocean energy undertaking.

When asked if the planned power projects could be viably absorbed into the power transmission network of the National Grid Corporation of the Philippines (NGCP), Energy Undersecretary Rowena Guevara admitted that most of the planned capacities had not been included yet in the Transmission Development Plan (TDP).

“If we look at the current TDP and the submission of NGCP for its 5th regulatory reset, it can be observed that 50,000MW of the listed projects are not there,” she stressed.

It is worth noting that the fifth round of adjustment on NGCP’s tariff is currently pending with the Energy Regulatory Commission (ERC) and part of the building blocks on its rate application is its schedule of capital expenditures (capex), primarily the line-up of its transmission projects.

To remedy that setback, the energy official indicated that the plan of the DOE is “to come up with a smart and green grid system (SGGS), which encompasses all of those things that are not in the list of NGCP.”

Less clear at this point, however, is how the government will pursue warranted buildup and reinforcement in the transmission system within the bounds of the industry’s current set-up wherein the transmission facilities are under the management and operation of a third party private concessionaire.

As a starting point, Guevara said, “we’re planning to get the numbers for each year, what’s the scale of transmission lines required and where these (lines) would be installed,” she said.

Investments for transmission facilities in the country are already on catch-up mode and that is not offering any bit of good news to companies that have been eyeing to inject capital for greenfield power projects.

As a matter of fact, the uncertainty on grid integration of new power capacities – primarily the targeted developments in the renewable energy (RE) sector – already reared its ugly head in the recent green energy auction (GEA) administered by the energy department.

Investors have been forthright in raising concern that grid integration is a major dilemma that they would want to be assured of solution, otherwise, their facilities could suffer curtailments that could then result in foregone revenues or losses.

Until the time that NGCP and the government can firmly address that drawback, along with other major concerns of investors, it is expected that even the forthcoming round of RE auctions would end up in series of disappointments, because investors would shun funneling capital into a market with huge risks.