Energy department to investors: Don’t pull plug on power investments

By Lenie Lectura – December 6, 2016

from Business Mirror

The Department of Energy (DOE) on Tuesday strongly urged the private sector to continue investing in the power sector, stressing the country needs an additional 17,338 megawatts (MW) of power-generation capacity by 2030.

The bulk of the capacity, equivalent to about 10,070 MW, is needed in Luzon, of which 4,320 MW must come from base-load plants, 4,800 MW from midmerit and 950 MW from peaking plants.

The Visayas needs 3,618 MW, with 1,968 MW to be provided by base-load plants, 1,500 MW by midmerit and 150-MW by peaking plants.

In spite of the new capacities installed in Mindanao, the grid will still need 3,650 MW, with 2,100 MW base-load requirement, 1,500 MW midmerit and 50 MW peaking plants.

“The 17,338-MW requirement of the country will result in optimal power plant categories of 70-percent base-load, 20 percent midmerit and 10 percent peaking,”  Energy Secretary Alfonso G. Cusi said during the 2016 Energy Investment Forum in Makati City.

“This could serve as a guide for the entry of investors and/or proponents in the energy industry,” Cusi added.

In support of the base-load requirement, the agency is also exploring the use of nuclear energy to determine its possible place in the country’s energy mix. Thus, the DOE is conducting a study to enable the government to determine nuclear energy future in the country.

For the first half of the year all existing power plants’ installed generation capacity is 20,000 MW, with available capacity of only 13,877 MW, or 69 percent of installed capacity.

If broken down into fuel type, the country’s installed capacity is 34 percent renewable energy, 33 percent from coal plants, 18 percent from oil-based plants and 14 percent from natural-gas plants.

The DOE noted that current data indicates the need for critical intervention to address the period where there is peak demand and low availability of hydropower capacities.

“Based on available capacity, an 8 percent annual gross domestic product  growth rate and 1.5 percent population growth, our power demand will continue with its upward trend, as we aggressively move toward industrialization and urbanization,” Cusi said.

To support these additional capacity requirements, the DOE has directed the National Grid Corp. of the Philippines (NGCP) to expedite the implementation of the transmission development plan (TDP), which includes the completion of the Mindanao-Visayas interconnection project.

“The TDP is long over due. It cannot be further delayed. What we want is, before this administration ends, matapos na ’yun [is to finish] TDP. Pabilisin natin iyan [Let’s speed up its completion],” Cusi said.

The energy chief added that he has been meeting with the NGCP and the National Transmission Corp. to speed up the TDP.

For the oil and gas sector, the DOE has identified 16 sedimentary basins, with a combined potential of 4,777 million barrels of fuel equivalent. These areas, approximately 709,000 kilometers, require private- sector investments, particularly in the exploration, development and production activities.

“At present, the DOE is monitoring 25 active petroleum service contracts. We hope to have more of these contracts through the conduct of the Philippine Energy Contracting Round,” Cusi said.

For coal, the country has a total of 400.8 million metric tons of coal reserves and a total resource potential of 2.36 billion metric tons. “We need to develop these areas to increase our local sources of coal and reduce importation. We will offer new areas in the next contracting round,” Cusi added.

The DOE also said it is monitoring 48 active coal operating contracts in the exploration phase and 30 contracts in the development and production phase.

On the natural-gas sector, the DOE is preparing for the depletion of the Malampaya gas field. “We are currently designing and crafting a natural-gas policy that identifies strategic activities, including the further exploration and the necessary implementation of critical infrastructure,” Cusi said.

He also assured that the agency will continue to identify appropriate alternative fuels and technology.

At present, the DOE is prioritizing the development of liquefied petroleum gas, compressed natural gas, liquefied natural gas, electric vehicle and hybrid electric vehicle.

Cusi said the agency is also studying the impact of biofuels on current and future fuel prices, and balancing the mandate of the law with consumer interests.

For renewable energy (RE), a target installation of 10,381 MW has been set. Cusi vowed to accelerate the exploration and development of RE resources.

To date, 781 RE contracts were awarded with a potential capacity of 15,910 MW and 4,132 MW were installed. There are still about 300 RE applications undergoing processing, which has a potential capacity of 3,826 MW.

“To sum everything up, the Philippine energy sector offers a number of investment opportunities. The incentives, policy mechanisms and the regulation framework are in place. We just have to work together and continuously provide feedback for the improvement and effective implementation of programs,” Cusi said.