INDUSTRY stakeholders paint a bleak and very challenging power sector this year.
The Institute for Climate and Sustainable Cities (ICSC) said rotating brownouts could happen in the second quarter of this year because of two reasons that were not included in earlier projections of the grid operator.
“The power outlook for 2023 is bleak. We at ICSC do not foresee much improvement in the supply from both coal and fossil gas power plants,” ICSC senior policy advisor Pete Maniego Jr. said.
He cited the weekly demand, supply, and operating margin 2023 report of the National Grid Corporation of the Philippines (NGCP) in which it cited sufficient operating reserves in the second quarter, specifically from April 24 to May 28, 2023. However, the ICSC said the assumptions of these projected margins are very optimistic and might not reflect the actual operation of the grid.
He said yellow and red alerts, with possible rotating blackouts, would be possible again in the second quarter of this year, “If these two considerations are not mitigated.”
He was referring to the forced outages of coal-fired power plants and the continued shutdown of the Ilijan gas plant.
Based on the operating margin projections, the ICSC said around 8,300 megawatts (MW) should be available for coal-fired power plants. However, the total installed coal capacity in Luzon grid is less than that.
“This means that new capacities should be available during this second quarter of 2023 to meet the 8,300 MW available capacity projected in the operational margin. Additionally, many existing coal fired power plants have experienced unplanned outages and exceeded their ERC [Energy Regulatory Commission]-mandated allowable outage limits in 2022.
“If the same unplanned outages occur in the second quarter of 2023, then this would significantly deplete the available capacity during this period,” the group warned.
Meanwhile, the shutdown of Ilijan power facility since June last year has led to a capacity deficit of 1277 MW in the Luzon grid, which has increased the frequency of red and yellow alerts. “If the full capacity of Ilijan power plants is not available by second quarter of 2023, then this would significantly reduce the available capacity,” it pointed out.
Energy Secretary Raphael Lotilla could not stress enough the importance of additional power supply and reserves during the summer months when demand is at its peak. “We need every source of power to bridge that period,” Lotilla had said.
The energy chief conveyed to the lawmakers early on the possibility of several yellow alerts and possible red alerts that await the Luzon grid this year. Based on initial assessment of the country’s power supply and demand for this year, NGCP could issue 17 yellow alerts and three red alerts throughout 2023.
A red alert status is issued by the grid operator when power supply is insufficient to meet consumer demand and the transmission grid’s regulating requirement.
DOE Undersecretary Rowena Cristina Guevara said, “we are more worried in summer” because of higher demand.
The NGCP has yet to release an updated power demand and supply for this year. It stressed though that even if maintenance work on power plants is prohibited during summer, this is not an assurance that there will be no power outage during the period. It is when there are unscheduled shutdowns and derations, and extensions of maintenance duration that grid operations may be disrupted enough to warrant the issuance of a grid alert status, it said.
Power firms vowed to continue and complete their committed power projects as soon as possible to help plug that deficit.
Based on DOE’s latest data, the total committed power projects as of November 2022 in Luzon from 2022 and beyond will result in an additional capacity of 9,168.17MW capacity and 1,500MW of Energy Storage System (ESS).
Of this, 926.82MW of power generation capacity and 760 ESS are targeted for commercial operation this year.
ACEN Corp. President Eric Francia said the company is currently building over 1000MW of solar and wind projects in the Philippines, of which around 700MW is expected to start operations within the next 12 months. Francia said these projects would help alleviate some of the supply pressure, and help towards achieving the country’s renewable targets.
“For 2023, it will remain challenging especially given the declining output from Malampaya and the continued electricity demand growth on the back of economic recovery,” said Francia via email.
Aboitiz Power Corp. President Emmanuel Rubio said via viber that the company’s power projects would considerably support the country’s need for reliable and stable power in many years to come.
“It comes at an opportune time that the latest addition to our thermal portfolio, the 1,336 MW GNPower Dinginin, is ready to deliver much-needed baseload power to support the country’s growing power needs.
Furthermore, our renewable energy assets continue to grow with over 1,000 MW of disclosed renewable energy projects from various indigenous energy sources like solar, wind, and geothermal,” Rubio pointed out.
Isidro Consunji, chairman and chief executive officer of integrated energy company Semirara Mining and Power Corp. (SMPC), also commented that power supply will be challenging this year while expensive gas prices is expected next year.
“I think 2023 is the most challenging, more than 2024 because in 2023, the LNG (liquefied natural gas) is not ready. So there may not be enough (supply),” said Consunji.
“For 2024, (LNG) is ready, so there will be no brownout, but it may be more expensive. I think 2024 is not so challenging because LNG is already there. The issue is price,” said Consunji, adding that LNG price is estimated to be 50 percent higher than coal. “So, we will have power, but it’s going to be more expensive than today. That’s the problem,” Consunji stressed.
The LNG projects of Linseed Field Power Corp. and FGen LNG Corp. are up for commissioning in the first quarter. Commercial operations are expected in the second quarter.
To help ease the impact of high fuel prices, Lotilla said his office continues to encourage the use of renewable energy (RE). “It is a global market. Therefore, what happens in one part of the world affects the price we’re going to import,” he said.
In its priority list, the DOE will conduct a second round of the Green Energy Auction Program (GEAP) and develop essential policy frameworks for emerging RE technologies such as offshore wind and hydrogen.
Moving forward, ACEN said the country should incorporate more energy storage in the system to support the scaling up of renewables. “It is therefore critical to get the reserve market operational soonest. It is also critical to get the renewable energy market operational, especially given the upward adjustment in renewable portfolio standards,” Francia stressed.
The DOE has included in its priority list the implementation of the reserve market and the WESM (Wholesale Electricity Spot Market) in Mindanao, which is expected to happen this month.
Also part of the DOE’s priority list is to formulate a nuclear power roadmap, in partnership with the private sector, International Atomic Energy Agency (IAEA), experts and stakeholders to address the challenges of the nuclear energy program.
But more importantly, the DOE and the ERC have vowed to ensure that committed power projects, transmission line facilities, and LNG infrastructure are completed and delivered on time.
“The ERC is pushing for greater transparency so that true rates are reflected in our electricity bills. The priorities we have set for this year are all meant to protect consumer interest,” said ERC chairperson Monalisa Dimalanta.
The ERC said it would complete within the first quarter the reset of NGCP’s rates. It will also process the generation rates review for pass through charges in the first quarter and complete them within the first half of 2023.
For the second half of the year, Dimalanta said the ERC and the DOE are expected to complete the revised guidelines for competitive bidding for power supply agreements (PSAs) contracting, and dispense the pending rulings on PSAs affected by the Supreme Court’s decision on Alyansa cases.
It will also pursue rate reset for distribution utilities and electric cooperatives, added Dimalanta.
The rising power demand is an indication that the country has already bounced back to prepandemic levels. While increasing demand is good news since this shows that businesses are recovering, the power sector urgently needs to catch up to serve the growing demand. With high optimism and strong cooperation from the private sector, the DOE hopes it will be a brownout-free summer this year.