Mindanao has about 800 megawatts (MW) of excess power capacity today, according to the Mindanao Development Authority (MinDA), but by 2030 it will need additional capacity to serve the region’s increasing demand for power.
According to MinDA Deputy Executive Director Romeo Montenegro, Mindanao’s excess power is “time relative,” which “could be gone” in six or seven years from now.
“Prior to the pandemic, we were averaging 1,700 MW. At the height of the pandemic last year, we went down to as low as 1,500 MW. But today we have gone back to pre-Covid levels in terms of energy demand and, in fact, we are already hitting 2,000 MW.
So, the 1,000 MW excess we had two or three years ago, is already around only 800 MW today. By our calculation with the DOE [Department of Energy], at 7-percent annual growth demand, that excess will be gone by 2028 or 2027. Mindanao needs around 100 MW to 150 MW every year,” he said during last week’s webinar, “Mindanao as the energy hub in the country, Davao as a world-class corridor.”
While recognizing that the Davao Region has a huge potential to become a significant significant contributor to an energy-secure and power-independent Philippines, Montenegro said Mindanao needs an additional capacity of 3,500MW by 2030.
“In 2018, we counted around 40 high-end or vertical projects in Davao. These are mostly condominium that will probably be needing two to three MW to operate. If all of them in Davao alone shall have been operating, Davao Light and Co. would have to forecast the need to contract additional 80 to 120 MW to be able to serve the demand of these 40 condominium projects that are rising in Mindanao and this is just in Davao,” said Montenegro, adding that this trend is expected in all urban areas in Mindanao in the years to come.
Engr. Rodger S. Velasco, President and Chief Operating Officer of Davao Light & Power Company, recognized the need for investments in the Davao region as major industries continue to expand and develop in the area.
“I see the potential in investing in Davao for manufacturing,” he said during the webinar. “We have a number of huge energy-intensive customers looking to invest and build plants in the region. Davao is proving to be a very good area to invest in for energy.”
To hit 3,500MW, Montenegro said there is a need to shift to 50:50 balance energy mix from the current 70/30 level of fossil fuels to renewable energy (RE). Moreover, he said, transition to RE is policy-driven.
“We have to look at the 3,500 MW needed between now and 2030 should be coming from RE. We are looking at distributed generation as one approach where bite-size capacities can be embedded capacities of ECs [electric cooperatives] in Mindanao rather than the usual default mode of building a big power plant and be connected in the grid and distributed to ECs.”
Distributed generation systems may include solar photovoltaic panels, small wind turbines, natural-gas-fired fuel cells, emergency backup generators, usually fueled by gasoline or diesel fuel, among others.
“Is there one near a water source for hydro? Is there one near an industrial scale plantation of crops that would have waste to serve as feedstock for biomass…These are some of the things that we can possibly deliberately work [on] with the DOE and all members of the Mindanao Power Monitoring Committee chaired by MinDA, in partnership with the private sector, to send the right signals to investors,” Montenegro said.
‘Bite-size approach’
John Eric Francia, President and CEO of AC Energy Corp., recognized that the proposed “bite-size approach” in Mindanao is the right strategy.
However, Francia noted that the possibility of intermittent energy may occur and, as such, still needs so to be managed by the national grid and the distribution utilities. “Therefore, having ancillary services [AS] becomes very important. One elephant in the room in Mindanao is lack of reserves capacity, notwithstanding the fact there is a lot of capacity available in Mindanao.
So, when we strongly advocated and hope a reserve market in the Philippines is implemented, it will encourage investors like us to seriously consider investing more in battery energy storage system and other such technologies that will help provide AS and stabilize further the grid.”
Francia believes the potential of Mindanao as a net exporter of energy through the development of a more interconnected grid, especially as the Green Energy Option launches in Luzon and Visayas.
“Once you unlock that potential through the spot market, retail competition, and open access, then it will spur a lot of renewable opportunities,” he added.
Aboitiz Power Corp. also highlighted the vast resources available in Mindanao which can prime it to become a key source of renewable and sustainable energy for the country.
“All the resources in the region combined together really does give the advantage to Mindanao, to be able to lead the forefront for investments, and the power will follow with that. We have plenty of supply currently in Mindanao to support the growth in the industries,” said Anton Percices, company operating officer of distribution utilities.
The webinar was organized by the Davao Investment Conference (Davao ICon 2021) as part of its year-long Innovation Series that will tackle also the Mindanao market and the future of logistics.
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