The document discusses the Philippines' power supply outlook and readiness for the ASEAN Economic Community (AEC) set to begin in late 2015. It finds that power production growth in the Philippines has lagged neighbors and many existing power plants are old and prone to breakdowns. Rotating blackouts are expected in 2015 due to thin power reserves. While some large industrial users have backup power, this would drive up electricity costs. To improve supply, the document recommends bringing in more peaker plants, encouraging industrial self-generation, reducing demand through efficiency, and streamlining permits for new plants. Regional energy trade should also be enhanced to boost national and regional power supplies.

1. 28 Dec 2014
infrastructure
Workers check a damaged electric post in
Cagayan de Oro, southern Philippines

2. 29Dec 2014
Ready for the AEC?
Is Our Power Supply
the philippines
I
t is generally understood that
growth in electricity production in
the Philippines has been slower
than that of its neighbors in the
Asean countries. China, South Korea, In-
donesia, Malaysia and Vietnam have ex-
panded their electricity production by five
times or more in just two decades, causing
some anxiety mixed with optimism, over
the potential impact of the region’s fast-
approaching economic integration.
In the Philippines, a number of re-
ports have claimed that rotating brown-
outs and power outages will be in-
evitable in the hot months of March to
May 2015, when electricity demand is
high and power reserves are thin. The
Department of Energy (DOE) has asked
Congress to grant President Benigno
Aquino the authority to deal with the
projected power supply deficit in an
emergency.
The above medium-term supply-de-
mand outlook for Luzon, the largest island
in the Philippines, is based on the assump-
tion that the Required Reserve Margin is a
4% regulating reserve, as well as a contin-
gency and dispatchable reserve require-
ment.
It also assumes that there will be a 4.2%
peak demand growth rate in 2015, com-
pared with the current year, based on the
observed 0.6 elasticity ratio of demand for
electric power, with a projected GDP rate of
7% in 2015.
Also, there will be a 4.8% peak demand
growth rate in 2016-2020, based on a pro-
jected 8% GDP growth rate for this period,
and assumed average forced outage or
scheduled maintenance, while the monthly
percentages of the total available capacity
are as follows.
However, available capacity calculations
and committed projects do not deliver 100%
of their rated capacity. Old conventional
power plants tend to require more frequent
maintenance or scheduled shutdowns, or
they suffer from more unscheduled shut-
downs. For new renewable sources of en-
ergy, such as wind and solar power, their
dependable capacity is only some 20% of
their rated capacity.
Country 1990 2011 2011/1990
Multiple*
Country 1990 2011 2010/1990
Multiple*
A. Developing East Asia B. Developed Asia
China 621.2 4,715.7 7.6 Japan 835.5 1,025.8 1.2.
Indonesia 32.7 182.4 5.6 S. Korea 105.4 528.4 (2012) 5.0
Thailand 44.2 156.0 3.5 Taiwan 51.0 252.4 (2013) 4.9
Malaysia 23.0 130.1 5.7 Singapore 15.7 46.0 2.9
Viet Nam 8.7 99.2 11.4 Hong Kong 28.9 39.0 1.3
Philippines 26.3 69.2 2.6
Laos 0.8 12.8 16.0 C. Developing South Asia
Myanmar 2.5 7.3 2.9 India 289.4 1,052.3 3.6
Brunei 1.2 3.7 3.1 Pakistan 37.7 95.3 2.5
Cambodia 0.2 (’95) 1.1 5.5 Bangladesh 7.7 44.1 5.7
Figure 1. Electricity production in Asia, 1990 vs 2011 in billion kWh
* The multiple is not part of the ADB Report; it has been added for this article.
The Asean Economic Community is to begin operations by the end of 2015,
when trade, investments, tourism and cultural exchanges are expected to
see further increases among the member economies. However, ensuring
an adequate and stable supply of electricity at affordable or competitive
rates will pose a significant challenge to the economies.
By Bienvenido ‘Nonoy’ Oplas, Jr

3. 30 Dec 2014
Figure 3.
Figure 2. Power supply-demand in Luzon, 2014-2019, as of November 2014
Source: Department of Energy (DOE) abridged version
Thus, a 100 MW solar or wind plant
can deliver only around 20 MW, on average.
When there is little to no sunlight or wind,
the energy output from these plants is zero
or minimal.
The DOE’s outlook fails to adequately
reflect future dependable supply (FDPS),
and so, the true gap between peak demand
and available capacity/committed projects
cannot be effectively addressed.
For its part, the National Grid Corpora-
tion of the Philippines issues alert levels in
cases of power deficiencies. “Red Alert,” for
instance, means the contingency reserve is
near zero, if not negative. Red alerts have
already been issued a number of times
between June and September 2014, well
ahead of the launch of the AEC.
Here are some critical periods in 2014,
they can give a preview of supply outlook in
2015.
Actual peak demand this year was
8,717 MW, made in May 21, 2014. “Red
Alert” have been issued on June 17 (natural
gas restriction), June 25 (3 coal plants have
unscheduled shutdowns, 1 has derated
power), and July 12-13 (natural gas pipeline
problem).
Thin reserves were also experienced
last September 8-11 (natural gas restric-
tion), last August 30 - September 28 (Sual
coal unit 2 maintenance, 647 MW), Sep-
tember 26 - October 25 (Sual coal unit 1
maintenance, also 647 MW).
Thin reserves, if not power supply defi-
cit, will be most critical on April-May 2015.
But big industrial and commercial consum-
ers have back up power.
Metro Manila and Luzon provinces are
heavily dependent on a number of power
facilities, many of which are already more
than 20 years old; hence, they either re-
quire more frequent maintenance shut-
downs or are prone to unscheduled shut-
downs.
From 2002 to 2013, only one new
power plant was commissioned: the
Mariveles GN Power coal plant. The oil
barge by TMO is an old power plant that
had remained inactive for at least five
years and was re-commissioned in late
2013, purely to help prevent brownouts
during last year’s Christmas season.
So, is the Philippines ready for the an-
ticipated energy demand surge when the
AEC begins operations?
If existing and committed power plants
are to be relied on, then the answer is no.
Many of them are old, and many new plants
utilize intermittent sources, such as wind,
with low dependable power capacities.
The warehouse grounds of Aboitiz-owned Visayas Electric Company (VECO) in Cebu City, central Philippines.
infrastructure

4. 31Dec 2014
Figure 4. Detailed view of 2014 and 2015
Power Plant
Capacity (MW) Year
Com-missionedInstalled Dependable
Total Coal 4,530.6 4,219
Sual 1,294 1,294 1999
Pagbilao 764 764 1996
Mariveles 651.6 495 2013
Masinloc 630 630 1998
Calaca 600 510 1984
Quezon Power 511 460 2000
Total Oil 1,775.1 1,585.8
Malaya OilThermal 650 610 1995
Limay CCGT 620 540 1993
Bauang Diesel PP 235.2 180 1994
TMO 242 150 2013 Nov.
Subic DPP 116 110 1994
Total Nat Gas 2,861 2,759
Ilijan 1,271 1,200 2001
San Lorenzo 530 523 2002
Santa Rita 1,060 1,036 1997
Total Big Hydro 2,444.8 2,129.2
Kalayaan PSPP 739.2 720 1982
San Roque 411 411 2003
Magat Dam 360 360 1983
Angat Dam 246 135 1967
Pantabangan -
Masiway
132 132 1977
Binga 125 125 1960
Ambuklao 105 105 1956
Casecnan (NIA) 165 39 2002
Bakun 70 36.4 2001
Caliraya 35 28 1942
Botocan 22.8 22.4 1946
Total Geothermal 824.2 599
MakBan 442.8 333.9 1979
Tiwi 234 207.9 1979
BacMan 130 45 1993
Figure 5. Existing major power plants in Luzon, early 2014
(Smaller plants not included in this list. Marked in red are power plants that are 20 years or older.)
Source:DOE
If large industrial and commercial consumers use
back-up power, as part of the Interruptible Load Program,
then the answer is yes.
However, the latter would drive up the price of elec-
tricity, as these large consumers would use their own
generators, and the reduced demand in the national grid
would have to be compensated. This would come in the
form of higher “universal charges” in succeeding months
or direct payments by the DOE, using taxpayers’ money.
Still, there are a few solutions that could help expand
the country’s power supply capacity.
First, power companies should bring in more peak-
load plants, similar to mobile diesel power barges. The
drastic decline in global oil prices presents an opportunity
to lower the cost of fuel for these power plants and, in
turn, lower their power-generation prices. Second, large
industrial and commercial consumers can enter the pow-
er-generation business, as well. Third, media campaigns
can be run to request the public, households and com-
mercial offices to reduce their power demands by using
more energy-efficient lights and appliances.
Further, government agencies should limit the bu-
reaucratic red tape involved in getting the permits re-
quired to commission and build new power plants. DOE
Secretary Jericho Petilla once said that for some projects,
about 100 signatures are needed to launch and maintain
a single large power plant.
Over the medium term, the government should re-
duce taxes and royalties for power generation, as these
impositions significantly contribute to high electricity
prices. The natural gas tax, for instance, amounts to 60%
of the net price of gas.
It is equally important to ensure that the trade of liq-
uefied natural gas, coal and oil among Asean countries is
further assisted to help boost national and regional power
supplies.
The writer is the president of the Minimal Government Thinkers Inc, Manila.
the philippines