David Celestra Tan, MSK
23 Sept 2016
The new Department of Energy has floated the idea of nuclear power and the reviving of the never operated 600mw Bataan Nuclear Power Plant (BNPP) as a lower cost and cleaner power supply solution as opposed to coal and natural gas. Additionally people are intrigued by the claims of solar developer Solar Philippines of the Leviste and Legarda families that solar has achieved grid-parity. That means solar power being low enough to compete with the P4 and P5 per kwh of coal and natural gas. This contrasted with the P7.70 to 9.60 per kwh that the Solar Alliance lobby group and the government owned NREB continue in pushing as the consumer FIT subsidy level.
First things first though. Even if nuclear offers a really good option and solar is as competitive as claimed, all these will not really happen because there will be no major buyers of power. Why? Meralco would already be contracted for most of its base-load power requirements until 2035 if they get away with their seven (7) midnight coal power supply contracts totaling 4,100mw. And they are all on Luzon island, same island as the BNPP and of the 7,000mw of existing power plants. Unless of course the government agrees that nuclear will also be majority owned by the MVP Group.
That said, lets start with nuclear power.
There is no question that properly operated nuclear power is for now potentially the cleanest and cheapest power generation technology outside of large hydro. Well at least until fusion technology comes around. We can probably get a rate of P3.00 per kwh. It is also true that there are countries like Japan and South Korea who have long years of successful experience in operating and maintaining nuclear power plants using the same technology as the BNPP. The other truth is the Filipinos have just about paid for the Billion dollars that the government borrowed to finance it.
The question is can the 620mw BNPP technically still be operated after it has never been operated and mothballed for 30 years since 1987? The South Koreans, as pushed for by Cong. Mark Cojuangco of Pangasinan, are interested in studying the BNPP’s revival and estimated that it will cost $1 billion (P47 billion pesos) to revive and operate. We believe the study alone with cost $2 million.
Assuming that the government is willing to explore the revival of the plant, should the Filipinos be asked to pay for the attempt? What happens if the plant, after spending $500 million will cost another $1 billion to finally operate. Let us remember that a lot of the equipment and installations have either been pilfered or deteriorated the last 3 decades. We believe that what would be rational and fair for the consumers is if the government wants to do it and KEPCO of South Korea are sure that they can make it work, it should be done on an ROM basis, “rehabilitate operate and maintain”. An agreement can be signed so that the DU’s are willing to buy the nuclear power output at say P3.25 per kwh and if the Koreans are successful they are assured of a market for the output. But surely it would be unreasonable for the government to spend or borrow a single cent for this adventure and to make the taxpayers take the risk if the concept does not pan out.
As pointed out by columnist Boo Chanco, there are other newer, safer, and cheaper nuclear options that are even smaller in size that fits the archipelagic landscape of the Philippines.
We bet that the Koreans will not go for a “no cure no pay” arrangement like ROM because they must know there would be a lot of headaches and risks. Most power generation professionals will tell you that it is actually cheaper and predictable to build a new plant instead of reviving an old one using old technology.
If we add nuclear to our energy mix, lets go for the smaller and safer technologies in the 200 to 300mw range. Spread it out in several islands. As to the BNPP, lets not do it. It is too risky and will not save much. Just charge it as part of our price for regaining democracy and liberty from martial law.
How about Solar?
Young Leandro Levistes Solar Philippines came into the solar scene carrying a pedigree and lobbying power. His focus had been roof top solar and people are giving him the benefit of the doubt since theoretically roof-top solar specially on the expanse of mall and school rooftop would be viable specially if Meralco cooperates in implementing it under the Net Metering program of the ERC.
In the recent months Leviste went on a media blitz announcing that solar has achieved grid-parity. If he means rooftop solar, maybe. If he means grid connected solar we are not sure. And it seems he is referring to large scale solar because he was talking about 1,000mw in Batangas and the low prices in the bidding in Dubai where it is down to $0.04 or P1.92 per kwh.
Before we get too excited, let us consider a few things.
1) What conditions in Dubai allow foreign bidders to bid that low for 300mw of solar? For one the solar irradiance level of Dubai (and the middle east) is almost double that of the Philippines so they get more energy out of their installation by 25% to 40%. Some reports also say Dubai offers attractive project financing support with negligible interest rates.
2) The lesson of Dubai for the Filipinos is actually not they got lower rates but that they did by holding an open competitive bidding or CSP. Our Department of Energy while admitting that the cost of solar panels have gone down by 70 to 80% is still insisting on doling out high Feed-In Tariff to their chosen RE developers. The government paid NREB (National Renewable Energy Board) recently recommended a subsidized rate of P7.70 ($0.16!!) per kwh for the 3rd round of Solar FIT’s.
Cannot President Duterte order these people to hold a competitive bidding instead?
3) When Leviste talks about grid-parity, we are wondering if he also means grid-compatibility? The lesson of the Visayas is that these solar farms cause grid interruptions every time there are passing clouds. And who buys and pays for the regulating reserve that is needed by the grid to stabilize the system? NGCP who then passes it on to the consumers. We doubt that Solar Philippines is referring to self-regulating solar farms. If they are and the rate is in the range of P4.50 per kwh, let’s go!
Let us be realistic. And be realistic that if Meralco and the MVP Group are allowed to evade the mandatory CSP policy for power supply contracts, all these talk for nuclear and energy mix are moot.
Matuwid na Singil sa Kuryente Consumer Alliance Inc.