Brace for tight power supply in Luzon due to plant outages

by Lenie Lectura – January 6, 2016

from Business Mirror

Businesses and households should brace for possible brownouts, especially in the second half of 2016, as eight power plants in Luzon with a combined capacity of 4,547.8 megawatts (MW) are scheduled to implement maintenance shutdowns this year.

The majority of these facilities will go offline in the July-to-December period. This means power supply—at least in the areas being served by the Manila Electric Co. (Meralco)—could prove tight in the second half of the year.

The utility firm distributes electricity mainly in Metro Manila, Bulacan, Cavite and Rizal, as well as parts of Batangas, Laguna, Quezon and Pampanga. As of September last year, Meralco recorded 5.7 million customers.

Based on the latest 2016 plant outages schedule provided by Meralco to the BusinessMirror, more than 700 MW of capacity from three power facilities in Batangas are on scheduled outages for the month of August. These are the 190-MW Ilijan combined-cycle power plant 2; the 330-MW Calaca coal-fired thermal power plant 1; and the Santa Rita combined-cycle natural-gas plant Module (Mod) 20, with a generating capacity of 255.7 MW.

For September almost 600 MW of power-generating capacity coming from Santa Rita Module 30 (265.5 MW) and Calaca 1 would be shaved off from the grid.

The 647-MW Sual 1 Power Station in Pangasinan will also be out in October and November this year.

Lawrence Fernandez, Meralco head of Utility Economics, said these are among the plants with which the utility firm has contracts. He said Meralco has no information yet on forced outages.

The company sources its power requirements from a mix of the following: Wholesale Electricity Spot Market (WESM), independent power producers (IPPs), and power supply agreements (PSAs). The latest share of PSAs, IPPs and WESM to Meralco’s total power requirements stood at 49.9 percent, 44.4 percent and 5.7 percent, respectively.

“As mentioned by Mr. Oscar Reyes, the scheduled outages are bunched up in January and the months of August and September, with one unit of Sual going out from October to November,” Fernandez said via e-mail. Reyes is the president of Meralco.

Steelmakers worried

For the steel industry, the scheduled shutdowns highlight the tripartite problem on power that has long hampered the competitiveness of local steel manufacturers.

“There are three equally important dimensions to power: availability, reliability and cost. These must be addressed together and simultaneously to be meaningful. In other words, availability alone won’t do. This has been an old problem that has adversely affected present-day competitiveness, and has discouraged future investments for expansion, upgrading or integration,” Rolando Narciso, member of the Philippine Iron and Steel Institute and former president of National Steel Corp.

These outstanding problems in power aggravate the industry’s dependence on China’s steel products.

“That is why we have, at present, a worrisome level of import dependence [especially because China is our biggest source] as our country scales up its infrastructure program to 5 percent of its rising GDP. We hope that the next administration will finally address this long-overlooked matter that has been articulated emphatically in the steel industry strategy road maps,” Narciso added.

Shutdown schedule

The following power plants are scheduled to go offline in the second half of the year:

  • San Lorenzo Module 50 (264.80 MW) from June 11 to 12; San Lorenzo Mod. 60 (261.80) from June 18 to 19; and Sta. Rita Mod. 40 (264MW) from June 25-29.
  • Santa Rita Module 30 on July 2, 3 and on August 27 up to September 30; Santa Rita Module 20 on July 9, 10 and July 23 to August 26;  Santa Rita Module 10 (257.3 MW) on July 16,17; Ilijan 2 from July 31 to August 3, August 4 to 26, and August 27 to September 3; Calaca 1 from August 1 to September 14. From October 1 to November 30 this year, Sual 1 will be out for 60 days.
  • San Lorenzo Module 60 is again scheduled to go offline from October 1 to 5; San Lorenzo Module 50 (264.8 MW) from October 6 to 10; Calaca 2 (330 MW) from November 27 to January 10, 2017; San Lorenzo Module 50 on December 17 and 18; and San Lorenzo Mod.60 on December 24 and 25.

“These are already the adjusted periods, based on the evaluation of the NGCP [National Grid Corp. of the Philippines] in its development of the GOMP [Grid Operating and Maintenance Program] for 2016,” commented Fernandez when asked if the latest data already took into account the rescheduling of power-plant shutdowns.

The NGCP, for its part, said it adheres to the scheduled maintenance activities of the power plants. “If we project a possible deficiency due to the shutdown, we ask them to reschedule to maintain the balance of supply and demand and ensure ample reserve,” it said when sought for comment.

And if the power-plant owners would not comply, the NGCP would seek the assistance of the Department of Energy (DOE).

It can be recalled that Reyes said most of the scheduled power-plant outages were moved from the first half of 2016 to the second half to assure a stable supply of electricity during the election period. In the data provided by Meralco, there are no power-plant outages scheduled in May.

Reyes said peak demand in Luzon is seen to happen after election week, or during the May 14 to 20 period, with 9,365 MW expected as so-called system load.

He said the rescheduled power-plant shutdowns, therefore, “will put some tightness in the market” in the second half of the year. “If schedules change, and there are more overlaps, then that tightness becomes, well, tighter,” Reyes said.

The Meralco chief said unforeseen power outage caused by sudden breakdown of power facilities is another thing to look out for. “We can only hope that there will be no power plants that will suddenly encounter technical problems during the time that most of the power plants are on scheduled shutdown,” Reyes commented.

For the first half of 2016, the following power plants are scheduled for shutdown: Calaca 1 and 2 until January 24 and 15, respectively; Masinloc 1 (315 MW) untilJanuary 31; Santa Rita Module 10 (257.3 MW) until January 3; Santa Rita Module 40 from January 9 and 10; Santa Rita Module 30 on January 16 and 17.

Calaca 1 from February 1-7; Santa Rita Module 10 from February 11-15; Quezon Power Plant  (459 MW) from February 16 to March 15;  Masinloc 2 (315 MW) from March 1 to 12; and Pagbilao 1 (382 MW) from April 1 to 30.

Preparing for the worst

Meralco continues to prepare for the worst. In anticipation of tight supply in the grid this year, Reyes said Meralco has started to secure supply contracts for its peaking needs.

“This is the reason we’re doing this,” he said referring to the proposals it received for an interim power supply for summer peaking for a total of 243 MW.

Meanwhile, Fernandez said Meralco would pursue the three-pronged approach it did in 2015. “We will encourage energy efficiency among our business and household customers; prepare the ILP [Interruptible Load Program] participants for possible activation this summer; and contract interim power supply agreements [IPSAs].”

Meralco has maintained about 700 MW to 800 MW of ILP capacity.

Under the ILP, participants are urged to use their own generator sets to ease power demand during peak times.

“These are our main preparations, but this will be subject to the outcome of the meeting of the interagency El Niño Task Force on power that the DOE said it will be convening this January,” Fernandez said.

The DOE, for its part, has been saying that there would be no power outages during the election this year, unless some major power plants suddenly conk out.

Energy Secretary Zenaida Monsada said that based on initial assessment, the extended El Niño would have “minimal impact” on electricity supply in Luzon and the Visayas.

She said it is Mindanao that the DOE is worried about, since the island largely relies on hydroelectricity generated by several plants in the Agus river area in the Lanao provinces.

No brownouts during polls, please

Speaker Feliciano Belmonte Jr. said the scheduled shutdown of power plants serving Meralco should not affect the May 9 national and local elections.

“I hope that if unavoidable, Meralco will schedule the shutdown in such a way as not to affect the electoral process, particularly the casting, counting of ballots and electronic transmittal of results,” Belmonte said.

“The Aquino administration should act on this now because this has become a perennial problem. This should not happen and the DOE should be put to task,” Bayan Muna Rep. Neri Colmenares said.

Kabataan Rep. Terry Ridon said the government should ensure the shutdowns will not be scheduled during the election season, or until all votes had been counted and canvassed and the winners proclaimed. “We should not allow simultaneous shutdowns that might dip supply to critical levels.”

(With Jovee Marie N. dela Cruz and Catherine N. Pillas)