DoE targets 25% of reserve power buffer

December 8, 2017
from BusinessWorld

THE Department of Energy (DoE) said the country needs to build a buffer of reserve power that is at least 25% of demand as the agency’s top official made his annual call for businesses to invest in the energy sector.

“We want to ensure that we have enough supply ahead of demand. This is why the DoE is institutionalizing a 25% reserve requirement to ensure that we are on track to reliably meet the 17,338 megawatts (MW) in additional capacity required by 2030 to meet our growth needs,” Energy Secretary Alfonso G. Cusi told participants of an industry forum at the Makati Shangri-La Hotel, Manila.

“Further 43,765 MW is needed by 2040,” he added.

Based on latest DoE data, demand for power in the first half peaked at 13,684 MW or nearly 89% of the 15,393 MW available capacity during the period.

Mr. Cusi said his proposed buffer should keep supply ahead of demand, enabling the power sector to provide reliable, secure, sustainable and affordable energy to consumers.

“When it comes to improving our energy security, our transmission policy will play a critical role,” he said.

He said aside from the importance of keeping existing infrastructure at pace with the digital age, it was also  important to heighten accessibility, pointing to the continued disconnect between Mindanao and the power grids in Luzon and the Visayas.

“We want transmission projects to be completed at the soonest possible time. Our goal being to improve access and distribution systems,” he said.

“I’m pleased to say after a long delay that we have already started the ball rolling. We are fast-tracking the interconnection projects such as Visayas and Mindanao, and for the small island provinces. This will allow us to make the most [of] Mindanao’s excess supply,” he said.

Mr. Cusi said it was vital for privately owned National Grid Corp. of the Philippines (NGCP) “as the national transmission operator [to] responsibly play its role in ensuring this access and makes the necessary investments.”

NGCP in September secured provisional authority from the Energy Regulatory Commission to implement the interconnection between the Visayas and Mindanao power grids for around P51.7 billion.

“Filipinos have waited too long. As the President has promised, we want to achieve total electrification by the end of this term,” Mr. Cusi said.

Aside from assuring investors that power supply would be adequate, he also noted that Executive Order No. 30 “will change the way we process energy projects.”

“No longer will it take up to three years for bureaucrats to respond to a proposal to a project. Instead, these agencies must act on a proposal within 30 days, failing which the proposal is deemed approved,” he said.

In his speech, Mr. Cusi told investors to take stock of the dynamic shift in the supply of global liquefied natural gas (LNG).

“The future is such that global markets will find themselves with abundance of LNG with global supply on course to increase by 50% between 2014 and 2021,” he said.

“Given this surge, it has raised questions of how the Philippines intends to place itself amid the opening of this new channel of LNG supply,” Mr. Cusi said.

He said there is an opportunity for the Philippines to benefit from this due to its strategic location astride key shipping lanes.

“If we plan ahead, we can be the gateway for future gas exports into the Southeast Asia,” he said.

On Monday, the DoE published the first draft of the Philippine natural gas regulation, which the department envisions to transform the country into an LNG trading and transshipment hub in Asia-Pacific. Mr. Cusi said that equally important to promising grand projects is drawing the investments to make them a reality.

Sought for comment, industry stakeholders generally responded positively to the DoE’s assurance to investors and its call for investments.

Guillermo M. Luz, private sector co-chairman of the National Competitiveness Council, said he views Mr. Cusi’s call for reserve power as a signal of confidence in strong economic growth.

“To be able to spur the type of investments to come in and fill the requirements, including the 25% reserves, I guess some things need to be done including streamlining licensing procedures for building and commissioning power plants,” he said.

Angelito U. Lantin, senior vice-president at distribution utility Manila Electric Co. (Meralco) said: “It’s good that we are targeting 25% reserve but how do you implement it?”

“How do you make sure that you have it in the system?” he added. — Victor V. Saulon