Mindanao’s base load power investments on halt for 7-10 years

by Myrna Velasco – October 25, 2016

from Manila Bulletin

Investments for base load power plants in Mindanao will be on standstill for the next 7-10 years given the overcapacity situation that the grid will be putting up with in the short- to medium term.

This has been the assessment of Alsons Energy Development Corporation of the Alcantara group – a company of which power investments had been concentrated in Mindanao grid.

“Speaking only of Mindanao, there will be no need for new baseload capacity in the next seven to 10 years,” Alsons Power Group Vice President for Business Development Joseph C. Nocos said.

He noted “Mindanao will have enough power supply to support its development plans.” This is a shared prognosis by many power project developers in Mindanao, with the grid now seeing at least 50-percent overcapacity in supply.

Nocos further qualified “the challenge is to optimize the utilization of various generating assets on the island to ensure system stability and minimize cost.”

Without a functioning Wholesale Electricity Spot Market (WESM) in that domain, industry players have been seeing ‘stranded capacity’ not being channeled to end-users – an irony in a situation where there is too much supply but there are some areas that still experience energy poverty.

“In Mindanao, where the WESM is not yet operational, generating capacity that is not contracted could end up being stranded,” Nocos explained.

Notwithstanding that, he noted “there will be sufficient base load reserves in the short to medium term. Properly managed, these will enhance the reliability of the system and the attractiveness of the Philippines to industrial investors.”

The Alsons Power Group is currently moving headway on the development of its second unit Sarangani coal-fired power plant at 105-megawatt capacity. Company officials said the comfortable level of contracts they have secured for the facility will ease any concern of their capacity not being soaked up by targeted end-users.

The appetite for additional power investments in Mindanao is still there for many developers, including those that are blueprinting renewable energy projects that could then help lessen the current dominance of coal plants in the grid.