DOE keeps new coal capacity target

Published January 18, 2021, 6:30 AM

by Myrna M. Velasco

The country’s love affair with coal technology is far from over, as the current official project list of the Department of Energy (DOE) still casts 11,289 megawatts of committed and indicative coal plant projects due for developments in the short to medium term.

 For committed power projects, which are anticipated to be on commercial stream between this year until 2024-2025, total capacity is targeted at 3,541 megawatts – the bulk of the installations of which will be in Luzon grid for 3,136MW; Visayas will corner additional 135MW; and Mindanao will have coal capacity addition of 270MW.

The indicative projects already processed by the DOE summed up to 7,748MW and Luzon grid also has the highest share in the pie at 6,520MW; while Visayas targets capacity addition of 600MW; and Mindanao is looking at 628MW.

These indicative projects are targeted to advance to construction phases when tight supply conditions may arise again because of forecast economic recovery post the Covid-19 pandemic – and that timeframe is seen between 2024-2025.

 If gleaned from the coal moratorium advisory formally issued by the DOE last week, the indicative projects that have started with permitting or have already advanced in their implementation processes shall be excluded from the development prohibition.

Based on project updates reported by the DOE, most of the indicative projects in the roll already worked on their permits and regulatory requirements from various relevant government agencies; some are finalizing power supply agreements (PSAs) with off-taker utilities; and the others are already at the phase of securing project financing.

Committed projects are generally the ventures at construction phases or nearing completion; or those that are shovel-ready or prepping to advance to construction stage – often undergoing final negotiations on financing as well as engineering, procurement and construction (EPC) contracts.

Conversely, indicative projects are those that have already done site pre-development activities and have processed project permits; securing agreements for grid connections and market for their capacity; sorting out loans on project financing; and have been advancing plans on a tendering process for EPC or turnkey contractors. It is the commercial completion of the project that has yet to be decided on this sphere.

When Energy Secretary Alfonso G. Cusi announced the ‘coal moratorium’ in October last year, many advocacy groups welcomed the development, but while the final policy advisory was being crafted, there had also been intense pressure hurled on the DOE to drop all coal plant developments, including ongoing projects.

In the end, the DOE did not back down to the wish of the lobby groups, hence, the final form of the advisory still allowed indicative, committed and coal expansion projects to continue.

Cusi, in a recent Energy Investment Forum convened by the DOE, announced that the country will be marching on to its “clean energy transition” through year 2040. However, he also indicated that while future project developments will predominantly lean on renewable energy, coal cannot still be avoided totally in the future energy mix. The Philippine Energy Plan (PEP) aims for more flexibility in the operation of the country’s power system — and the technology matching it is cementing will be RE-to-gas coupling, hence, increased developments of greenfield power projects fueled with liquefied natural gas (LNG) are targeted to go along with the propounded massive RE installations