Luzon power supply at tipping point, but are the solutions suitable?

Published June 18, 2021, 12:36 AM

by Manila Bulletin

Electricity demand surge ushered in by the country’s bit-by-bit economic reopening is now wrestling with available supply – especially for Luzon grid –  but news of greenfield power plant developments are still not up to expectations.

The main power grid can still count on new plants coming on stream commercially until next year – the last one could be unit two of the 1,336-megawatt GNPower Dinginin plant in Bataan.

Beyond that though, power supply in Luzon can no longer tread on comfortable level – particularly in the next few years when the Philippines is targeting to bounce back from the economic distress of the COVID-19 pandemic.

A June 10 Senate hearing on the rotational brownouts that happened on May 31 and June 1, turned into a “confrontational scene,” but beyond the political drama, the entire nation has been waiting for pronouncements from the Department of Energy (DOE) on how supply can be specifically addressed to prevent future brownouts. Yet the response given by the agency had been blurry, to say the least.

On power supply in the next three to five years, the DOE has been less certain; and its energy plan until 2040 that calls for investments in nuclear and hydrogen as future alternatives, actually raised more questions than answers. That was quite frustrating too – especially to the consumers who always end up as “collateral damage”  to the double whammy of brownouts and rate spikes.

The industry players are echoing similar prognosis: There’s thinning of supply margin as demand increases – and available supply is not sufficient to meet the country’s need for energy and reserves.
In Luzon’s case, peak demand grows by average 600MW per year, so the grid needs at least 624MW (or 600MW plus four percent  regulating reserve) as capacity addition annually.

The Manila Electric Company (Meralco), for one, is constantly sounding off that “having overcapacity will be better than recurring deficiencies,” and more supply entails less chances of brownouts. Additionally, this will put downward pressure on prices at the Wholesale Electricity Spot Market (WESM) to the consumers’ benefit.

There are projects – courtesy of SMC Global Power Holdings of the San Miguel group  – likely advancing to construction and slated for completion in 2024 to 2025 – and these are the power plants contracted by Meralco via its competitive selection process (CSP) this year.  But what about next year and 2023 summer months? And how about supply security for the rest of Luzon grid?

The DOE’s attention is also tugged into the de-rated capacities of the aging generating facilities and the need for a clear-cut policy on power plant retirements.

But Energy Secretary Alfonso Cusi’s proposed solutions would be for the government to revert to power generation business and enforcement of sanctions to the de-rated power facilities. The nagging questions, however, are: What capabilities do government people have now on power generation since most of its technical experts already moved to the private sector after the privatization of the National Power Corporation assets? And on plants’ de-rating – what are the technical concerns behind these?

Major lessons are emerging from the brownout predicaments that Luzon had suffered two weeks ago. Some things may work, others may fail – but hopefully, the DOE will focus on making right decisions, efficient energy planning and taking the hard choices.