The Department of Energy (DoE) has categorically countered the planned buy-out and phaseout or retirement of coal-fired power plants in Mindanao, specifying that this is not part of a scenario set in the Philippine Energy Plan (PEP) in the next two decades.
“The PEP is not yet looking at decommissioning or implementing forced shutdown of power facilities, more so of coal-fired power plants. Thus, we have not yet evaluated the buy-out cost of any fossil-fired power plant,” Energy Secretary Alfonso G. Cusi said.
The updated PEP spans 20-year planning period for the country’s energy needs – and the adjusted investment plans as well as policy enforcements are set until 2040 timeframe.
The position of the DoE is diametrically opposed to a pronouncement of the Department of Finance (DoF) that coal plants in Mindanao grid will already be traversing their ‘retirement’ phase – and this will be launched as part of the Philippine government’s decarbonization commitment during the 26th Conference of the Parties (COP) Climate Change Summit in Glasgow, Scotland next month.
Cusi qualified that while “decarbonization of the energy sector is one of the scenarios we are looking at,” that will just be tackled in the next PEP update, which perceptibly will already be latched on to the lap of the next administration.
The energy chief indicated the eventual phaseout of the coal plants shall cover “evaluation of this scenario on the financial cost of implementing decarbonization together with its impacts and consequences.”
In Cusi’s view, “Our decarbonization scenario will look into the possibility of converting fossil-fired power plants to other fuels such as biomass, fuelwood ,etc.”
When asked on the planned phaseout and buy-out of coal plants in Mindanao, the power investors in the grid were unanimous in saying that their power generating facilities are “not for sale”. It is also their wish that before a policy will be committed by the Philippine government to a global climate change diplomacy, relevant government agencies must at least discuss forward plans with them first, because these could have chilling effect on their foreign lenders and contractual obligations, including power supply agreements, that could be unduly infringed upon.
Apart from the 210-megawatt Mindanao thermal power facility in Misamis Oriental, most of the coal-fired plants in the grid are ‘new builds’ – having just reached their commercial operations in 2015 to 2017. Notably, coal technology is also the dominant source of electricity in the region -- given that development of renewables in the area is still picking up its pace.
Separately, Aboitiz Power Corporation President and CEO Emmanuel V. Rubio noted that “We have yet to understand the process, how the transition is envisioned to ensure that the grid will continue to get stable and reliable supply of electricity.”
He reminded government policymakers that “with what’s happening in Europe and China, policies and regulations need to be reviewed thoroughly, or we could also experience shortages. The European experience is something we can all learn from.” This was partly in reference to the recent experience of the United Kingdom on switching back its coal plants as it waded through an energy crisis this year.
Rubio emphasized that the Aboitiz group, which has significant power investments in Mindanao, “fully supports a transition, we just need to make sure that we plug all the gaps and address the risks of such a program.”
Additionally, Cusi stated that the development of RE in Mindanao grid could be advanced “in a hybrid manner so as to optimize their production and availability while connected to a BESS (battery energy storage system).”
He cited “the observed trend in the cost of BESS is expected to help improve and make power generation from intermittent renewable energy more affordable.”