Next DOE chief to deal with brownouts, soaring oil prices

Published June 21, 2022, 2:56 PM

by Myrna M. Velasco

The next energy secretary of President-elect Ferdinand Marcos Jr. will have to deal with soaring fuel prices and brownouts, which are expected to plague Filipino consumers until 2024-2025.

Marcos has yet to name his energy czar that will flesh out and implement his policies for the industry in the next six years of his reign.

This early, investors in the sector have been sounding off their wish that the Energy Secretary must be a “competent technocrat” – one with extensive background on energy and well-oriented on the sector’s nexus with climate change and other environmental issues as well as with other infrastructure platforms; and must not treat the agency as a political post.

If the incoming DOE Secretary will be slow on the uptake; uninitiated or of the ‘kindergarten crew type’ when it comes to learning the intricacies of the policies and programs of the sector, investors are betting that the energy future of the country will end up in shambles — with one industry source emphasizing that “when that happens, the Filipinos will not only be agonizing with blackouts; but the country in general will suffer because electricity is an important backbone to achieve economic growth.”

Two weeks before the inauguration of Marcos into the Presidency by June 30, the biggest power grid of Luzon has already been successively afflicted with “yellow” and “red alert” conditions – and the worse incident on June 18 led to brownout predicaments in various areas in Metro Manila and neighboring provinces.

As of Tuesday, June 21, Luzon grid was in another state of “yellow alert” – meaning, there is no sufficient reserves in the power system — that if more plants will conk out, consumers will have no choice but to live through harrowing experiences of rotational blackouts.

System operator National Grid Corporation of the Philippines (NGCP) reported that unplanned outages of power plants shaved off 1,592 megawatts of power capacity from the system, hence, reserve tumbled to as low as 412MW.

Sources indicated that “the supply problem of the power sector has been mainly attributed to under-investment in baseload capacities under the Duterte administration.” By far, the next new plants to come on stream will be by the latter part of 2024.

And while there are targeted influx of capital in the renewable energy (RE) sector, industry sources pointed out “these will not be enough to plug the gap in required capacity additions in the next 2-3 years” — given that RE technologies are also typically wretched with intermittency in generation, like their electricity generation could suddenly drop when the sun doesn’t shine; and when the wind won’t blow.

Despite the flourishing RE-battery storage coupling, this is not yet a widespread technology solution being deployed in the Philippine power sector given the fact that the costs of battery energy storage systems (BESS) are still not at price points affordable to the penny-pinching Filipino consumers.

Another major tight spot for the incoming DOE chief is the unabated astronomical rise in oil prices – that in effect has not just been squeezing the pockets and paychecks of consumers, but it has also been exerting inflationary pressures on the cost of basic commodities as well as on transport fares and wages.

With all these very serious concerns needing prompt and solid attention from the incoming Energy Secretary, investors conveyed that “the next DOE chief can no longer be afforded even a short time for a learning curve.” ###