When El Nino was very much around, the sporadic blackouts and power outages were blamed to high cost of fuel, low dam levels to run the hydroelectric power plants amid a surging demand caused by the unbearable heat forcing residents to turn all electric fans and air-conditioning units.
But even after El Nino, the energy crisis persists and weather is of no consequence, but the misguided energy policies of the Department of Energy, said Dr. Victor Limlingan (a retired professor at Asian Institute of Management and a fellow at the Foundation for Economic Freedom), current chair of the Guagua National Colleges, Regina Capital Development Corp., Cristina Travel Corp., Vita Development Corp., in his column at Business World.
He said Energy Secretary Raphael Lotilla attributed the power crisis to surging demand driven by intense heat wave in April, implying it would be short-lived.
The heat wave gone, the rains have come but the crisis remains. The cause obviously is not demand driven but by misguided energy policy, Limlingan said.
Said he: “In April of 2024, coal accounted for 63.34 percent of our supply, with natural gas at 16.45 percent and renewables (biomass, geothermal, hydro, solar and wind) accounting for 18.29 percent. Solar accounted for 3.80 percent and wind for 0.63 percent.”
Former DoE Secretary Alfonso Cusi adopted a Power Supply Plan which called for the transition from coal to renewables with natural gas as a bridge power source.
Under the Cusi Plan, the contribution of coal would be reduced to 25 percent (from 63 percent), the share of natural gas would increase to 40 percent (from 16 percent), and renewables would increase to 35 percent (from 18 percent).
When Secretary Lotilla took office, he revised this plan and accelerated the transition to renewable energy (RE) by increasing RE from 35 percent to 50 percent and decreasing the share of natural gas (NG) to 25 percent from 40 percent.
Lotilla also increased the share of wind power from 1.41 percent under Cusi to 17.11 percent (or from the current 0.78 terawatt hours or TWh in 2024, to 49 TWh in 2040, an increase of 63 times in 16 years).
This drastic revision of the Cusi Plan has several consequences, Limlingan now pointed out.
He said this disrupts the private sector plans for their natural gas power plants with the Lotilla Plan transferring the 15 percent earmarked for NG plants to wind power plants.
To recall, the country’s NG power plants previously sourced through pipes their fuel from Malampaya. But now that Malampaya is depleting, these power plants will source their NG from abroad, a complicated process.
If imported from Qatar, NG must be converted to liquid through a freezing process. The liquefied natural gas (LNG) is then loaded onto special ships and transported here. Upon arrival, the LNG must be converted back to gas through a gasification process.
In sum, existing and prospective NG power plant operators must have access to or own a gasification plant. Aboitiz Power and San Miguel Power, which operate NG plants, plan to create, in partnership with Meralco, the largest gasification plant in the Philippines.
With the Lotilla Plan to reduce the share of NG as a source of power supply, the gasification plant risks being underutilized.
The elimination of NG power plants under the Cusi plan will greatly discourage efforts to extend the life of the Malampaya gas field and efforts to explore and develop new gas fields in the Philippines.
Natural gas has been planned as a bridging plant from coal to renewables or as a contingent plant should the solar and wind power sources not produce as expected and on time. The Lotilla Plan, by reducing the share of NG increases the risk of an energy crisis and is thus misguided, Limlingan said.
Transition from fossil fuels
The ASEAN Center of Energy, in a recent report entitled, “Assessment of the Role of Coal in the ASEAN Energy Transition and Coal Phase-Out” noted that the 2040 phase-out faces significant challenges based on the experience of Germany which took over 20 years and approximately $1 trillion for its energy transition.
The report explained that the installed capacity of the renewables does not match the quantity or quality of the dispatchable energy from fossil fuel.
A coal plant with a rated capacity of 100 MW can realistically deliver 80 MW or an 80 percent utilization rate. While a solar power plant with a capacity of 100 MW can only deliver 20 MW or a 20 percent utilization rate. The solar plant cannot operate at night and during rainy or cloudy days. Thus, to replace a 100-MW coal plant we need a 400-MW solar plant.
The coal plant operates 24/7 while the solar plant must have a battery plant so the solar plus battery plant can also operate 24/7. The cost of battery power is not low enough to replace coal. Thus, the resort to NG while awaiting the cost of battery power to decline to the point where it makes solar/battery power competitive with coal.
The claim that the cost of solar and wind power has declined is irrelevant to the consumers. Under the feed-in tariff provisions, the providers of solar and wind power are guaranteed a fixed price for the next 20 years. Whatever savings are realized from the decline in the cost of solar and wind power goes to the power providers and not the consumers.
Logically, cheap and reliable energy such as fossil fuel is dispatched first and only then should expensive and unreliable RE can be dispatched. This policy results in higher costs and highly unreliable power for consumers.
This probably explains why only the Philippines and Vietnam in Southeast Asia are enthusiastic about wind and solar power. But the Philippines’ enthusiasm is reflected only in intention rather than in action as only a small portion of the proposed wind and solar plants are under construction.
At best, the only area where the RE companies are ahead of schedule are in their IPOs (Initial Public Offerings), although lately stock prices for RE companies have not performed as well as the fossil fuel power companies, meaning the market does not share the government’s proclaimed optimism.
There is therefore a risk that the proposed wind power plants which are supposed to be constructed in lieu of the NG power plants may or may not be constructed at all, resulting in power shortages or at least higher power costs. He then pushed for the reversal to the Cusi plan.
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