Averting the perennial power crisis

Recent brownouts have worsened the suffering of everyone cooped up because of the pandemic. No fans or aircon, no TV or cable, no social media to relieve the monotony. Even the country’s pandemic response is at risk, as vaccines require stable cold storage.

The power crisis isn’t new. We suffered daily brownouts in the early ‘90s that left the government with no choice but to grant take-or-pay contracts to power producers. The result? Electricity rates skyrocketed and remain as one of the highest in Asia. Then in November and December 2013, spot market prices ballooned to more than P32 per kilowatt hour (kWh) due to power outages. Now, the market caps are being breached again. Expect your electricity bills to go up.

In recent Senate hearings, the prolonged and unscheduled outages of several coal and fossil gas power plants were identified as the reason for the Luzon brownouts. According to the Department of Energy (DOE), dependable plant capacity in Luzon stood at 15,000 megawatts (MW) while estimated peak demand was 12,000 MW, leaving a 3,000-MW reserve. But the outages depleted the reserve. Worse, the preventive maintenance of the Ilijan Natgas plant could no longer be deferred.

The solution: transition from conventional centralized generation to a distributed and flexible generation system that follows variable hourly demand. For a self-reliant and stable system, a high share of our power supply must come from indigenous sources such as wind, solar, hydro, geothermal, and biomass, supported by pump-hydro and battery storage. While solar and wind power are variable, their generations are predictable. On the other hand, coal power has been shown to be unreliable. In the Senate hearings, DOE officials confirmed that the May 31 to June 1 brownouts in the Luzon grid could be attributed to the 4,000 MW of unplanned shutdowns and capacity de-rating of power plants.

Energy efficiency and conservation, voluntary load curtailment, and restoring plants online are the immediate solutions. To avert another crisis next year, construction of at least 2,000 MW of utility scale solar must start now. This is doable, as there are over 9,000 MW of solar service contracts approved by the DOE in Luzon alone. Rooftop solar is another quick solution. Fast-track installations by removing permit impediments and providing easy financing under the net metering program. If Vietnam can install over 8,000 MW of rooftop solar within six months last year, so can we. By supplying power during peak demand from 10 a.m. to 3 p.m., solar can augment the shortage.

Selling prices from new solar plants are already below P4/kWh. Future prices of coal, gas, or oil power plants are volatile. Power producers enjoy risk-free fuel price adjustments that are automatically passed on to end users. Meralco consumers were charged over P7.50/kWh in February 2019 for coal-sourced power supply. In contrast, the much-criticized Renewable Energy Feed-in Tariffs actually generated billions of savings to consumers due to lower spot market prices since 2013.

Flexible generation is the long-term solution. It addresses variable demand and balances supply from all sources. The moratorium on inflexible greenfield coal plants the DOE issued in 2020 is a big step toward this goal. Less dependence on inflexible power plants would lead to a more reliable, resilient, clean, and affordable power system for us all.

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Pete H. Maniego is senior policy advisor of the Institute for Climate and Sustainable Cities and former chair of the National Renewable Energy Board.