Critical power outlook
Summer is just around the corner and the Department of Energy (DOE) has yet to confidently assure the public that there will be enough electricity supply especially during the national elections scheduled on May 9.
A number of factors are threatening the power situation: Indonesia’s ban on coal exports, the warning by the National Grid Corporation of the Philippines (NGCP) of thin supply this summer, and the increasing demand for electricity as businesses recover from the pandemic. Add to this the fact that as of Jan. 21, there were still 69 municipalities in Visayas and Mindanao that remain without electricity due to the devastation caused by Supertyphoon “Odette” (international name: Rai) in December last year.
Energy Secretary Alfonso G. Cusi had admitted in a letter of appeal sent last Jan. 6 to Indonesian Minister of Energy and Mineral Resources Arifin Tasrif that Indonesia’s ban would be “detrimental to economies that rely on coal-fired power generation systems like the Philippines.” Indonesia, the world’s biggest coal exporter, suspended exports on Jan. 1 after local supply hit very low levels, but last week relented and allowed mines that have completed 100-percent of their domestic market obligations to ship to overseas buyers. The Philippines is expected to be affected by Indonesia’s ban because “power generated from coal comprises about 60 percent of the country’s power demand,” Cusi said in the letter. It’s true that there are other suppliers, but their coal is more expensive and can raise electricity prices. Besides, the DOE must ensure that alternative suppliers are ready when Indonesian coal becomes unavailable.
Last week, NGCP also warned about the possibility of thin energy supply during the summer months due to high demand. “Thin operating margin (or excess electricity supply) is forecast in the Luzon grid from April to June due to increase in demand during the summer, which includes the critical election period,” it said. While NGCP has finalized and submitted to the DOE last Jan. 10 the annual Grid Operating and Maintenance Program, which consolidates preventive maintenance schedules of power plants, the problem of unscheduled shutdowns of old facilities is another perennial problem. There is just no way to forecast power plant failures. In May last year, the Luzon grid experienced rotating brownouts that Cusi said were due to the breakdown of power plants with a total capacity of more than 2,000 MW.
Some generating units already extended their maintenance shutdowns this month while others “de-rated,” or decreased their committed generation output. As a result, yellow alerts were issued last Jan. 10 and 11, according to NGCP. Private power firms are worried that not enough maintenance work on generating facilities was done during the past two years because of pandemic mobility restrictions, which prevented the entry of foreign technical advisors. Those planning maintenance activities have to squeeze these in before or after the May polls as the DOE has directed power plant firms not to shut down any power-generating facility for maintenance two months before and two months after the election period.
Another issue in the power outlook this year is the gas supply from the Malampaya field, which fuels about 40 percent of gas-fired plants with 3,500 MW in combined capacity in Luzon. Supply shortfalls in March to June and in September last year already pushed up electricity prices as some gas-fired power plants were forced to shift to more expensive fuel. Supply from the Malampaya gas field is projected to be depleted by early 2022 or at the latest by 2027.
Another major factor that will impact the power outlook is the projected recovery in demand for electricity, which already bounced back last year to near pre-pandemic levels after big parts of the economy opened with the easing of COVID-19 quarantine restrictions. While increasing demand is good news in that it means businesses are recovering, the power sector has failed to catch up with such rising demand as it grapples with the problem of aging power plants and the lack of new power-generation facilities to bolster supply.
The DOE had scheduled a meeting last week with NGCP on updating the supply-demand forecasts especially for the first half of this year. According to Energy Assistant Secretary Redentor E. Delola, the last power supply outlook drawn up by the DOE and other stakeholders was for the last quarter of 2021 where the overall projection then pointed to sufficient power supply for the first quarter of 2022. The sudden “yellow alerts” in the main power grid this month prompted the meeting, which also sought to explore contingency measures to be enforced especially when demand picks up in the summer months and the election period. The crucial 2022 elections, happening in the midst of the still-raging pandemic, are too important to leave to chance. The DOE owes it to the people to give an honest and accurate power outlook for these next months and the contingency measures—if any—it has lined up to ensure that there will be a sufficient and steady supply of electricity for the holding of that most important democratic exercise.
