Locational strategy for PH power development

If the Philippines is to continually develop its power supply to meet its growing needs, it will require predictable and well-planned generating capacity additions and a better planned proactive transmission development program.

Private power generators choose their own locations based on their own parameters. Individually, they deal with environmental and other challenges in the random local communities. The receptivity of local officials and militancy of cause-oriented groups vary greatly, making for unpredictable power project completion.

Moreover, our transmission development plan is necessarily reactive in nature, in compliance with the “nondiscriminatory” access to transmission services mandated by the Electric Power Industry Reform Act (Epira). As the transmission service concessionaire, National Grid Corp. of the Philippines (NGCP) is obligated to build transmission lines to connect these new power projects to the grid.

In Luzon, the transmission line corridor from Batangas, where many power projects are proposed, to the load center of Metro Manila is already congested. We cannot continually build lines. Concentrating the transmission capacity will also make the power system vulnerable to natural calamities and disasters in one area.

It is time to balance the system by building power sources in other areas like Quezon, Zambales and the Bataan peninsula. Instead of forcing the issue on locating the 600-MW Redondo coal project in Subic, why not develop the old nuclear plant area in Morong as an energy zone and finally use that white elephant? There used to be a 230-kV line from Morong to Hermosa, but it has since been pilfered.

In our archipelago, an island-by-island energy development plan would be helpful, but it has to be balanced by a national strategy that includes a sensible grid connection plan. Due to a lack of locational strategy, new private power projects in the Visayas are sprouting in “environmentally tolerant” islands like Panay, Cebu and Leyte. Little is happening on Negros island. Thus, NGCP will need to build submarine cables on prohibitive costs, which will then be passed on to consumers. It is currently in a quandary to build an 80-MW expansion of the Negros-Panay submarine cable system whose costs do not actually justify the economic use. It would be more economical to encourage more generating capacity on Negros itself. There are areas in the southern part of the island that can be receptive.

Not many consumers are aware of the significant impact of the “line rental” charges of Philippine Electricity Market Corp., which come from congestion in the grids, and which in turn can be avoided with better-planned locations for power generating plants.

NGCP is rushing a 138-kV transmission line to connect a new mine mouth coal plant of San Miguel in Mindanao, and the other big coal projects are being interconnected. NGCP is also trying to connect the island of Mindoro to Luzon at a cost of P11.9 billion, to be paid by Luzon consumers. The benefit? A theoretical 300-MW coal plant project on Mindoro that can supply Luzon.

Our advocacy group, MSK, argues that it will be cheaper for Luzon consumers to buy the 300 MW from Luzon power projects without need for an P11.9-billion investment in transmission facilities. We hope the Energy Regulatory Commission will listen to reason.

The government needs to show the way. A comprehensive study on where new power projects should be developed is imperative. Multilateral agencies will gladly help with this study, which will include strategic thinking on the kind of fuel and technologies that can be used. Now, if we leave it up to the private sector, it will all be coal.

Solar developers just choose their own sites and, once again, it will be up to NGCP to build the connecting lines. On top of the subsidy for renewable energy, there is the added cost of connecting the lines to the grid, the cost of which is passed on to consumers as part of the transmission tariff. In Luzon it is currently P1 per kWh. With all these additions, how much will that be in five years?

Establishing energy zones will enable the country to develop power generating supply in more predictable timetables. Environmental requirements for those areas can be crafted to balance community concerns. These special zones can have facilitative rules and incentives similar to those provided to economic free zones. Winners of competitive bidding for long-term power supply can reduce their risks and bid more competitively.

The Department of Energy’s program to work with local government units in developing their own power development aspirations may not be effective and sustainable. First, power development is localized and not part of a comprehensive and rational whole. Second, LGUs are elected every three years, so in many cases power projects that require long gestation can face uncertain attitudes that may ultimately derail them.

At some point Mindanao will have to be connected to the Visayas and Luzon grids. There are so many coal projects being developed in Mindanao that it will soon become a power-exporting island. We need to connect it to the Visayan Grid.

The costs and guaranteed returns of NGCP on these projects are recovered from consumers as part of the transmission tariff. If this trend continues, the transmission wheeling charges will continue to rise without really ensuring that transmission lines are judiciously built and efficiently used.

A more independent system operator is essential to rationalize a national power development plan. The conflict of interest in NGCP being both systems operator and transmission line concessionaire has to be eliminated quick, as originally mandated by the Epira, if an implementable master plan can truly happen.

It is time for a locational strategy in power generating and transmission development.

David Celestra Tan ([email protected]) is a founder and former president of the Philippine Independent Power Producers Association. He is a coconvener of Matuwid na Singil sa Kuryente Consumer Alliance Inc.