[ANALYSIS] Caught between the devil and the deep blue sea: The present power situation
We certainly don’t like it. But whether we like it or not, we are now in a situation in which our power supply is simply low and knotty to solve.
This is made clear more than ever from our experience to meet both increased and fluctuating demand for power exacerbated by the current El Niño weather together with the impact of the recent “forced outages” that hit about 68 of our power plants, 47 of which are fossil-fuel fed and 21 are hydro-electric, that placed all main grids across the country – Luzon, Visayas, and Mindanao – under red or yellow alert.
A red alert is issued when the power supply is insufficient to meet the consumer demand. This can lead to power interruptions. A yellow alert, on the other end, is raised when the operating margin is insufficient.
The said incident has also roused legislative reactions from senator Sherwin Gatchalian and fellow senators Risa Hontiveros and Francis Escudero to seek a probe on the “unjustified” power outages, with the aim to find solutions for new power capability, and possibly resolve the question of higher power bills in the country.
In the meantime, there is this strong global pressure to wean away from the use of coal with its historically negative impact on the environment. There is also this rising clamor to embrace the increased use of renewable energy sources like solar, wind, water, and geothermal, but with all their not-yet-fully-matured technology to harness their full potential.
Under this backdrop, the current effort to ramp out quickly the power supply condition of the country could be described as being “caught between the devil and the deep blue sea.”
At the Monday Circle Financial Forum: The country’s basic power situation
The Monday Circle Financial Forum held last April 22 at the Westin Manila actually focused on this issue of low power supply.
As a platform for the development of an intelligent investing public through the proper understanding of various issues, news, events and information, an assessment was made on the country’s energy mix along with the evaluation of the individual benefits and practical uses of the component power resources.
Acting as instant resource person while attending for the first time as an invited guest in the forum was Meralco Vice President and Head of Corporate Communications Joe Zaldarriaga.
Recent news say that our energy mix is broken down into 60% from coal (which is mainly imported from Indonesia), 18% from natural gas, and 2.3% from oil-based power plants. The remaining balance of 19.7% is from renewable energy, which is shared in varying scale by solar, geothermal, hydro, wind, and biomass.
Worldwide, coal also continues to lead as source of electricity, representing 35.4% of global power generation in 2022. This is followed by natural gas at 22.7%, and hydroelectric at 14.9%. Interestingly, over three-quarters of the world’s total coal-generated electricity is consumed in just three countries. These are China by 50.5%, India by 11.3%, and the US by 8.5%.
Total energy consumption in the country has also been increasing by 4% per year since 2020 to 64.5 Mega tons of oil equivalent (Mtoe) in 2022. This makes the “per capita energy consumption at 0.56 toe [ton of oil equivalent], including 790 kWh [kilowatt-hour] of electricity.” Curiously, these levels are said to be two times lower than the ASEAN average in 2022.
Access to electricity in 2021 was placed at 97.49%. Interestingly, this represented a 1.1% increase in the percentage of the population with access to electricity based on industry and national surveys data of 2020.
The country has also a total installed capacity of around 28,297 megawatts (MW) as of June 2023, while peak demand was estimated at 17,000 MW. Another 8,000 MW in additional power generation capacity is needed to meet the anticipated 25,000 MW peak demand in 2028.
Peak demand is the time of the day in which consumer use for electricity is at its highest.
NGCP and crux of the power crises
In summary, there is no single factor that contributed to the dire state of our power situation, which appears to boil down to lack of baseload power plants, according to Zaldarriaga.
Baseload power sources are those plants that can generate dependable power to consistently meet demand over 24 hours.
Also, our current power problem appears more to be the result of the confluence of unlikely factors and circumstances. For instance, there is this untimely incidence of equipment failures and maintenance requirements precipitated by the present El Niño weather condition.
Global trends against the use of coal also affected programs to install baseload power plants. This is compounded by an existing anomaly linking the four sectors of the power industry, which is generation, transmission, distribution and supply.
Thus, to the credit of our policy makers, the current power problem is not wittingly the result of a fatal flaw or neglect in planning to provide for the power needs of the country.
However, to allow large-scale private investment to come in and be a backbone for our energy development, proponents find that there is an obvious need for the transmission sector to modernize to keep up with the new technologies coming in.
The National Grid Corporation of the Philippines (NGCP) has been criticized – even by the present government – that it has not fulfilled adequately its obligations as rotating brownouts still remain a recurring problem since the start of this year due to its failure in processing the timely acquisition of reliable ancillary power agreements.
As well said, “Having generated capacity is great, but you need to make sure that the grid infrastructure will actually allow this generating capacity to come online and allow it to work significantly.”
Postscripts
Again, while the Philippines appears among the highest in Southeast Asia on electricity prices, along with Singapore ($0.16/kWh and $0.18/kWh, respectively), the lower prices as reported in January 2023 for Thailand ($0.10/kWh), Indonesia ($0.10/kWh), and Malaysia ($0.05/kWh are but the product of a substantial government subsidy program extended to the general public, according to Zaldarriaga.
There are these upsides and downsides of government subsidy programs. In our case, our current fiscal policy not to subsidize electric bills still fits within the limits of the people’s resiliency. It has afforded the government not to sacrifice on equally important primary development services such as education, food production, peace and order, and national security, among others.
In hindsight, the best type of power plants to serve baseload requirements are still coal and natural gas. The most reliable, however, are nuclear power plants. They “are producing maximum power to more than 92% of the time during the year, which is nearly two times more as natural gas and coal units, and almost three times or more reliable than wind and solar plants.”
Nuclear power plants require less maintenance, too. They “are designed to operate for longer stretches before refueling, as in every 1.5 to two years only.”
In comparison, natural gas and coal capacity factors require more routine maintenance and refueling attention. Renewable plants, on the other hand, are considered intermittent or variable sources because they are mostly limited by lack of fuel such as when the sun goes down for solar, when the wind stops for windmills, or water when the river beds go dry as in what happened lately.
As a result, these plants need a backup power source such as large-scale storage, which at the moment is still in its infancy at grid-scale. They are good ancillary power sources, especially when they can be paired with a reliable baseload power like nuclear energy.
Lastly, “in a typical nuclear reactor of 1 GW [gigawatt], you would need almost two coal or three to four renewable plants, with 1 GW size each, to generate the same amount of electricity onto the grid.”
(The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. You may reach the writer at densomera@yahoo.com)