Friday, September 19, 2014

Energy Econ 26: Dealing with Power Deficit in 2015

Independent think tank, Stratbase Research Institute (SRI) published yesterday my paper, "Energy and Rice Deficiency: Reform Challenges for the Last Quarter of the Aquino Administration."

I uploaded the paper in my slideshare account, 11 pages, check it there. For this article, I will only discuss the part on power and energy.

President Aquino has officially requested for a Congressional Resolution to deal with projected power deficiency next year, especially on the hot months of March to May 2015, or just six months from now. I believe they have a reason to panic.

Chart 1. Power Supply-Demand in Luzon, 2014-2020, as of June 2014

Source: Department of Energy (DOE).

I highlighted in my paper that when analyzing the above graph.

1. Available or existing capacity (blue curve) does not mean that all power plants will not experience sudden or unscheduled shutdowns. A number of those facilities just conk out anytime, especially among the  older ones. Thus, actual power production on certain period is lower than what the blue line in  the  chart suggests.

2. The same applies for committed power projects (gray curve). In addition, many of these committed are wind and biomass, where actual power generation is very often lower than their rated or promised capacity. 

The National Grid Corporation of the Philippines (NGCP) issues alert levels in cases of power deficiency.  "Red alert” means the contingency reserve is near zero, if not negative. “Yellow alert” means the total power  reserves is less than the capacity of the largest plant online, which for the Luzon grid is 647 megawatts (MW).

Chart 2. Zoom in to  2014 and 2015 Only

NGCP has issued “Yellow Alert” last April 8, May 9, 14, 20 and 26, 2014. It also issued  “Red Alert” (RA) on the following days this year.

1. RA May 16:  Two unscheduled shutdowns, one unit of Sual coal plant (647 MW) + one unit of Pagbilao coal plant (367 MW).

2. RA June 17:  Malampaya Gas Restriction, Manual load dropped 105 MW.

3. RA June 25: Three unscheduled outages:  Sual 1 (647 MW) + Calaca 1 (300 MW) + Masinloc 2 (315 MW). Plus derated capability of GN power (Mariveles) 1&2.

4. RA September 9: Two unscheduled shutdown on September 8:  GNPower Unit 2 (300 MW) + Ilijan Block A (600 MW). And two scheduled maintenance shutdowns: Sual Unit 2 (647 MW) + Kalayaan Unit 1 (177 MW)

These are huge power plants that conked  out unscheduled: Sual (15 year old), Pagbilao (18 yo), Masinloc (19 yo) and Calaca (30 yo). Metro  Manila and provinces in the Luzon grid are dependent on power facilities listed below.

Check again Chart 1 above, committed power projects. Wind for late 2014 to 2015 is 253.5 MW (Northwind 18, Burgos 87, Caparispisan 81, Pillila 67.5). That looks substantial but wind power is highly unstable and  unreliable in delivering power.

Take the case of Germany, possibly the “wind and solar power giant” in the world today based on  their installed capacity. In the chart below, gray is conventional power (coal, nuclear, gas), yellow is solar, dark blue is wind, light blue is hydro, and green  is biomass. Red is actual German consumption. 

The story is no different for the  US and UK. 

The threat of rotating brownouts next year in Metro Manila and other provinces in Luzon is real. It is not imaginary. But it will not be as bad as the one we experienced in 1990-91 where the whole of Metro Manila would have about 3-5 hours brownout daily on some months. I think it will just be a few hours and not cover the entire metropolis. Something like this: brownout in Malabon 7-8am, in Navotas 8-9am, in northern Quezon City 9-10am, and so on.

To have stable electricity, supply must be generally equal to demand. If supply is limited due to technical problems with some big power plants, parts of electricity demand  should be "killed" via rotating brownouts.

Some policy proposals that I put in the paper:

1. Get more peak-load plants like those mobile diesel power barges. In Luzon, there is only one existing, Therma Mobile (TMO) of Aboitiz Power. It is an old power barge actually, bought from Duracom Power and was idle for about five years until it  was rehabilitated and re-commissioned  in  November 2013 just to prevent rotating brownouts in Metro Manila and other Luzon provinces during the Christmas holiday season.

2. Reduce power demand on peak hours of those hot months by asking the heavy users like big industrial zones, mining firms and cement plants, to have their own power generator sets. The Interruptible Load Program (ILP) seems  to be working, more big companies should volunteer to join the ILP.  But they should be compensated somehow, in the latter  months as these companies would have larger power cost on those periods that they were using their gen sets.

3. The public, households and commercial offices can help reduce power demand by using more energy-efficient lights and appliances.

4. Government agencies  should reduce the bureaucracies and permits they require in building and commissioning new power plants. DOE Sec. Petilla once said that in some projects, some 100 signatures are required to have one big power plant be put up and keep running.

5. Over the medium term, government should  reduce the taxes and royalties in power as these impositions  significantly contribute to high electricity prices. And the public blame the power companies or the distribution utilities (DUs) and even call for “Junk EPIRA, back to government monopoly in power.” 

See also:

No comments: