The emergence of a first ever President of the Philippines coming from Mindanao has produced ample business opportunities to that big island and its many provinces in the south. After the elections last month for instance, Davao City in particular experienced huge boost in business and tourism.
Overcoming energy poverty or insufficient supply of power
and electricity for the people should be among the priorities of the new
government. For instance, our average electricity consumption of 672 kWh per
capita in 2012 was lower than that of Indonesia, nearly ½ that of Vietnam,
nearly ¼ that of Thailand, nearly 1/7 that of Malaysia and almost 1/12 that of
Singapore.
There are no comparative data for 2015 so this paper
makes its computation, shown in the last column in this table below.
Table 1. Electric power consumption (kWh per capita)
Sources: Columns 2-5: WB, World Development Indicators,
http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC;
Columns 6-7: BP,
Statistical Review of World Energy, June 2016;
Column 8: IMF, World Economic
Outlook, April 2016;
Column 9: computation by this paper
Estimating energy poverty in Mindanao
The combined population of regions 9 to 13 plus ARMM in
the census August 2015 was 24.136 million (source: Philippine Statistics Authority
(PSA)). Gross electricity generation in Mindanao in 2015 was 9,282 GWh (source:
DOE)
This means that average electricity consumption in
Mindanao last year was only 384.6 kWh per capita. This is less than half that
of the national average of 809 kWh per capita, and this may be equivalent to
that of Cambodia (207 kWh per capita in 2012).
Existing capacity in Mindanao, 2015
As of 2015, Mindanao grid has a total installed capacity
of 2,414 MW. The major energy sources are hydro (44%), oil-based (33%) and coal
(16%). Geothermal, biomass and solar constitute the remaining 7%.
In terms of actual power generation in 2015, the 17
generating companies (gencos) and 39 distribution utilities (DUs) in Mindanao
has produced and distributed 9,282 GWh of electricity, mainly coming from hydro
(39%), oil-based (33%) and coal (20%). Geothermal contributed 8% while biomass
and solar contribution was negligible.
Capacity addition in Mindanao, 2016-2019
The biggest addition was Therma South Inc. (TSI) of
Aboitiz Power with 300 MW. Unit 1 (150 MW) started operation in September 2015
while Unit 2 (also 150 MW) began operation in January 2016.
Coming this year will be Saranggani (by Alsons), San
Miguel Davao (by SMEC) and FDC (by Filinvest), all coal plants. Next year, GN
Power will further add a huge coal power plant.
Table 2. Committed Power Projects in Mindanao, 2016-2019,
as of May 2016
Source: DOE.
These will result in temporary power oversupply by 2017
and significantly raise the kWh per capita use in Mindanao. But such oversupply
will be short-term because demand will simply adjust and rise quickly. Again,
note the low per capita electricity consumption in Mindanao compared to the
national average, and much lower compared to those in Vietnam, Thailand,
Malaysia and other developed Asian economies.
Here are the indicative projects for Mindanao grid. Coal
plants will still dominate the field. Once the Wholesale Electricity Spot
Market (WESM) operates in Mindanao, it will be a dynamic market for both power
producers and consumers.
Table 3. Indicative Power Projects in Mindanao,
2016-2021, as of May 2016
With these initiatives at big power addition in Mindanao,
among the policy measures that needed to be put in place are the following.
One, ensure the transmission link between the Mindanao
and Visayas grids soon. This will significantly complement WESM operation in
Mindanao.
Two, do not reverse many coal capacity additions with
anti-coal pronouncements that might possibly come from the DENR and the Climate
Change Commission (CCC). Check again table 1 above, the Philippines’ coal
consumption even until 2015 is small compared to the coal capacity of our
neighbors in the region.
Three, renewable energy development in Mindanao should
focus on hydro power, development of new ones and rehabilitation and capacity
expansion of existing ones under PSALM, and less on new renewables like wind
and solar that require huge FIT allowance and more expensive electricity.
The stance of the new DENR Secretary against mining has
an indirect adverse impact against coal power plants. The worst that can happen
is a stop in granting DENR’s environmental clearance certificate (ECC) for new
coal plants while a mild version is to further bureaucratize and delay for
years the granting of ECC and various environmental permits. Both actions will
adversely affect power development in the country and prolong energy poverty.
This should not happen.
With six years in power of the first Mindanaoan President
of the Philippines, the looming finalization of peace agreement with the MILF
and even with the CPP-NPA, business expansion under the ASEAN Economic
Community (AEC) and the 16-nations Regional Comprehensive Economic Partnership
(RCCEP), and continued destabilization in many Muslim countries in the Middle
East, many big investments and businesses will be coming to Mindanao. What
appears as power oversupply by 2017 can become undersupply the next year when
high demand from existing and new consumers – household, commercial and
industrial – will kick in.
Bienvenido S. Oplas, Jr. is a Fellow of Stratbase-ADRi, a
columnist in BusinessWorld, and President of Minimal Government Thinkers.
--------------See also:
Energy 72, FIT-eligible solar plants in the Philippines, June 22, 2016
Energy 73, Comments to DOE draft Department Circular on RPS, June 27, 2016
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