Hydrocarbons, pumped storage hydro and economic growth
June 26, 2025 | 12:00am
There are a number of good developments in the Philippine energy sector recently. Consider these reports in The Philippine STAR written by Brix Lelis: “DOE: Drilling operations begin at Malampaya field” (June 21); “Meralco, Gokongweis expand power supply deal” (June 24); “MGen inks supply deals with D&L unit” (June 25); “DOE seeking Chinese expertise on battery storage facilities” (June 25); “‘Philippines, Tiger Cub economies to ignite global oil demand’” (June 25).
We need more hydrocarbons, oil and gas energy to power the Philippines’ high growth trajectory. The number of vehicles especially large trucks and buses that transport heavy loads and millions of passengers will need more oil. The number of companies and households that need more electricity will need more gas to augment our coal, hydro and other renewables generation.
About the Department of Energy’s (DOE) plan to get State Grid Corp. of China (SGCC) support in deploying battery storage systems to reinforce the country’s transmission network, this is good. I saw partly SGCC’s sophistication in grid operation, maintenance and innovation. As I mentioned earlier in this column, I saw last April the Fengning pumped storage hydro (PSH) plant in Hebei province that serves as ancillary service (AS) or peaking plant, owned by SGCC. I also saw China’s modern road infrastructure like many road tunnels under big and long mountains, plus the high speed train. The Fengning facility is the largest PSH plant in the world at 3,600 MW (300 MW x 12 units).
But there is potential danger of over-capacity of PSH under the DOE plan because while the average demand for regulating reserves in Luzon is only around 700 MW, the DOE’s Green Energy Auction Plan (GEAP) 3 for PSH as AS is targeting 6,100 MW for Luzon at high price. Examples are Ahunan Power’s Pakil PSH of 1,400 MW at P5.46/kwh, and Olympia Violago’s Wawa PSH of 800 MW at P5.36/kwh.
AS are standby plants, they do not run 24/7 like baseload hydro. If baseload hydro will charge P5-P6/kwh, that is good and competitive. But PSH as AS and charging P5+/kwh is expensive, meaning more expensive electricity for the consumers someday.
The DOE should not target very high AS at high prices. DOE should instead target more baseload plants including big hydro, big nuclear, big coal and gas plants. These plants are priced at market rates whether with captive or competitive customers.
Last week June 18, Meralco PowerGen Corp. (MGEN) through its subsidiary PacificLight Power Pte Ltd (PLP) has successfully completed and commissioned a 100 MW Fast Start AS facility on Jurong Island, Singapore. I saw the PLP’s LNG power plant last November along with some local media, it is impressive. Huge LNG plant occupying a small land area and offering stable electricity at competitive prices to Singapore businesses and households.
MGEN president and CEO Emmanuel Rubio optimistically said: “This milestone reflects our commitment to investing in high-efficiency, future-ready technologies that address both reliability and sustainability challenges. Through PLP, we are proud to contribute to Singapore’s energy security while expanding our regional footprint with innovation at the core.”
Also last week, I bumped into the vice president for corporate affairs of Aboitiz Power, Suiee Suarez. I asked about their company’s innovation in thermal and hydrocarbon plants, he said that “AP invests in innovations like AI and digital twin technologies leading to improved operational reliability through predictive analytics and proactive maintenance activities. The resulting gains in plant availability and efficiency translate to better service to our customers thereby helping boost economic activities across the country.”
About the International Energy Agency (IEA) report that Philippines along with Indonesia, Malaysia, Thailand and Vietnam as “Tiger Club Economies” are poised to roar forward and capture a growing share of global oil demand growth through 2030. That is another good news for us. The IEA is notorious for RE lobbying, it is slowly realizing that the world cannot modernize without hydrocarbons and fossil fuels. The ASEAN-5 is growing fast, will continue growing fast in the short- to medium-term.
Fast growth before was something like 6.5 to 10 percent a year, now 4.0 to 6.0 percent can be considered fast. Europe is growing at -1 to 3 percent a year, degrowth is the trend not the exception.
We need to go back to the old school, conventional energy use – more hydrocarbons, more petroleum, more fossil fuels. We need more petrochemicals, from paint to nylon to plastic, courtesy of crude oil. We need more ammonium fertilizers, courtesy of natural gas. We need more cement, courtesy of coal. Aside from power generation function of oil, gas and coal.
Meanwhile, I want to thank the barangay police CCTV monitoring team of Barangay San Antonio, Makati City. The other day our dog slipped out of our door and walked outside. After looking for him for more than an hour, I gave up and went to the CCTV monitoring team. Team leader Gilbert Gapasin guided me and through the many CCTVs in the barangay playing back, I was able to find our dog. Hats off, barangay officials. Thank you.
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