BWorld 128, The quest for more stable and cheaper electricity in the ASEAN

* This is my article in BusinessWorld last April 28, 2017.

High economic growth means high energy demand coming from stable supply and competitively priced energy, not unstable, intermittent, and expensive energy. This is what the Association of Southeast Asian Nations (ASEAN) economies need as their high GDP growth of 4.7% in 2016 is projected to improve to 4.8% this year and 5% in 2018 (ADB data), much faster than the projected growth of other regions and economic blocs.

One week before the ASEAN 50th Summit Meeting, the 7th Annual Meeting of the Nuclear Energy Cooperation Sub-Sector Network (NEC-SSN) hosted by the Department of Energy (DoE) was held. A pre-feasibility study showed that many ASEAN countries are in favor of using nuclear energy for commercial use. The ASEAN Center for Energy (ACE) also sees nuclear energy as a long-term power source for the member-countries.

The intensive infrastructure projects of the Duterte administration require huge amount of energy. The proposed 25-km. subway in Metro Manila by the Japan government alone would require high energy supply for the dozens of trains running simultaneously below the ground plus dozens of train stations below and above ground.

Lots of base-load power plants, those that can run 24-7 all year round except when they are on scheduled shut down for maintenance, will be needed. These baseload plants include coal, natural gas, geothermal, and nuclear. Hydro plants too but only during the rainy season.

How reliable and how costly are the different power generation plants that the Philippines and other ASEAN countries will need? This table will help provide the answer as I have not seen data for the ASEAN yet.

Power reliability is represented by plant capacity factor or actual power output relative to its installed capacity. So unstable, intermittent sources like wind and solar have low capacity factor, not good for manufacturing plants, hotels, hospitals, malls, shops, and houses that require steady electricity supply.

Power cost is represented by the levelized cost of electricity (LCOE), composed of capital expenditures (capex), fixed and regular operation and maintenance (O&M), variable O&M, and transmission investment. CCS means carbon capture and sequestration.

The cost of ancillary services for intermittent sources, the standby power plants if the wind does not blow or if it rains make solar plants temporarily inutile, does not seem to be reflected in the transmission cost though.

ASEAN countries like the Philippines will need those power plants that have (a) high reliability, high capacity factor, (b) low LCOE, and (c) low or zero need for ancillary services.

However, more ASEAN countries are entertaining more solar PV and wind onshore since they were convinced to believe that they need unstable yet expensive electricity to “save the planet.”

During the Energy Policy Development Program (EPDP) lecture last April 20 at the UP School of Economics (UPSE), Ms. Melinda L. Ocampo, president of the Philippine Electricity Market Corp. (PEMC) talked about “Electricity Trading and Pricing in the Philippine WESM.” Ms. Ocampo discussed among others, the new management system where the interval for electricity dispatch has been improved from one hour to only five minutes.

I pointed during the open forum that the imposition of the lousy scheme feed-in-tariff (FiT) or more expensive electricity for favored renewables was unleashed even to consumers in Mindanao, which is not part of WESM, and is not connected to the Luzon-Visayas grids. The FiT-Allowance that is reflected in our monthly electricity bill has risen from 4 centavos/kWh in 2015 to 12.40 centavos in 2016 and this year, we should brace for at least 26 centavos/kWh soon because the 23 centavos petition by Transco starting January 2017 has not been acted by the Energy Regulatory Commission yet.

The issue of stable and affordable energy will be tackled in the forthcoming BusinessWorld Economic Forum this May 19, 2017 at Shangri-La BGC. Session 4 “Fuelling Future Growth”of the conference will have the following speakers: John Eric T. Francia, president & CEO of Ayala Corp. (AC) Energy Holdings, Inc.; Antonio R. Moraza, president & COO of Aboitiz Power Corporation; Josephine Gotianun Yap, president of Filinvest Development Corp., and DoE Secretary Alfonso G. Cusi. Yap and Cusi are still to confirm the invite.

Local energy players will have a big role in ensuring that the Philippines should have stable and competitively priced energy supply today and tomorrow.

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See also: 

BWorld 120, Five myths of solar-wind energy, April 08, 2017

BWorld 125, On the retail competition and open access (RCOA) and EPIRA, May 05, 2017 

BWorld 126, Why mining is appropriate for certain areas and provinces, May 06, 2017 

BWorld 127, Economic freedom in Asia means faster growth, lower prices, May 07, 2017

BWorld 63, Can renewables only power the PH and Asian markets?

* This is my article in BusinessWorld last June 08, 2016.

There is a belief that “renewables only” can supply all the power and electricity needs of the Philippines, or of the world. Because the sun shines everywhere, the wind can blow everywhere, there is biomass everywhere, there are rivers in many places and some countries are “blessed” with plenty of volcanoes and geothermal power is more available to them. Therefore, it is just a matter of “political will” to make this “renewables alone” to happen nationwide or worldwide.

This urban legend has spread and persisted for many years until today. Never mind that while there is indeed high contribution to electricity production by hydro in many countries, and geothermal for the Philippines and the US, the rest of renewables -- solar, wind, biomass, tidal power -- have contributed very little.

In 2015, of total electricity production in the Philippines, only 1% came from solar + wind + biomass combined. Their combined installed capacity has indeed expanded to around 3%-4% of total but their actual electricity generation was only 1% of total.

The “Asia Clean Energy Forum 2016,” which will be held from June 6-10 at the Asian Development Bank (ADB) headquarters in Ortigas, involve deep dive workshops and technical seminars on the first two days, and various policy discussions on the third and the fifth day.

Day 1 topics include among others, wind deployment in developing countries, green energy finance, carbon capture and storage, mini-grid lessons, Nordic models in renewables. Day 2 topics include integrating renewable energy (RE) into power systems, RE finance and PPP, powering Asian tigers with RE, and microgrid energy storage.

Then a renewables lobbyist and think tank, Center for Renewable Energy Strategies (CREST) produced a new paper, “The Energy Road Not Taken: How the Philippine Energy Plan can lead to a coal-free future within a few years.”

CREST paper cited some basic facts from the Department of Energy like baseline supply for 2016 is 16,244 MW (16.24 GW). The Philippine Energy Plan “business as usual” power demand of 10.9 GW in 2012 to rise to 23.2 GW in 2030. But with the introduction of the Philippine Energy Efficiency Project, the projected demand will be lower, only 19.56 GW by 2030 and the required supply will only be 21.63 GW by 2030.

Including regulating reserves, the projected derated additional power requirements will be 7.73 GW by 2030. CREST says this can be supplied by RE only -- but mostly hydro and geothermal, plus some wind power.

Is this scenario of “renewables only” for those 7.7 GW of power by 2030 possible for the Philippines?

Two tables below will help answer this question. Table 1 will compare energy density of various sources of electricity. Some definitions to better understand this table.

(1) Energy density -- the amount of energy stored in a given system or region of space per unit volume.

(2) Specific energy -- the amount of energy stored per unit mass (weight).

(3) 1 joule -- can produce one watt of power for one second, or one “watt second” (W·s).

(4) 1 kWh = 3.6 megajoules (MJ); or 1 MJ = 0.28 kWh

While diesel, gasoline, and coal can produce megajoules of power per liter, renewables like wind and solar can produce only a few joules, or fraction of joules, per cubic meter of space. Low energy density means low capacity to produce electricity per unit or volume of energy source.

The next table on levelized cost of electricity (LCOE) will corroborate the above statement. LCOE is a good measurement of the overall competiveness of different power generation technologies over an assumed financial life and duty cycle.

Capacity factor means the ratio of actual electricity output over rated or installed capacity (see Table 2).

So with (a) low capacity factor, (b) high capital cost, (c) high fixed operation and management (O&M) cost, and (d) high transmission cost, even if the cost of fuel (variable O&M) is zero, the renewables’ competitiveness is heavily reduced and compromised.

Note that latest and more advanced technologies in wind and solar from an advanced economy (US) are assumed to be employed here because these are power plants that are expected to become operational by 2020 or four years from now.

With those numbers on the comparative technologies of various energy sources, the answer to the statement “renewables only” can power the Philippines (or the world) by 2030 and beyond is a clear NO.

Malaysia with just 31 million people (less than 1/3 that of the Philippines) has electrical capacity of 32 GW in 2014 or 2x that of the Philippines for the same period, and is projected to double it to 64 GW by 2030, up to 85 GW by 2040, the bulk of which will be from coal and natural gas (source: SEA Energy Outlook 2015). But CREST and other campaigners of “limit energy demand unless coming from our renewables” would be happy to see a 21 GW Philippine capacity by 2030, or only 1/3 that of Malaysia’s then.

The Philippines still suffers from energy poverty with very low kWh per capita consumption per year compared to many of its ASEAN neighbors. The renewables lobby will not be able to produce convincing data and arguments that intermittent, weather-dependent, and subsidies-hungry renewables will be able to get out of their inherent weaknesses.

Governments including multilateral institutions like the World Bank and ADB should spare the people of the tyranny of expensive and unstable electricity. Climate alarmism as the main alibi for renewables favoritism and cronyism should confront the fact that climate change is natural and cyclical. That global warming and global cooling cycles did happen and will continue to happen even if we go back to the stone age lifestyle.

Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers, and a Fellow of SEANET and Stratbase-ADRi. minimalgovernment@gmail.com

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See also: 

BWorld 60, Classical liberal, neoliberal and anti-liberal, May 29, 2016 

BWorld 61, 100 indicators better than GDP, June 03, 2016 

BWorld 62, Unemployment and underemployment data may be overstated, June 08, 2016

Energy 68, China's coal and Germany's renewables, May 30, 2016 
Energy 69, ACEF 2016 on wind power in Asia, June 07, 2016