Wednesday, February 29, 2012

Meralco OKs Aboitiz power deal

Manila Standard Today
by Alena Mae S. Flores


The board of Manila Electric Co., the country’s largest power distributor, approved the signing of a power supply agreement with Therma Luzon Inc., a unit of Aboitiz Power Corp.


Meralco chief operating officer Oscar Reyes said the seven-year power supply agreement involving the delivery of 350 megawatts will be signed shortly.


“We are in the final stages of closing contract. This is for Pagbilao [coal-fired power plant] with Therma Luzon. We are talking of initially 350 MW,” Reyes told reporters.


Aboitiz Power, a publicly-listed holding company that has interests in hydroelectric and coal power plants owns, Thema Luzon, which administers the contracted capacity of the Pagbilao power plant in Pagbilao, Quezon.


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(Published in the Manila Standard Today newspaper on /2012/february/29.)

DOE urges EU to develop ocean power

Manila Times.net
Published : Wednesday, February 29, 2012 00:00 Written by : Euan Paulo C. AƱonuevo


THE Department of Energy (DOE) plans to draw investors from the European Union (EU) into developing ocean power technology in the country.


During a briefing at the 1st EU-Philippines Meeting on Energy, Jose Rene Almendras, DOE secretary said that the country can take advantage of EU member countries’ renewable energy (RE) expertise amid government’s thrust to develop clean and indigenouse energy sources.


”The intention really was to bring the EU’s expertise, knowledge and technologies to work with Philippine industries and businesses . . . the Philippines is the most ideal venue for ocean technology. We have water current, we have 7,700 plus islands that need power that are surrounded by the ocean,” he said.


Ocean power technology utilizes currents or temperature differences along large bodies of water to generate electricity.


Despite being surrounded by such vast resource, only two RE developers are pursuing ocean power technology in the country, namely California-based Deep Ocean Power Philippines Inc. and UK firm Belle Pirie Power Corp.


Deep Ocean was awarded earlier by the government the contract to develop ocean power facilities in Amini-y, Antique and Sablayan, Mindoro; while Belle Pirie was given the go-signal to put up a similar project in Cagangan, Zambales.


EU Ambassador Guy Ledoux, on the other hand, said that they are open to improving exchanges between their members and the Philippines especially in RE technology.


”The presence of many European countries . . . is a reminder that foreign expertise is already available to boost the Philippine renewable energy market, the same way that the Philippines have started to invest in foreign markets using their own know how,” Ledoux said.


About 40 European company representatives, including a visiting delegation of leading UK RE developers attended the EU-Philippine energy forum.

UK firms seek Phl partners for renewable energy projects

By Neil Jerome C. Morales (The Philippine Star) Updated February 29, 2012 12:00 AM


MANILA, Philippines - UK-based-companies are ready to share their expertise in the renewable energy sector to local firms through partnerships and business ventures, officials said.


They said the Philippines, despite the lack of funding and technology, has a big potential to generate more power from green energy projects.


Local energy officials, for their part, said the feed-in tariff (FIT) mechanism for renewable energy projects might be implemented in the second quarter to encourage more investments in the sector.


“The Philippines has a very advance policy development, it has ambitious plans for renewable energy,” Michael Doran, managing director of consultation firm Action Renewables, said in “The UK Experience on Renewable Energy” forum yesterday.


The next step is for the implementation of renewable energy projects in the country.


Doran said the company will facilitate, educate and advice public and private sector on renewable energy projects.


For Claire Watson, an associate of London-based commercial law firm Pinsent Masons, the Philippines can take advantage of its wind energy potential.


“There is a huge amount of wind potential in the Philippines,” Watson said. The country can generate as much as 76,600 megawatts (MW) of power through wind energy.


These projects can be implemented for Northern Luzon and Eastern basin provinces like Mindoro, Panay, Negros and Palawan.


However, Watson said the $50-million, 33-MW Northwind Power Development Corp. in Bangui Bay in Ilocos Norte is the only major wind farm project in the Philippines.


In contrast, UK has 16 offshore wind farms with a generating capacity of 1.6 gigawatts, the largest in the world.


Dave Pratt, director of tidal technology company Nautricity, said the Philippines can take advantage of tidal waves to generate power.


“The tidal market is immature at the moment. There are no significant investments or projects of scale,” Pratt said.


However, the first generation tidal technology is very expensive so more research should be conducted, Pratt said.


UK has secured 72 million pounds of investments for innovations in the marine energy between 2004 and 2008.


Duncan Barker, project manager at consultancy firm Mott MacDonald, said they are ready to consult with local firms interested in renewable energy.


“Every project has a risk that might prevent the project from being delivered,” Barker said. For instance, financial markets, legal and regulatory risks and construction risk might pose a challenge for investors.


Since 2008, the UK has been supporting projects to raise public awareness in the Philippines on climate change issues.


The UK government targets cutting its carbon gas emissions by 50 percent from 1990 levels by 2025 to meet its emission reduction commitment under the Climate Change Act of 2008.


To date, the UK ranks fifth globally in terms of high-value clean technology patent filings.


Firms said the expertise can be transferred through various partnerships with local firms.


Local officials said the country will secure more investments in the renewable energy sector when more incentives are in place.


The FIT scheme will hopefully implemented in the second quarter, Francis Saturnino C. Juan, executive director of the Energy Regulatory Commission (ERC), said on the sidelines of the renewable investment forum.


Juan said the ERC hopes to implement the program despite an ongoing hearing with the Court of Appeals.


Last year, the Foundation for Economic Freedom filed for a temporary restraining order to stop hearings of the regulator on the FIT.


The FIT scheme, whose implementation is already delayed by almost three years, guarantees investments of renewable energy firms through fixed rates that would be shouldered by consumers over a set period of time.


“We have to approve the FIT now in order to start the projects. Renewable energy projects are in limbo as they wait for the FIT and they cannot go into financial closing,” National Renewable Energy Board chairman Pete H. Maniego said.


To date, the Philippines sources 35 percent its total power requirements from renewable energy sources.

Meralco, Aboitiz unit ink power supply deal

By Neil Jerome C. Morales (The Philippine Star) Updated February 29, 2012 12:00 AM


MANILA, Philippines - Manila Electric Co. (Meralco), the country’s largest power distributor, has signed a new deal to source power from a subsidiary of Aboitiz Power Corp. (APC).


The Pangilinan-led utility firm said it also is in talks for a power supply agreement (PSA) with diversified conglomerate San Miguel Corp. to ensure continued supply of power to its customers.


Meralco said its board of directors approved the signing of a PSA with Therma Luzon Inc.


“The PSE between Meralco and Therma Luzon for the 350-megawatt (MW) capacity for the Pagbilao power plant is scheduled to be signed not later than Feb. 29,” the company said.


Under the agreement, Meralco will buy power from Therma Luzon for seven years.


APC said the PSA will be implemented after an approval by the Energy Regulatory Commission (ERC).


“Pending the ERC’s approval, the transition supply contract (TSC) between Meralco and National Power Corp. will govern the supply of power by Therma Luzon to Meralco,” the company said. The TSC will expire in December.


Therma Luzon is wholly-owned by APC. It operates the Pagbilao power plant, a 764-MW coal-fired thermal power plant in Pagbilao, Quezon.


Meralco will also sign one more PSA with a power generation firm to ensure the ample amount of electricity it can distribute to consumers.


“I think we will try to close one more contract...We are talking to San Miguel for Sual,” Meralco chief operating officer Oscar S. Reyes said. The capacity is still under discussion.


Meralco is indirectly controlled by Hong Kong-based First Pacific Co. Ltd. and partly owned by San Miguel Corp.


“We will have a supply envelope that will enable us to provide assurance on adequacy, reliability and quality,” Reyes said. “That is good for high growth customers.”


The company had 5.3 million customers last year, up by 3.7 percent from a year ago.


Ample power will allow Meralco to manage power distribution despite outages of supply from power generators, Reyes said.


Late last year, Meralco entered into PSAs with South Premiere Power Corp., which administers the Ilijan power plant in Batangas; SEM-Calaca Power Corp., a wholly owned subsidiary of Semirara Mining Corp. that owns and operates the Calaca coal-fired thermal power plant; and Masinloc Power Partners Co. Ltd. (AES Philippines), which owns and operates a coal-fired power generating facility in Masinloc, Zambales.


Profits of the power utility giant surged almost 40 percent to an all-time high P13.2 billion on the back of higher rates and more sales from a record number of consumers.


Core net income, which strips out currency and derivatives-related items, climbed 22 percent to P14.9 billion from a year ago. It exceeded the profit guidance of P14.5 billion. Meralco expects core earnings to hit P15 billion this year.

Tuesday, February 28, 2012

All available power sources eyed to stem Mindanao crisis

Business World Online
Posted on February 28, 2012 09:20:08 PM


ELECTRIC COOPERATIVES and power generators will be required to tap all available sources to stem a worsening electricity shortage in Mindanao due to maintenance shutdown of facilities and the onset of summer, an Energy official said yesterday.


"We are drafting a new circular [to use all available power] with additional provisions based on meetings with the energy family including the National Power Corp., National Electrification Administration, National Grid Corporation of the Philippines (NGCP), Power Sector Assets and Liabilities Management Corp. (PSALM) and the general managers in Mindanao," Energy Undersecretary Josefina Patricia M. Asirit said in a text message.


"The circular will be redefined so distribution utilities and electric cooperatives have to do their own demand side management," she added.


Mindanao has been experiencing rotating brownouts in the past few weeks.


The island’s normal power requirement ranges from 1,400 megawatts (MW) on weekdays to 1,200 MW on weekends. As of yesterday, NGCP’s Web site showed a 211-MW deficiency.


The power shortage is expected to prevail into the summer months as the island is highly dependent on hydroelectric power.


"There really is a deficiency in generation... We were constrained because there are some downed plants...," said Ms. Asirit.


A similar circular was implemented in 2010 at the height of a dry spell that forced the temporary closure of Mindanao’s hydroelectric power plants. The circular particularly targeted power barges 118 and 117 owned and operated by Aboitiz Power Corp. subsidiary Therma Marine, Inc. which was contracted to provide ancillary power to NGCP. These provided around 100 MW combined.


Rates from ancillary power are more expensive.


"We are waiting for the direction of the Energy department for Mindanao. One of the options is to release a circular which will give us the legal cover to dispatch all power as energy which we will of course follow," said NGCP Spokesperson Cynthia D. Perez- Alabanza in a telephone interview.


The NGCP is still negotiating a new contract with Therma Marine, she added, "so we do not have that capacity [as of now]."


Aboitiz Power could not be reached for comment.


Two years ago, at the height of a dry spell, the island’s power deficiency peaked at 600 MW resulting in daily power outages that last for as long as 10 hours.


Power demand in Mindanao is projected to rise by 4.65% this year which will further put pressure on limited resources.


In a related development, Finance Secretary Cesar V. Purisima has urged the Energy Regulatory Commission (ERC) to act on the long-standing appeal of the Power Sector Assets and Liabilities Management Corp. to impose a universal charge.


"The ERC should already approve the filing of PSALM for a universal charge. I believe that the increase is very reasonable and is spread out over a wide period," Mr. Purisima, also the chairman of the state-run energy firm, said on the sidelines of the Bureau of Internal Revenue’s 2012 Tax Campaign Kick-Off yesterday.


PSALM filed a petition for a universal charge of P0.39 per kilowatt-hour (kWh) with the ERC in July. The P140 billion covered by the petition only involves the stranded debts and costs of Napocor. The petition is still pending.


The state-owned firm is allowed by the Electric Power Industry Reform Act of 2001 to file petitions for a universal charge -- a pass-through cost to consumers -- to help pay for its debts.


"If the ERC thinks the universal charge filed for in the petition is too high, then they should call for a public hearing. But there must be some action on the proposal. The debt of PSALM just continues to grow," Mr. Purisima warned.


PSALM’s debts are estimated to total $18 billion. Of this, $8.7 billion comprise obligations to independent power producers while $7 billion are debts incurred by the National Power Corp.


Consumers may oppose the hike in their power costs, but the Finance chief said that somebody has to pay for the liabilities.


"Unfortunately, there is no such thing as a free lunch. Either the consumers carry the universal charge or the taxpayers shoulder the debts," Mr. Purisima said. -- E. N. J. David and D. C. J. Jiao

Renewable energy bottlenecks identified

Business World Online
Posted on February 28, 2012 09:14:39 PM


THE COUNTRY has to address several issues if it wants to further develop clean technology, British firms involved in renewable energy said in a forum.


At the UK Experience in Renewable Energy event yesterday, the firms identified issues to entice investments in renewable energy, namely, price, inadequate resource maps and lack of accreditation system for technology installers.


"Those who want to invest in renewable energy have to be able to know the best location, do due diligence and ensure performance and quality," Claire Watson, an associate with renewable energy law firm Pinsent Masons, said in a speech.


Investors should also know where to file requests for licenses before applying for service contracts with the Energy department, she added.


Aside from the steps to obtain permits, the need for resource location was also raised.


"There is a need to have adequate maps for resources for better understanding of the country’s potential," said Michael Doran, managing director of Action Renewables.


He noted the need for "an accreditation system for installers but there has to be quality control over the people who install your solutions."


The speakers said the Philippines should first focus on the approval of so-called feed-in tariff, or guaranteed payments to renewable energy investors through a universal charge.


Meanwhile, the feed-in tariff could be approved in the second quarter, an official said.


"(I)t is possible to approve it for the second quarter," said Energy Regulatory Commission Executive Director Francis Saturnino C. Juan on the sidelines of the forum. -- E. N. J. David

Semirara signs P11.5-B loan with 4 local banks

Manila Times.net
Published : Tuesday, February 28, 2012 00:00 Written by : Euan Paulo C. AƱonuevo


SEMIRARA Mining Corp. has tapped four local banks for a syndicated loan to fund the expansion of the Calaca coal plant in Batangas.


In a disclosure to the Philippine Stock Exchange, Semirara said that the company, through wholly-owned unit Southwest Luzon Power Generation Corp., signed a loan agreement with lenders worth P11.5 billion for the 300-megawatt (MW) expansion of the Calaca coal-fired power plant.


The banks include Banco De Oro Unibank Inc., Bank of the Philippines Islands and China Banking Corp. (the lenders) with BDO Capital and Investments Corp. as lead arranger.


Southwest Luzon will use the amount to partially finance the design, engineering, procurement, construction and operation of the Calaca plant.


In return, Semirara agreed to guarantee its subsidiary’s obligations, shoulder cost over runs and pledge 67 percent of voting shares to the lenders. Isidro Consunji, Semirara vice chairman, said they decided to get a lower loan of P11.5 billion from the previously approved P14 billion due to “lower project cost and more equity.” The total project cost of the Calaca’s expansion was placed at $425 million (P18.2 billion).


The Semirara board last year approved the additional investment in power generation for an additional 300 MW capacity alongside the existing 600 MW Calaca plant. The facility is designed to utilize local coal from Semirara.


DMCI Holdings Inc., parent firm of Semirara, bought the Calaca plant from the government in July 2009 with its bid price of $361.7 million.


Semirara is the country’s largest coal producer with production reaching 7.19 million metric tons last year.

Meralco’s net income up by a fifth last year

Manila Times.net
Published : Tuesday, February 28, 2012 00:00 Written by : Euan Paulo C. AƱonuevo, Reporter




Manila Electric Co. (Meralco) reported a double-digit profit growth last year as a result of an increase in tariffs and sales over the previous year.




In a briefing, Manuel Pangilinan, Meralco president and chief executive told reporters that its net income rose 22 percent to P14.89 billion last year from P12.16 billion in 2010.


Despite the hefty profit hike, Pangilinan said that the company expects core earnings to slow down this year at about P15 billion because of the lower approved maximum allowable revenue earlier approved by regulators from 2012 to 2015.


”Our forecast for volume sales for the year will be approximately 3 percent on the basis of economic growth and customer count in the course of 2012. However, revenues will be at the pressure because of the almost flattish and slightly declining tariffs between 2012 up to 2015,” Pangilinan said.


”The guidance we’re providing a number we’re all be comfortable which is P15 billion of core for 2012 compared to P14.89 billion last year,” he added.


Meralco is the country’s largest private power distribution company with around 5.03 million service connections in Metro Manila and its environs.


Last year, the company posted consolidated revenues of P256.8 billion, up 7 percent over the previous year as a result of an increase in sales volume, transmission charges and distribution rate.


Meralco’s consolidated sales volume, in particular, rose 1.1 percent to 30,592 gigawatthours (GwH) from 30,314 GWh. Oscar Reyes, Meralco executive vice president, said that the increase was the result of growth in commercial and industrial sectors.


Sales to residential consumers, however, declined by 2 percent due to the cooler temperature last year.


Despite this, Reyes said that Meralco posted a record system loss of 7.35 percent last year, which generated savings of P2.4 billion or a reduction of P0.07 per kilowatthours for consumers. Meralco plans to spend around P11 billion this year for capital expenditure projects from P8.7 billion last year to further improve its distribution business.


Regulators prescribe that system loss, which arise from pilferage and technical consideration, be shouldered by consumers via an increase in tariffs if it falls above the 8.5 percent cap and the other way around if it falls below this level. Meralco approved cash dividends of P4.10 per share to shareholders of record at March 23, 2012 payable on April 23, 2012.

Monday, February 27, 2012

NGCP lines up 6 major transmission projects

Required investments may hit P103B in 5-8 yrs
By: Amy R. Remo
Philippine Daily Inquirer
1:31 am | Monday, February 27th, 2012


MANILA, Philippines—National Grid Corp. of the Philippines, operator of the country’s electricity superhighway, plans to embark on six critical transmission projects worth a total of P96 billion.
These projects will make the national grid the strongest among its peers in Southeast Asia, said the company.
In a recent briefing, NGCP deputy department manager Giovanni R.A. Galang identified the six major projects as the P3.6-billion Northern Luzon 230-kilovolt (kV) Backbone; P9.2-billion Western Luzon 500kV Backbone; P14-billion Metro Manila 500kV Backbone; P11-billion Batangas-Mindoro Interconnection; P36-billion Cebu-Negros-Panay 230kV Backbone; and the P22-billion Leyte-Mindanao Interconnection Project (LMIP).
An alternative to the LMIP, in case it will not be feasible, is the P29-billion Negros-Mindanao Interconnection project which, if chosen, would jack up the total investment requirements for the six projects to about P103 billion over the next five to eight years.
All the projects, which are targeted to be put up over the next five to eight years, are geared toward improving and increasing the capacity of the transmission facilities to meet the additional volume to be produced by several new power generation facilities.
The Northern Luzon 230-kV backbone project targets to provide adequate facilities up north, to cater to the huge wind power generation potential of the region. It also aims to improve the overall reliability of the transmission network.
NGCP has already identified the initial locations of the substations to be put up along the 230 kV loop, which will serve as the connection point for the wind power plants. These are the sites closest to the proposed wind power plants in the area.
In anticipation of the increase in the generation capacity in Bataan and Pangasinan, the Western Luzon 500 kV backbone project aims to develop a western corridor backbone that will allow the transmission of power from the generation sites to Metro Manila and ensure the overall reliability, security and stability of the grid.
The Metro Manila 500 kV backbone will, meanwhile, address the growing power demand in the metropolis. Metro Manila accounts for about 70 percent of the total power load in Luzon and would thus require a transmission backbone that has a capacity to transfer larger volume of power from the north and south.
In the meantime, the P11-billion Batangas-Mindoro Interconnection project targets to develop a 230-kV interconnection facility between the main grid Luzon and the power grid in Mindoro.

ERC issues rules on accreditation of power utilities' external auditors

By Neil Jerome C. Morales (The Philippine Star) Updated February 27, 2012 12:00 AM


MANILA, Philippines – The Energy Regulatory Commission (ERC) has issued draft rules on the accreditation of external auditors that will verify distribution utilities’ (DU) compliance to regulatory filings.


The new rules will “put in place a fair and transparent process for the accreditation of external auditors and auditing firms that may be engaged by the DUs to audit their automatic cost adjustments and true-up charges subject of the ERC’s confirmation process,” the ERC said.


It will also ensure that the external auditors possess the professional qualifications while defining the extent of the authority of the auditing firms.


Under Republic Act 9136 or the Electric Power Industry Reform Act of 2001, the ERC needs to check the automatic cost adjustments and true-up mechanisms of the DUs.


DUs are allowed to implement automatic adjustments based on movements of cost components that are beyond their control like supply procurement, fuel price fluctuations and foreign exchange rate adjustments. These adjustments are reflected in customers’ monthly bills.


DUs refer to holders of an exclusive franchise to operate an electricity distribution system in an area like electric cooperatives, private corporations and government-owned firms.


Auditing firms and individual practitioners should have an accreditation from the Board of Accountancy and Professional Regulation Commission, respectively, at the time of application to the ERC.


These entities should also have at least five years of experience in the industry while having no outstanding complaints with regulatory agencies involving criminal or unethical conduct.


Auditing firms and individual practitioners found guilty by a court of any case involving criminal or unethical practices will not be accredited, the ERC said.


Only auditors accredited by the ERC can be tapped by DUs for the verification process.


Members of the independent auditing firm should not have any direct or indirect financial interest in the DU that will be examined, the ERC said.


Members of the auditing firm should not also be related up to the fourth degree civil of consanguinity or affinity to any office of the DU.


Auditors should have also not held any position in the DU in the past three years, the ERC added.


For reporting of the audit, the ERC can order auditors to submit specific reports before, during and after the examination.


Fines and penalties will be slapped to auditors that fail to submit reports required by the ERC.


Any misrepresentation in documents, refusal to submit requested documents and gross negligence in the verification process will also merit sanctions, ERC said.


Furthermore, failure of auditors to settle penalties within a prescribed period will result in revocation of the ERC accreditation.


The ERC said it will accept comments from stakeholders until March 6.

Zubiri warns of 'catastrophic blackouts' in Mindanao

By Christina M. Mendez (The Philippine Star) Updated February 27, 2012 12:00 AM


MANILA, Philippines – Former Sen. Juan Miguel Zubiri has warned of “catastrophic blackouts” in Mindanao in the next five weeks, unless government moves fast to fix the island’s massive power supply deficit.


In a letter to Energy Secretary Jose Almendras, Zubiri expressed alarm over the current two-to four-hour daily blackouts in many parts of Mindanao.


The former senator said the situation “could worsen into power outages of up to eight hours by April, on account of increased demand associated with the summer season.”


To effectively address Mindanao’s power supply shortage, Zubiri recommended the temporary deployment of additional power barges to reinforce supply in affected areas in Mindanao.


He also pushed for the use of the renewable energy trust fund to grant incentives to entities prepared to install and deliver new biomass, solar, wind, hydro, geothermal and/or ocean power supplies, exclusively for Mindanao, in six to 18 months.


In a press statement, Zubiri also saw the need for the energy sector’s retention in the Investment Priorities Plan of the Board of Investments, in order to attract fresh capital needed to quickly grow Mindanao’s power supply.


In his letter to Almendras, Zubiri said he was driven to offer his proposals because “the people of Mindanao find it increasingly burdensome to carry out our daily household and business activities, let alone grow our employment-generating industries, in light of the highly disruptive power outages.”


A report by the National Grid Corp. showed that as of Feb. 24, Mindanao has a deficit of 67 megawatts (MWs), based on available generating capacity of 1,159 MWs versus system peak demand of 1,226 MWs.


“However, references to menacing blackouts of up eight hours daily by April imply a real supply deficit of roughly 21.8 percent, or 268 MWs, without counting the 25 percent allowance required for Mindanao to enjoy gross power reserves that match those of Luzon and the Visayas,” Zubiri said.


Luzon has gross power reserves of 22.3 percent, or 1,456 MWs, with available capacity of 7,991 MWs versus system peak demand of 6,535 MWs.


The Visayas has gross power reserves of 27.8 percent, or 376 MWs, with available capacity of 1,727 MWs versus system peak demand of 1,351 MWs.


“Government may have to willfully encourage entities seeking to avail of Renewable Energy Law incentives to go to Mindanao, where there is a clear and urgent lack of reliable generating capacity, instead of installing their facilities in Luzon or the Visayas, which both have ample power supplies,” Zubiri said.


A native of Bukidnon, Zubiri is one-time chairman of the Senate committee on environment and natural resources, and author of the Renewable Energy Law of 2008.


Under the law, an initial P2 billion was provided to “support the development and operation of new renewable resources to improve their competitiveness in the market.”

NGCP allots P100 billion for new transmission lines

By Neil Jerome C. Morales (The Philippine Star) Updated February 27, 2012 12:00 AM


MANILA, Philippines – The National Grid Corp. of the Philippines (NGCP) will be spending nearly P100 billion in the next 10 years for the establishment of new transmission lines and substations and the expansion of existing facilities nationwide.


Massive capital expenditures will allow the NGCP to provide a more efficient power transmission amid increasing generation capacity in the areas involved, an official said.


Under the Transmission Development Plan 2011-2020, the NGCP plans to spend P95.8 to 102.8 billion in six major transmission line expansion projects, said Giovanni Galang, deputy department manager of the NGCP’s Transmission Planning department.


Most of the projects will be completed in the next five to eight years, Galang said.


“No matter how many power plants there are, the capacity will be stranded if transmission lines cannot handle it,” Galang said.


Four of the six major investments will be in Luzon.


First is the 178-kilometer (km.) Northern Luzon 230 kilovolts (kv) backbone, which will require an investment of P3.6 billion.


Galang said this is under study and the project is targeted for completion in 2015.


It will support the wind power generation potential of northern Luzon and to increase the reliability of the transmission lines.


The NGCP said that between 2011 and 2020, Luzon will have an additional power generation capacity of 4,188 megawatts (MW), which includes the 82-MW Burgos Wind project.


The second project is the P9.2-billion Western Luzon 500 kv backbone project that is still under study, Galang said.


This is in anticipation of additional power generation capacity in Bataan and Pangasinan, NGCP said.


For Metro Manila, NGCP is conducting a study on the P14-billion, 500 kv Metro Manila backbone, Galang said.


The Batangas-Mindoro Interconnection, for its part, is now in the approval process. NGCP targets to complete the P11-billion interconnection in 2014.


For Visayas and Mindanao, NGCP is looking at an interconnection and backbone project in the next few years.


Specifically, Galang said the NGCP is consulting stakeholders for the Cebu-Negros-Panay 230 kv backbone that consist of 131 kms. of overhead transmission lines and 50 km. of submarine lines with a total capital requirement of P36 billion.


Another option is the 48-km. transmission line expansion in Negros and Panay worth P3 billion, Galang said.


The NGCP is also studying two options to connect Visayas and Mindanao.


For one, Galang said the Leyte-Mindanao Interconnection will cost P22 billion. An alternative, the Negros-Mindanao Interconnection, is worth P29 billion.


NGCP operates and maintains the National Transmission Corp.’s transmission business.


The Transmission Development Plan wants to improve power transmission nationwide through the installation of new system reinforcements, development of alternative transmission corridors, prevention of heavy loading and upgrade of existing facilities for the NGCP to be the strongest power grid in Southeast Asia.

Zubiri warns of ‘catastrophic’ brownouts in Mindanao

Manila Times.net
Published : Monday, February 27, 2012 00:00 Written by : FRANCIS EARL A. CUETO REPORTER


FORMER Sen. Juan Miguel Zubiri warned of “catastrophic brownouts” in Mindanao within five weeks, unless the government moves fast to fix the island’s massive power supply deficit.


In a letter to Energy Secretary Jose Almendras, Zubiri expressed alarm over the current two-to four-hour daily brownouts in many parts of Mindanao, which he said “could worsen into power outages of up to eight hours by April, on account of increased demand associated with the summer season.”


To effectively cure Mindanao’s power supply shortage, Zubiri suggested the following remedies: the temporary deployment of additional power barges to reinforce supply in affected areas in Mindanao; the use of the renewable energy trust fund to grant incentives to entities prepared to install and deliver new biomass, solar, wind, hydro, geothermal and/or ocean power supplies, exclusively for Mindanao, in six to 18 months; and the energy sector’s retention in the Investment Priorities Plan of the Board of Investments, in order to attract fresh capital needed to quickly grow Mindanao’s power supply.


In his letter to Almendras, Zubiri said he was driven to offer his proposals because “the people of Mindanao find it increasingly burdensome to carry out our daily household and business activities, let alone grow our employment-generating industries, in light of the highly disruptive power outages.”


A report by the National Grid Corp. showed that as of February 24, Mindanao has a deficit of 67 megawatts (MWs), based on available generating capacity of 1,159 MWs versus system peak demand of 1,226 MWs.


“However, references to menacing brownouts of up eight hours daily by April imply a real supply deficit of roughly 21.8 percent, or 268 MWs, without counting the 25 percent allowance required for Mindanao to enjoy gross power reserves that match those of Luzon and the Visayas,” Zubiri said.


Luzon has gross power reserves of 22.3 percent, or 1,456 MWs, with available capacity of 7,991 MWs versus system peak demand of 6,535 MWs.


The Visayas has gross power reserves of 27.8 percent, or 376 MWs, with available capacity of 1,727 MWs versus system peak demand of 1,351 MWs.


“Government may have to willfully encourage entities seeking to avail of Renewable Energy Law incentives to go to Mindanao, where there is a clear and urgent lack of reliable generating capacity, instead of installing their facilities in Luzon or the Visayas, which both have ample power supplies,” Zubiri said.


A native of Bukidnon, Zubiri is one-time chairman of the Senate committee on environment and natural resources, and author of the Renewable Energy Law of 2008.


Under the law, an initial P2 billion was provided to “support the development and operation of new renewable resources to improve their competitiveness in the market.”


Money out of the fund may be used as grants, loans, equity investments, credit guarantees, insurance, counterpart fund or such other financial arrangements.


The fund is being supported by emission fees from all generating facilities under the Clean Air Act, and mandatory contributions from the Philippine Charity Sweepstakes Office, Philippine Amusement and Gaming Corp., and the Philippine National Oil Co., as well as royalties from the exploitation of indigenous non-renewable energy sources, such as natural gas.

PNOC-EC eyes coal project in Indonesia

Manila Times.net
Published : Monday, February 27, 2012 00:00 Written by : EUAN PAULO C. AƑONUEVO REPORTER


Philippine National Oil Co.-Exploration Corp. (PNOC-EC) is keen on pursuing coal projects abroad.


Gemiliano Lopez, Jr., PNOC-EC chairman, told reporters that they plan to look into potential coal exploration and mining projects in other countries as part of the company’s expansion program.


“We have to establish first our position. Now after establishing that we have enough cash, that we do not have to borrow. Now if we have enough cash to invest outside the country, we will definitely invest,” he said.


Among the countries PNOC-EC is considering for possible investments is Indonesia, which offers “low-priced coal”.


The company targets to decide whether or not to pursue the proposed coal investment abroad within the year.


At present, PNOC-EC “is still in the process of studying the company’s financial position.”


PNOC-EC currently holds interests in five coal operating contracts located in various parts of the country.


Lopez earlier said that PNOC-EC intends to pursue other coal projects to help boost the country’s indigenous energy resources.


Among the coal investments PNOC-Ec has lined up this year are the mine-mouth plants in Isabela and Zamboaga Sibugay province, and the resumption of the company’s coal-trading activities.


Besides the company’s coal projects, PNOC-Ec also has interests in eight petroleum contracts. Foremost of which is a 10-percent stake in the Malampaya field, the country’s largest natural gas producer.


At present, the government, through PNOC, owns 99.71 percent of PNOC-EC shares, with the public owning the remaining 0.29 percent.

Saturday, February 25, 2012

Old king coal

Asian growth will remain fuelled by coal, which is worrying for the planet











“OUR civilisation”, wrote George Orwell over 70 years ago, “is founded on coal.” Unlike Europe’s, Asia’s still is. In 2010, according to the International Energy Agency (IEA), a think-tank, coal accounted for just one-fifth of primary energy supply in the OECD countries. But, in the world as a whole, coal accounted for almost half of the increase in energy use from 2000-10. Coal, says Edward Cunningham of Boston University, is experiencing an “historically incredible” resurgence, and may even overtake oil as a fuel by 2025. There is plenty of it and, compared with rival fuels, it is cheap. And often dirty.
Asia has been responsible for over two-thirds of the growth in global energy demand over the past two decades. As, above all, China and India race towards prosperity, they will burn coal in huge volumes. The resulting emissions of carbon dioxide will be among the biggest hurdles in the way of a global agreement on limiting climate change.
China leads the world in coal production and consumption. It mines over 3 billion tonnes of coal a year, three times more than the next-biggest producer (America), and yet last year overtook Japan to become the world’s biggest coal importer. Over four-fifths of China’s electricity comes from coal-fired power plants. Burning coal is a big cause of the severe air pollution afflicting parts of China, and, through waste from coal-washing and underground leakage, of contaminated water and degraded soil.
China is working hard to develop other sources of energy and to lessen the “energy intensity” of its growth (the energy needed per extra unit of GDP). It is already much the world’s biggest user of hydroelectric power, has almost as many new nuclear-power plants planned as the rest of the world put together, and is expanding solar and wind energy. But, according to projections by McKinsey, a consultancy, even taking all this into account, China is still likely to consume 4.4 billion tonnes of coal in 2030, when its carbon emissions are expected to have increased from 6.8 billion tonnes of carbon-dioxide equivalent in 2005 to 15 billion tonnes. Of these nearly 40% will come from power generation.
McKinsey outlines a strategy for making deep cuts in both coal consumption and carbon emissions. It seems optimistic. Mr Cunningham argues that the fragmented structure of Chinese mining, with myriad small producers, “makes it much harder for the central government to formulate and implement a sweeping reform.” Coal output has been increasing fast at home; imports are readily available from the world’s two biggest exporters, Australia and Indonesia, and Mongolia is developing the world’s largest untapped coal deposit just over the border. It is hard to argue with a report produced this week by GK Dragonomics, a Beijing-based research outfit, which concluded that “China will remain a highly coal-dependent economy for decades.”
Where China leads, India lumbers behind, also burning an awful lot of coal, and hungry for more electric power. Some 70% of its electricity comes from coal. The national grid has expanded hugely in recent years. But it still leaves about 300m people without a connection. In projections of increased energy demand over the next 25 years, India is second only to China.
Like China, it is ploughing resources into nuclear power, oil-and-gas exploration and imports, and renewable energy. Like China, too, however, India finds coal the obvious option. It is something it has plenty of—already the world’s third-largest producer, it has the world’s fifth-biggest coal reserves. But it cannot exploit them fast enough to meet demand. In fact, output has not increased for two years. Coal India, the state monopoly, blames the difficulty of securing mining permits. So India may soon become the world’s biggest coal importer.
On current trends, as estimated by McKinsey, India’s carbon emissions will increase by about two-and-a-half times by 2030, by which time its power industry alone will account for about one-tenth of the total rise in global emissions. Like China’s government, India’s points out that, per head, its people will still be producing far less carbon dioxide than Americans or Australians (though China is rapidly catching up with some European countries in pollution per person). And, in India’s case, total emissions (at 5 billion–6.5 billion tonnes) will remain well below China’s.
Coal-demand projections for both India and China were not much affected by the disaster last March at the Fukushima nuclear-power plant in Japan. The two giant countries announced reviews of their own nuclear programmes but are unlikely to scale them back. Elsewhere, however, heightened awareness of the risks of nuclear power has given coal another boost. In Japan itself, plans to increase nuclear generation from 30% of the total pre-Fukushima to 50% by 2030 are being re-examined. Coal already accounts for about 27%.
Two degrees of panic
Across Asia, from Bangladesh to the Philippines, the drive for more coal-fired power seems unstoppable. Renewable energy sources such as wind and solar generation do not offer affordable electricity on a big enough scale. Production of natural gas, which emits less carbon, will boom but not supplant coal.
So attention is focused on mitigating the harm coal power will do. Efforts to curb emissions from fossil-fuel power stations by “carbon capture and storage” are still no more than a good idea yet to be realised. Technologies to make generation cleaner and more efficient are available, however. But, as the IEA noted understatedly in a report last year, they “are not as widely deployed as they should be.” And, as the same agency has also argued, time is running out to limit emissions to levels that might keep the global temperature rise to 2°C this century. On today’s plans, it estimates, that rise will already be locked in by existing buildings and facilities, such as power plants, by 2017. The rise of Asia has costs, as well as benefits.