Tuesday, October 14, 2014

Mindanao electricity rates may rise with shift in energy source

Business World Online
Posted on October 14, 2014 10:34:00 PM

DAVAO CITY -- Mindanao may be assured of steady power supply beginning 2015 but rates are likely to go up starting 2016 with the forthcoming increased reliance on fossil fuel, the Mindanao Development Authority (MinDA) warned.

“Cheap rate of electricity is not automatic with sustained source of power because it will still depend on the [energy] source,” Romeo M. Montenegro, Director of MinDA’s Investment Promotions and Public Affairs Office, said.

Most of Mindanao, the Philippines’ second-largest island, gets its electricity from hydropower plants, which are renewable energy facilities.

Mr. Montenegro made these remarks on Tuesday, after the Mindanao grid posted a supply shortfall anew by 182 megawatts (MW) after four units with a combined output of 165 MW at the Agus complex reportedly shut down for “preventive maintenance”.

Another hydro plant, the Pulangi complex, is also down to an output of 100 MW from the regular 255 MW due to low water level from the source.

Based on the Web site of the National Grid Corporation of the Philippines, Mindanao had a capacity of 1,203 MW as of Tuesday with peak demand projected to reach 1,385 MW.

Mindanao suffered one of its worst supply shortages in February to May this year after the 210-MW coal-fired power plant of Steag State Power, Inc. in Misamis Oriental suffered a major breakdown.

Mr. Montenegro said it is crucial that Mindanao maintain a 50-50 power mix between fossil fuel and renewable energy to keep prices competitive and the island attractive to investors.

Mindanao has the lowest electricity rates in the country. The Philippines’ second-largest island currently sources more than half of its energy supply from hydropower plants, compared with the two other main island groups, Luzon and the Visayas.

Data from the National Power Corp. as of June show rates averaged P2.97 per kilowatt-hour (/kWh) in Mindanao, P4.57/kWh, in the Visayas and P5.72/kWh in Luzon.

“What we have now is 60% renewable energy and 40% fossil fuel but Mindanaoans can expect a reversal of this power mix by 2016-2017 with the operation of various coal-fired power plants,” Mr. Montenegro said.

The committed projects for the next two years can reach a total of 1,859.6 megawatts (MW), of which only 105.6 MW are coming from renewable energy sources.

RENEWABLE ENERGY
Mr. Montenegro reiterated the need to quickly process the approval of proposed renewable energy projects.

Some 157 renewable energy project applications have been submitted with an aggregate power capacity of 1,699.57 MW. The list includes 115 hydropower projects, 27 solar energy, eight geothermal, and seven biomass.

It currently takes at least five years to get an application approved with 13 government agencies plus the local governments involved.

“If we can cut the approval down to two years then renewable energy stands to be viable,” said Mr. Montenegro, who also heads the technical working group of the Mindanao Power Monitoring Committee.

MinDA has conducted consultations with various agencies involved in the approval process and is looking at schemes to trim the period by half.

As a start, MinDA launched in Manila on Oct. 13 the One-Stop Facilitation and Monitoring (OSFM) Web Portal, which provides real-time updates on applications to allow project proponents to immediately take the necessary next steps to hasten the process.

MinDA’s partner agencies in the Web portal management are the National Water Resources Board, Department of Agrarian Reform, Department of Environment and Natural Resources and the National Commission on Indigenous Peoples.

With the OSFM, Mr. Montenegro said they are optimistic that majority of the 157 pending renewable energy applications will get approval by 2016.

ABOITIZ AREA
Meanwhile, officials of power distribution firm Davao Light and Power Co. assured customers in its franchise areas within the Davao Region that it has enough supply from its embedded sources to cover the deficiency in the grid.

Rossano C. Luga, corporate communications head of Davao Light, a subsidiary of Aboitiz Power Corp., told BusinessWorld that the shortage from the grid has not forced them yet to tap their 40-megawatt diesel-fed Bajada standby plant.

The distributing utility is buying about 55 MW of power from sister company Hedcor, Inc., which is operating four small hydroelectric plants in Sta. Cruz, Davao del Sur.

In case its power reserve is exhausted, the company has an ancillary supplier in sister company Therma Marine, Inc., operator of two power barges moored in Maco, Compostela Valley.

The Mindanao Power Monitoring Committee said it has yet to receive reports of major power cuts. -- Carmencita A. Carillo and Carmelito Q. Francisco source

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