Saturday, March 14, 2015

Power crisis seen to fuel inflation

BSP expects ‘price pressures’ in summer
Philippine Daily Inquirer 6:07 AM | Saturday, March 14th, 2015
Paolo G. Montecillo

MANILA, Philippines—Consumers may be enjoying a reprieve at the moment in the form of cheap fuel, but the looming power shortage in the coming months might push prices of basic commodities back up, officials said this week.

In the minutes of its latest policy meeting, the Bangko Sentral ng Pilipinas (BSP) said price pressures could emerge from scheduled utility rate adjustments and a “possible power shortage.”

“The BSP will continue to monitor developments affecting the inflation outlook,” the BSP said in a statement.

The expected power shortage comes amid the government’s failure in the last four years to have power plants built that could substantially augment the country’s electricity supply. Dry weather as a result of El NiƱo may also put pressure on hydroelectric plants.

The government will be relying on a voluntary load-curtailment program wherein big companies would be asked to use their generators to ease demand from the grid.

Last month, inflation averaged 2.5 percent, inching up slightly from 2.4 percent in January but still below the midpoint of the BSP’s 2015 target range of 2 to 4 percent.

At the moment, the BSP expects risks to inflation to be broadly balanced. Problems with the energy supply would be offset by cheaper fuel and slower increases in food prices. Weaker-than-expected economic activity overseas may also keep prices of key commodities down.

The BSP’s main goal is to protect consumers’ purchasing power by keeping prices stable. This is done through interest rate movements and adjustments in policy levers than manage the country’s money supply.

“The Monetary Board is of the view that the within-target inflation outlook and robust domestic growth support keeping policy settings steady,” the BSP said. Earlier, BSP Governor Amando M. Tetangco Jr. said policy rates might be kept on hold for much of 2015.

In February, the BSP kept its benchmark overnight borrowing and lending rates at 4 and 6 percent, respectively, making it one of the few central banks in the region that have adopted a steady stance.

Amid weak economic conditions, the likes of Thailand and South Korea this week announced interest rate cuts, following in the steps of India and China. source

PSALM, Napocor renew O&M deal for power plants

By Iris C. Gonzales (The Philippine Star) | Updated March 14, 2015 - 12:00am

MANILA, Philippines - The Power Sector Assets and Liabilities Management Corp. (PSALM) and National Power Corp. (Napocor) have renewed their operation and maintenance agreement.

PSALM president Emmanuel Ledesma Jr. said under the agreement, Napocor would remain as the service provider for much of the remaining state-owned power assets being overseen by PSALM.

“The agreement is in accordance with Section 47(j) of the Electric Power Industry Reform Act, (EPIRA) which states that ‘Napocor may generate and sell electricity only from the generating assets and IPP (independent power producer) contracts of PSALM,” Ledesma said.

PSALM is the government corporation created by the EPIRA, the power reform law, to privatize the assets of Napocor.

Thus, under the new agreement, Napocor would operate, maintain, and manage PSALM’s remaining power plants and assets. Napocor, for its part, is tasked to maximize plant availability and performance, minimize outages and operations and maintenance costs.

Ledesma said the new agreement would cover Power Barges 101, 102, 103 and 104, as well as the Agus and Pulangui hydroelectric power plants in Mindanao.

Aside from these assets, Napocor would also provide personnel for supervision and preservation of PSALM’s decommissioned plants and other facilities to prevent the deterioration of serviceable equipment and systems prior to disposal or privatization.

These facilities include the Sucat thermal power plant in Muntinlupa City and the Bataan thermal power plant in Limay, Bataan.

PSALM raised P20.80 billion last year from the sale of power assets. Moving forward, PSALM still needs to sell several power plants with a total capacity of 1,600 to 1,700 megawatts and expects to raise up to $3.4 billion from the sale of the remaining assets which are lined up for privatization up to 2017. source

First Gen earnings surge 64% to $193M in 2014

By Iris C. Gonzales (The Philippine Star) | Updated March 14, 2015 - 12:00am

MANILA, Philippines - Lopez-owned power generation company First Gen Corp. reported a 64- percent increase in its 2014 net income to $193.2 million from $118 million the prior year.

In a disclosure to the Philippine Stock Exchange First Gen attributed the improved financial performance to higher earnings contributions from its 1,000-megawattt Santa Rita and 500-MW San Lorenzo natural gas power plants in Batangas as well as from the geothermal plants of its subsidiary Energy Development Corp. (EDC).

Net income rose despite a decrease in consolidated electricity revenues by 0.1 percent to $1.902 billion in 2014 from $1.904 billion in 2013.

In terms of revenue share, the First Gen gas plants accounted for $1.205 billion or 63.3 percent of total consolidated revenues.

EDC’s revenues accounted for $651.7 million or 34.3 percent of total while FG Hydro contributed $36.6 million of revenues or 1.9 percent.

The company attributed the lower revenues from First Gen’s gas plants to Santa Rita’s 250-MW Unit 40 main transformer damage in February 2014 after the installation of a new transformer.

Nevertheless, this was offset by San Lorenzo’s upgraded capacity, receipt of insurance claims, and the full-year contribution of Unit 60’s operations.

As a result, the First Gen gas plants contributed $121.5 million to the company’s net income for 2014, higher than the previous year’s $81.9 million, First Gen said.

Similarly, EDC’s consolidated revenues grew by $81.3 million mainly due to electricity generated by the Bacon-Manito plants and Nasulo power plants.

First Gen president Francis Giles Puno said the company’s thrust to grow its clean and renewable platform has gained significant momentum in 2014.

“The BacMan and Nasulo geothermal projects of EDC were positive turnaround stories for 2014 and, together with the new 150-MW Burgos wind project, will increase revenues moving forward,” he said. source

EDC ramps up First Gen profit

Manila Times
March 14, 2015 12:04 am
by RITCHIE A. HORARIO

ENERGY Development Corp. (EDC)’s turnaround story gave the Lopez-led First Gen Corporation (First Gen) a further boost to account for the bulk of the parent’s profit achievement in 2014.
EDC, drawing revenues from its geothermal projects, contributed $136.1 million or 70.4 percent of First Gen’s parent full-year net profit, or earnings attributable to stockholders.
Parent First Gen impresses with a 64 percent jump in net profit to a total US$193.2 million in 2014. It earned $75.1 million more than the US$118.1 million posted in 2013, the company said in a disclosure to the Philippine Stock Exchange (PSE) on Friday.
EDC’s own performance boasts a 77.7 percent surge in net profit to $136.1 million from $76.6 million in 2013.
The geothermal subsidiary accounted for $651.7 million or 34 percent of total revenue for the year.
Clean, renewable energy going forward
First Gen President Francis Giles B. Puno said the company’s thrust to grow its clean and renewable platform gained significant momentum in 2014.
He said the Bacman and Nasulo geothermal projects of EDC were positive turnaround stories and together with the new 150 MW Burgos wind project, will increase revenues moving forward.
“We are eager to deliver the fast-track 97 MW Avion natural gas-fired project this year to
address the power supply shortage, and are progressing well with the construction of the 414 MW San Gabriel natural gas plant to be operational in the summer of 2016,” he said.
Despite the reduced earnings from the Pantabangan hydro plant, Puno said they hope to get moving on their run-of-river projects in 2015.
“First Gen’s portfolio of power plants plays a vital role in the security of power supply. It is for this reason that we continue to develop and push projects that will provide solutions to the country’s power issues,” said Puno.
The parent’s improved financial performance also came from higher earnings contributions from First Gen’s Santa Rita and San Lorenzo natural gas power plants, but the three subsidiaries’ inputs were partially offset by lower earnings contributions from unit Hydro Power Corp. (FG Hydro) due to lower water levels.
Consolidated power revenues
First Gen’s consolidated electricity revenues slipped by $2.3 million or 0.1 percent, to $1.903 billion in 2014 from $1.905 billion in 2013.
The First Gen Gas Plants accounted for $1.20 billion or 63.3 percent of total consolidated revenues.
Of the total, EDC’s revenues accounted for $651.7 million or 34 percent.
The slightly lower revenues of First Gen Gas Plants were due to Santa Rita’s 250 megawatts (MW) Unit 40 main transformer’s damage in February 2014. Unit 40 was recommissioned in July after the installation of a new transformer.
The slowdown was offset somewhat by San Lorenzo’s upgraded capacity, receipt of insurance claims, and the full-year contribution of Unit 60’s operations.
As a result, the First Gen Gas Plants contributed $121.5 million to the company’s attributable net income for 2014, higher than the previous year’s $81.9 million.
EDC’s Bacman and Nasulo plants
Meanwhile, EDC’s own consolidated revenues grew by $81.3 million mainly due to electricity generated by the BacMan and Nasulo power plants.
Nasulo’s operation allowed for a partial reversal of a previous impairment provision.
A reduction in foreign exchange losses and receipt of insurance claims further contributed to EDC’s higher earnings, the company’s filing shows.
In total, EDC contributed $136.1 million in attributable earnings for the period.
The favorable results were partially reduced by higher administrative expenses due to payments of taxes, expenses related to project development, and interest expenses of both the parent and EDC due to fresh borrowings. source

Steag completes repair works on Mindanao coal power facility

By Iris Gonzales (The Philippine Star) | Updated March 14, 2015 - 12:00am

MANILA, Philippines - Steag State Power Inc. (SPI), the German-owned operator of a 210-megawatt coal-fired power plant in Mindanao, has completed the preventive maintenance shutdown for the plant’s Unit 1 ahead of its March 16 self-imposed deadline.

Unit 1, which went offline for a planned preventive maintenance starting Feb. 21, was synchronized to the Mindanao grid on March 12 while Unit 2, was restored earlier, on March 2.

SPI president and chief executive officer (CEO) Bodo Goerlich expressed optimism that with the two units now operating at full capacity, Mindanao’s power supply condition would improve.

“With our full capacity now made available, we expect the power supply condition in Mindanao to improve” he said.

He also said the timely conduct of the preventive maintenance and restoration of the units just in time for the onset of the summer months could provide a major relief to the volatile power supply condition of the island.

“We are confident that with our units now back on line, Mindanao is more prepared to meet its electric supply needs especially during the summer months where demand usually is at its peak,” Goerlich said.

Business ( Article MRec ), pagematch: 1, sectionmatch: 1
For his part, SPI power plant manager Carsten Evers said it was necessary to implement preventive maintenance to be carried out periodically to sustain optimum efficiency and reliability of the electric generating units.

SPI’s power plant, located inside the Phividec Industrial Estate in Misamis Oriental, is composed of two identical power generating units, each with a net generating output of 105 MW.

Plant operations commenced in November 2006. Since then, the coal facility has delivered more than 11.5 billion kilowatts of electricity to the Mindanao grid, representing about a fifth of the island’s total power supply.

SPI is principally owned by German company Steag GmbH. The company is a leader in advanced coal-power generation technology and one of the pioneers in operating and maintaining a highly efficient and reliable coal-fired power plant in the country.

In February last year, the plant was forced to shut down due to a damage on its turbine-electric generating sets. source

The Other purpose of the emergency power

Manila Standard Today
By Rod Kapunan | Mar. 14, 2015 at 12:01am

President Benigno Simeon Aquino is seeking an emergency power from Congress to cope up with the expected shortfall in the supply of electricity in the coming months, which will coincide with the onset of the El NiƱo phenomena. It is forecast that between 400 to 1,000 megawatts additional electricity are needed, particularly in the Luzon grid, to avert a four- to seven-hour daily brownout. PNoy attributes the shortage to boom in the economy triggering an increase in demand for more electricity and the scheduled maintenance work to be carried out at the Malampaya natural gas facilities that accordingly, supply us a total of 2,700 megawatts.

He said an emergency power is warranted because Section 71 of Republic Act 9136, otherwise known as the “Electricity Power Industry Reform Act of 2001” prohibits the government from constructing or engaging in power generation. Given the premise, one could easily draw the kind of logic that is in the mind of our congressmen principally headed by Speaker Feliciano “Sonny” Belmonte, Jr. Logically, when they incorporated that stupid provision, the oligarchs in this power industry assumed and guaranteed there would be no shortfall in the supply of electricity. They cannot get away from that responsibility because they totally disallowed the government from pegging their rates.

Now to solve the problem they created, they would like to give PNoy the authority to establish additional generation plants under the terms and conditions that Congress may approve or rent one but only to sell them after being built. According to Congressman Reynaldo Umali, P6 billion will be needed for the construction of the generation plant that could produce 300 megawatts, which is exclusive of fuel. It is just for the cost of construction. He added that for every 100 megawatts, it will cost the government P1 billion, and the minimum lease is for two years. Should it decide to lease one, it would cost the government one billion pesos for every 100 megawatts.

The people are skeptic, for aside from being illogical and stupid, the power that will be given to PNoy is clearly to make a run-around of the stupid provision. Remember, they even sought to dispose of the National Power Corporation and all of its assets by creating the Power Sector Assets and Liability Management Corporation (PSALM) pointing the blame on government competition as a hindrance to their expansion, viz. investment. To impress us, they have their promise incorporated in the law, to quote in Section 2, (b) of R.A. No. 9136: “To ensure quality, reliability, security and affordability in the supply of electric power.”

Nobody is against the grant of emergency power if its use is for the good of the people. As his Presidential Spokesman Edwin Lacierda, would put it, “The most expensive power is no power.” But the power crisis that looms was of their own making, and now makes their vile threat that our failure to solve the problem could stultify the alleged “economic boom” we are experiencing. Others have their reservation much the emergency powers could mean that everything will be made under a negotiated contract to award the construction to the cronies of this pretending-to-be-honest government.

Right now, the average cost per kilowatt hour for consumers is at P11.25. If we are to believe what Senator Sergio OsmeƱa III is saying, that the price per kilowatt hour will be as high as P15/kwh, or it could raise to P20/kwh, that would mean a 33 to 78 percent increase in the monthly electric bills. In which case, that would be self-defeating because even if we have an adequate supply of electricity, investors could not easily be lured into putting their eggs into one basket because they have other economic consideration, which is primarily focused on how to bring down the cost of production. If cannot be done and we might as well kiss goodbye to all our hopes to economic development.

The same is true to the Interruptible Load Program (ILP) where on a voluntary basis, big businesses such as malls and factories that have their own generators can be disconnected from the power grid in times of short supply, and can sell their excess power to distribution utilities. Like the proposal to create or rent additional power plants, the ILP is not without a cost to the taxpayers. Senator OsmeƱa said he would support the move if PNoy is authorized to use the P1 billion Malampaya gas royalty fund to support the idea. He said, it is a better option than establishing an additional generating plant.

Others insist that the Malampaya royalty funds should not be used to pay the factories and malls that will join the ILP much that they can get back their reimbursement from the distribution utilities for the same cost per kilowatt hour that generators can produce. They argue that the Malampaya royalty funds can be used to finance worthwhile projects designed to generate employment or provide additional economic assistance to the 25.2 percent of our people who are living below the poverty level.

His other proposal is that the additional four centavos per kilowatt hour increase in the cost of electricity will have to be paid by the consumers. Many likewise oppose the proposal for while we exhort our people to sacrifice, we reward the participants of the ILP to collect from their otherwise excess generation. Besides, the PNoy could exercise his power to protect the consuming public without necessarily burdening the participants of the ILP that in truth can get their refund from the distribution utilities. This the President can do by the exercise of his police power.

Finally, while other countries equally grant their power industry sector the blanket authority to take charge in the electrification program, including the right to fix their rate as what we did to defang the Energy Regulatory Commission (ERC), said authority goes with some responsibility. The problem is that they failed to digress that the doctrine of laissez-faire has its corresponding obligation and commitment to the consumers. It is on this equation why some are urging that the demigod in our present era be punished by fine, or be suspended from operating their power plant, or even have their power plants nationalized for their failure to live up with the promise under the law.

They must bear it in mind that the franchise accorded to them is a guarantee that the government will protect them from any undue competition in exchange for that they demanded. Sad to say, they failed to fulfill their part of the bargain. One need not even write this into law. All that is needed is a simple common sense to understand what it means. In our case, after being made a sucker, like a scum from hell, they come back begging for more money and more guarantee to their investment if they are to fulfill anew their promise.

Maybe it is high time for us to think whether to cling on to that stupid law or to scrap it altogether to achieve the real economic prosperity we have long been waiting for. source

rpkapunan@gmail.com

Friday, March 13, 2015

NGCP: Luzon power reserves still in excess

Manila Standard Today
By Alena Mae S. Flores | Mar. 13, 2015 at 11:20pm

Luzon’s power reserves are expected to reach 1,981 megawatts on Sunday despite the first day of the 30-day maintenance shutdown of the Malampaya gas facility in northwest Palawan.

Data from grid operator National Grid Corporation of the Philippines said system load or demand would reach 6,418 MW on Sunday against the projected capacity of 8,388 MW. The demand is lower during weekends or holidays compared with weekdays or ordinary working days.

By Monday, the system capacity will increase to 8,999 MW although demand will be higher at 7,719 MW, which meant the reserves is lower on Monday at 1,280 MW.

The capacity from the combined cycle or natural gas plant will go down to 2,280 MW starting Sunday from 3,060 MW on Friday and Saturday prior to the Malampaya shutdown, according to data.

The Malampaya gas field provides power to three natural gas plants, namely Sta. Rita (100 MW), San Lorenzo (500 MW) and Ilijan (1,200 MW), all in Batangas.

The Sta. Rita and San Lorenzo power plants will shift to the higher priced liquid fuel, while only one unit of the Ilijan combined cycle natural gas plant will be running using diesel as fuel.

“Ilijan will run but only limited at 420 MW,” Energy director Mylene Capongcol said.

Coal plants are expected to contribute 3,754 MW on Sunday while hydro plants are expected to deliver 1,282 MW.

Geothermal plants with a capacity of 483 MW will supply the grid on Sunday while gas turbine/wind will deliver 55 MW. Diesel plants will provide 545 MW.

Capongcol said some power plants were still on forced outage on Sunday. She did not provide additional information.

Energy Secretary Carlos Jericho Petilla earlier said Luzon was entering a “critical period” starting March 15.

He said Luzon was facing a 200-megawatt power shortage in March on a worst-case scenario, although that could be remedied by the interruptible load program.

“The best case scenario is no brownout. Based on our projection, you have a deficit of 200 megawatts without ILP. With ILP, this will already be covered,” Petilla said. source

Power supply in Mindanao to ease up

Sunstar Cagayan de Oro
By Butch D. Enerio
Friday, March 13, 2015

A POWER generator said that power supply in Mindanao is expected to ease up as its generating capacity has now been fully restored.

Steag State Power Inc. (SPI), in a statement, said it has successfully completed the preventive maintenance work of its electric power-generating unit 1 days ahead of its imposed schedule on March 16 this year.

Unit 1, which went offline for a preventive maintenance beginning February 21, 2015, was synchronized to the Mindanao grid on Thursday, March 12, around 12:25 p.m.

Earlier, SPI’s Unit 2, which also went offline for preventive maintenance beginning February 19, was restored back to the grid on March 2 as scheduled.

SPI president and chief executive officer (CEO) Dr. Bodo Goerlich said the preventive maintenance activities for Unit 1 were successfully completed even ahead of schedule.

He expressed optimism that with the two units now operating at full capacity, Mindanao’s power supply condition will improve.

“Without our full capacity now made available, we expect the power supply in Mindanao will improve,” Goerlich said.

Goerlich said the timely conduct of the preventive maintenance and restoration of the units just in time for the onset of the summer months could provide a major relief to the volatile power supply condition of the island.

“We are confident that with our generating units now back on line, Mindanao is more prepared to meet its electricity supply needs, especially during the summer months where the demand is usually at its peak,” Goerlich said.

SPI plant manager Dr. Carsten Evers said the preventive maintenance works need to be carried out periodically to sustain optimum efficiency and reliability of the electric generating units.

The preventive maintenance schedule was also carefully planned, scheduled and coordinated with key players in the power industry including the National Grid Corporation of the Philippines to minimize any adverse impact to the transmission line.

SPI’s power plant at the PHIVIDEC Industrial Estate in Misamis Oriental is composed of two identical power-generating units, each with a net generating output of 105MW. Since the start of its operations in November 2006, SPI has delivered more than 11.5 billion kWh of electricity representing about a fifth of Mindanao’s total power supply. source

First Gen reports 64% rise in 2014 profit

Business World Online
Posted on March 13, 2015 07:24:00 PM
By Claire-Ann Marie C. Feliciano, Senior Reporter

HIGHER EARNINGS from its power plants boosted First Gen Corp.’s profit by 64% last year, the Lopez-led energy firm said in a statement on Friday.

The company’s income attributable to the parent reached $193.2 million in the January to December period, up from $118.1 million in 2013.

“The improved financial performance was driven by higher earnings contributions from the Santa Rita and San Lorenzo natural gas power plants and Energy Development Corp.’s (EDC) geothermal plants,” First Gen said in its statement.

First Gen’s 1,000-megawatt (MW) Santa Rita and 500-MW San Lorenzo plants contributed $121.5 million to profit, higher than the previous year’s $81.9 million.

EDC, meanwhile, accounted for the $136.1 million attributable earnings, which is higher from the previous year’s $76.6 million in 2013.

First Gen’s consolidated electricity revenues, however, slipped by 0.10% to $1.903 billion from $1.905 million.

Of the total, the gas plants accounted for 63.3% of the revenues or $1.205 billion.

The gas plants’ revenues were lower mainly due to the shutdown of Santa Rita plant’s 250-MW unit after its transformer was damaged in February last year.

The unit was re-commissioned in July 2014 following the installation of a new transformer.

The upgraded capacity of the San Lorenzo plant, as well as the receipt of insurance claims and full-year contribution of one of its units contributed to the improved performance.

Of the total revenues, EDC -- which is in charge of the geothermal plants -- had a share of 34.3% or $651.7 million.

This was higher by $81.3 million, according to First Gen, which it said was mainly due to electricity generated by the BacMan (Bacon-Manito) and Nasulo power plants.

Reduction of foreign exchange losses and receipt of insurance claims also pushed EDC’s revenues.

The favorable performance of EDC was partly dragged by higher administrative expenses incurred due to tax payments, costs related to project development and interest expense due to fresh borrowings.

The strong performance of the geothermal and gas plants was able to offset the weaker earnings of First Gen Hydro Power Corp. (FG Hydro), which was hurt by lower water levels.

FG Hydro contributed $36.6 million or 1.9% of First Gen’s revenues.

First Gen President Francis Giles B. Puno said the company’s thrust to grow its clean and renewable platform gained significant momentum last year.

“The Bacman and Nasulo geothermal projects of EDC were positive turnaround stories for 2014 and, together with the new 150 MW Burgos wind project, will increase revenues moving forward,” Mr. Puno said.

“We are eager to deliver the fast-track 97 MW Avion natural gas-fired project this year to address the power supply shortage and are progressing well with the construction of the 414 MW San Gabriel natural gas plant to be operational in the summer of 2016,” he added.

Mr. Puno said despite lower earnings from the Pantabangan hydro plant, First Gen wants to pursue its run-of-river hydro projects this year.

Incorporated in 1998, First Gen is the holding firm for the power generation businesses of the Lopez Group.

Its shares ended trade at P29.60 apiece on Friday, up 10 centavos or 0.34% from Thursday’s closing price of P29.50. source

STEAG’s Misamis plant returns to operations after maintenance

Business World Online
Posted on March 13, 2015 06:44:00 PM

MINDANAO’s power supply situation is expected to stabilize following the return to service of a 105-megawatt (MW) coal-fired power plant unit.
STEAG State Power, Inc. (SPI) said in a statement on Friday that it completed the maintenance works on the unit ahead of its self-imposed March 16 deadline.

The unit one went offline starting Feb. 21 and was restored to operational status on Thursday.

The second 105-MW unit also went on preventive maintenance between Feb. 19 and March 2.

The entire power plant -- located in Misamis Oriental -- supplies more than a fifth of Mindanao’ power needs.

SPI President and Chief Executive Officer Bodo Goerlich said that with the preventive maintenance completed and the two units now at full capacity, he is optimistic Mindanao’s power supply will “improve.”

”We are confident that with our units now back on line, Mindanao is more prepared to meet its electric supply needs especially during the summer months where demand usually is at its peak,” he said.

Data from the National Grid Corporation of the Philippines showed that Mindanao on Friday had 58 MW in reserve as the system capacity of 1,429 MW exceeded the 1,371 MW peak demand.

SPI said that since starting operations in November 2006, the plant has delivered more than 11.5 billion kilowatt-hours of electricity.

SPI is principally owned by the German firm Steag GmbH. Its local partners are Aboitiz Power Corp. and La Filipina Uygongco Corp. -- Claire-Ann Marie C. Feliciano source

Thursday, March 12, 2015

DoE could cancel over 50 RE deals in first half

Business World Online
Posted on March 12, 2015 08:36:00 PM

OVER 50 renewable energy (RE) contracts will be canceled by the Department of Energy (DoE) within this semester, an official said last week, after making insufficient progress in moving their projects forward.

Mario C. Marasigan, director of the Renewable Energy Management Bureau, said the agency canceled over 100 contracts last year.

“For the first half of this year alone, more than 50 contracts will be canceled,” Mr. Marasigan told reporters in Makati City.

“We will be issuing the show cause order before canceling. Rest assured that they will be given a chance to explain,” said Mr. Marasigan.

Most of these projects, he said, are prospective wind and solar power plants.

The official noted the Energy department since last year has been monitoring progress of RE projects to ensure that the proponents perform their duty.

The cancellations form part of the Milestone Approach, which accelerates the process for contract applications to 45 days from two years to attract more investors to RE development.

If the project proponent fails to move forward within six months, the Energy department cancels the contract.

As of end-January, the department had a total of 622 RE contracts outstanding representing combined capacity of 12,638.35 megawatts.

“At present, the Philippines is harnessing 30% of RE in our energy mix. If we keep it at that level, we will have a secure energy source, even if oil prices go up or if there is a shortage in supply in the international market,” Energy Secretary Carlos Jericho L. Petilla said last year.

“Because RE is indigenous which means it is locally available, we can depend on it for energy security even if there are political issues such as war in other countries,” he added.

Mr. Petilla noted that benefits of RE projects are expected to outweigh the costs. -- Claire-Ann Marie C. Feliciano source

NEA funded P2.53 billion worth of electric cooperatives’ rehab works in 2014

Business World Online
Posted on March 12, 2015 08:33:00 PM

THE NATIONAL Electrification Administration (NEA) extended a total of P2.53 billion worth of funding in 2014 to support provincial power distributors’ rehabilitation and upgrading activities.

A total of 67 electric cooperatives (EC) benefited from the various loan windows last year and utilized the funds to sustain their operations.

The state-run agency said P829 million was borrowed by ECs due to the several typhoons, including Santi and Yolanda in 2013, and Glenda last year.

“NEA processed 84 financial packages vis-a-vis its target of 53 last year,” according to the agency.

It noted that collection efficiency was 100% on the loan amortization due.

“As part of NEA’s mandate, the agency has developed a credit guarantee program and facility for the ECs,” NEA Administrator Edita S. Bueno was quoted in the statement as saying.

The initiative aims to support the ECs in securing power supply via the Wholesale Electricity Spot Market, Interim Mindanao Electricity Market, or bilateral contracts with generation companies.

“NEA also continues to find ways to make funds readily for the ECs particularly in times of natural and man-made calamities for them to serve better their member-consumers”, Ms. Bueno said.

NEA also said eight ECs availed of loans collectively worth P203 million to fund their monthly shortfall for account settlements with generation companies and the National Grid Corporation of the Philippines.

Part of this was also used to finance arrears with their suppliers.

Two ECs -- Pampanga III Electric Cooperative and Camarines Sur I Electric Cooperative -- tapped the stand-by credit loan facility amounting to P30 million and P13.13 million respectively.

Such credit facility aims to strengthen the ECs creditworthiness with their power suppliers.

Davao del Norte Electric Cooperative, Misamis Oriental I Electric Cooperative and Zamboanga City Electric Cooperative borrowed a total of P137.15 million for the procurement of modular generator sets in preparation for the possible shortfall this dry season.

Five other ECs, meanwhile, used the Single Digit System Loss Loan Facility to improve their distribution facilities, which in turn could help curb their system losses. The other amounts of borrowings not specified.

In September last year, NEA’s Board of Administrators approved the reduction in NEA’s lending rate on term loan approvals.

For the two-year repayment period, the lending rate was cut to 6% from 8% per year; while the three-to-fifteen repayment period carries a rate of 6.5% from 9%. -- Claire-Ann Marie C. Feliciano source

Tuesday, March 10, 2015

Napocor selecting test area for wind technology

Business World Online
Posted on March 10, 2015 09:56:00 PM

THE GOVERNMENT has teamed up with a South Korean company to test new technology enabling the use of wind energy in remote areas not connected to the main electricity grid.

The National Power Corp. (Napocor) yesterday signed a memorandum of agreement with Odin Energy Co. Ltd. for the installation of the company’s wind tower systems in selected off-grid areas.

Gladys Cruz-Sta. Rita, Napocor president, said the Odin Energy will invest around $2 million for the first wind tower system, which can generate around 120 kilowatts of electricity.

“We are looking at different sites right now and then we will choose one,” she said on the sidelines of the signing ceremony in Makati City.

“We are considering putting up the first one either in Lubang Island (off Mindoro), Polillo Island (in Quezon), or in Ticao Island (off Masbate),” she said.

She said Napocor will select the site and allot land for the project. Odin Energy, on the other hand, will shoulder the cost of installing the wind tower.

“We are planning to start construction of the first one in May and then complete it after five to six months,” Ms. Cruz-Sta. Rita said.

“The good thing is that the project will be tested at no cost to the government,” she added.

The testing aims to determine the commercial viability of the project, which will likely be replicated in other far-flung areas.

“We have so many islands that are not connected to the grid. All of them are candidates,” Ms. Cruz-Sta. Rita said.

The project in the Philippines will be Odin Energy’s first venture outside South Korea. The company is already testing the same technology in Jeju Island.

Lee Hyuk, the South Korean ambassador, said Odin Energy’s technology will help address the challenge in providing electricity in off-grid areas.

“This pioneering technology offers a stable and lasting solution to the recurring problem,” said Mr. Lee.

“The wind tower of Odin Energy is the first of its kind in the world. It has multi-floor structure with facilities for Internet and telecommunications,” he added.

This tower system, Mr. Lee said, can produce more electricity through wind energy compared with traditional turbines used in existing wind farms.

He added that the wind system -- which can be easily applied in both off-grid and on-grid areas -- has less maintenance cost compared to the traditional power plants.

The technology also promises diminished noise and vibration, leading to possible use in buildings.

Odin Energy came to the Philippines with the help of Korea Trade-Investment Promotion Agency, which scouts for Korean firms interested in investing in the Philippines.

Napocor is mandated by Republic Act 9136 or the Electric Power Industry Reform Act of 2001, to provide electricity to remote areas not connected to the power grid.

It currently serves 300 off-grid areas, covering 207 towns across 36 provinces. -- Claire-Ann Marie C. Feliciano source