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Column by Henry J. Schumacher - July 15, 2015
Henry J. Schumacher-Asean-EU Perspective
WITH a combined gross domestic product (GDP) of $ 2.1 trillion in 2011, a wealth of natural resources and an enterprising and increasingly well educated work force, the 10 member-states that make up Asean possess the necessary assets to become a pillar of the global structure.
The world’s most powerful economies are focusing increasingly on Asean’s excellent performance and growth potential. There is one important and critical question coming up: Can developing Asean secure the energy it needs to fuel the expected economic expansion?
Energy security rests on three pillars: the adequacy and reliability of energy supply, environmental sustainability and affordable access. Failure on any of these fronts could derail economic development and the desired inclusive growth. Asean has an array of options to manage its energy appetite. But tackling issues such as outmoded subsidies requires political will, and green innovation requires imagination. Subsidies impose a tremendous burden on public budgets, exceeding 2 percent of GDP in Indonesia and Vietnam and are undermining the desired level playing field as Asean integrates. At this week’s Energy Smart conference and the European Union-Philippine Energy Policy Forum, we raised the issue again that the subsidies offered by other Asean countries need to be address asap as they undermine the competitiveness of the Philippines as we are in the final stretch to create the Asean Economic Community by January 1, 2016.
At the abovementioned meeting we’re happy to announce that the feared power shortage in summer 2015 did not happen, and asked the question, “Why did it not happen”?
The almost simple answer is public-private partnership (PPP) in its true sense:
Energy efficiency is being implemented and needs to be encouraged more; individuals and corporations need to understand and accept that they can be, and should be, part of the solution!
Data is available that 20 percent of power can be saved if everybody embarks on Energy Efficiency. Given 11,500 megawatts (MW), this equals 2,300 MW. This if far beyond the estimated shortfall of 400 MW to 800 MW.
Mobilization of self-generating capacity of large end-users/Interruptible Load Program (ILP).
The private sector is accumulating data on the ILP by convincing companies with large embedded generation plants to run those for 10 hours a day during the shortfall. We achieved that 700 MW can be made available, if needed.
Power price caps in the spot market should be abolished because they are a disincentive to energy generation investments.
Investors will only invest if there is a fair return on investment possible; this is—at the moment—undermined by the Wholesale Electricity Spot Market cap.
The approval process for generating new plants should be streamlined.
Approximately 162 permits and signatures are required before a power plant can be built; this means, in the Philippines, it takes five years to get a plant on stream, compared to three years in other countries.
The government should develop a sustainable energy mix policy and feed-in tariff implementation.
In order to drive investments and look sustainable feedstock, the government has to create a long-term vision on the energy mix, looking at coal, liquefied natural gas, geothermal and renewable-energy sources.
The government should fast-track the tender for banked gas. By 2016 Malampaya will have additional gas available to power a 200-MW plant. Philippine National Oil Co. owns banked gas enough to power
another 200 MW.
Why was and is the private sector keen to cooperate with the government to solve the power crisis? We have bad experience with previous governments buying expensive power off the rack, which further burdens power consumers and is a disincentive for new investments, the country badly needs.
Let’s all agree that we can address energy issues effectively in a PPP. We firmly believe that an Energy Council (like the National Competitiveness Council) should be formed now so that the energy stakeholders can meet regularly and transparently to secure energy at affordable prices. source
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