Posted on September 26, 2016
MINDANAO needs at least 150 megawatts (MW) of
additional capacity yearly until 2030 to meet rising demand from electricity
consumers as the government lines up infrastructure projects on the southern
island, the lead entity promoting its development said.
“We should be having at least 150 MW
installed in Mindanao every year way up to, let’s say, 2025 or 2030,” said
Romeo M. Montenegro, deputy executive director of Mindanao Development
Authority (MinDA).
Based on data from the Department of Energy (DoE), Mindanao as of 2015 has an installed capacity of 2,414 MW, of which 2,044 MW are considered dependable. It accounts for nearly 13% of the country’s total 18,695 MW installed capacity.
Mr. Montenegro estimates Mindanao’s demand for electricity to have increased at a pace between 4.7% and 5.3% in recent years, but he considered the growth rate as “suppressed” in light of a supply shortage that resulted in power interruptions when a dry spell ensued because of the El Niño phenomenon. The island sources at least 40% of its electricity from hydroelectric power plants. It is not connected to the Luzon and the Visayas grids.
“Initially we’re looking at an uptick of more than 10% for 2016 because that’s the natural tendency -- if you increase capacity everybody else will make use of it,” he said.
This year, several power projects are coming on-stream, including big ones such as San Miguel Consolidated Power Corp.’s 300-MW coal power plant in Malita, Davao del Sur and FDC Utilities, Inc. 405-MW coal plant in Villanueva, Misamis Oriental.
They account for the biggest portion of the 1,688 MW from ongoing power projects in Mindanao with target commercial operation dates between 2016 and 2018. DoE data show 47 other projects on the island are awaiting funding or completing their permitting process, potentially delivering 2,592 MW more.
“Up until we’ll be able to see a scenario where there is excess of supply in Mindanao for a period of five years, for instance, that’s the period when we can actually look at a more reliable forecast figure for Mindanao,” Mr. Montenegro said.
He said looking at how power demand was behaving in response to the economic growth in Mindanao, a growth forecast of 6-7% is likely to be reached.
“Our growth demand actually mirrors the GRDP [gross regional domestic product] growth,” he said. “Every 1% increase in GRDP in Mindanao translates to about 1[%] to 1.5[%] increase also in the demand.”
However, he said it was too early to come up with a “more confident forecast... given the rapid entry of investments in Mindanao in the last couple of months especially after the assumption of President [Rodrigo R.] Duterte.”
He added the government’s pronouncement to allocate 30% of the budget of the Department of Public Works and Highways to Mindanao might have an impact “in terms of drawing more economic activities across the island.” This is on top of businesses that have scaled up, and sectors that have attracted more investments such as business process outsourcing, real estate and malls.
“This is just Davao. If you look at Cagayan de Oro, General Santos and Zamboanga the growth of these industries are also growing at the same pace and therefore requiring electricity,” he said.
“Looking at this entire picture, that’s how we are able to assess that there is an uptick of around 10-12% of demand for Mindanao at least for 2016, and then it will taper off to its natural course at 6%, probably, for the next five years,” he said.
CRITICAL YEARS
He said he was confident of sufficient power supply in the next four to five years with the entry of new coal power plants, but the years 2022 to 2025 would be crucial.
“We’re looking at 2022 to 2025 as the next period where Mindanao should be having additional capacity,” he said.
“This is where we want the R.E. [renewable energy] projects going full steam so that they are available by 2022 and then adding capacity to the grid,” he said.
Mr. Montenegro said building up on renewable energy projects would allow the island to reach an energy mix of 50% coming from clean technology and 50% from conventional fossil fuel. With the current projects, he expects the mix at 80:20 in favor of fossil fuel.
He said the renewable energy projects that MinDA was tracking excludes Mindanao’s hydroelectric power plants along Agus and Pulangi rivers.
“The facilitation we’re doing right now are just confined to the small R.E. players especially those that do not have not yet the financial muscle to go through the challenges of regulatory processes. These are all 284 projects with a potential capacity of 3,700 MW,” he said. “Even if we just target around 1,000 MW of these R.E. projects, this is already a big addition in terms of renewable energy to our energy mix.”
He said the big R.E. project in MinDA’s list is the Agus III, the only one of the seven hydropower projects along the Agus river that was not completed. He said the plant’s target capacity is 250-260 MW. The proponent, Maranao Energy Corp., is yet to close a power supply agreement ahead of concluding project financing.
The Agus hydropower complex has an installed capacity of at least 700 MW, with the biggest coming from Agus VI in Iligan City, Lanao del Norte.
Pulangi IV hydroelectric power plant in Maramag, Bukidnon has three units each with a rated capacity of 85 MW. It is the first completed project of six facilities envisioned along the Pulangi river.
Mr. Montenegro said the proposed Pulangi V was awaiting DoE decision whether the project would be bid out or awarded to its original proponent, Greenergy Development Corp. Pulangi V, will have a dam, has a target capacity of 300 MW.
The existing Agus and Pulangi facilities are managed by state agency Power Sector Assets and Liabilities Corp. (PSALM).
“We are expecting that a bill for legislating the Mindanao Power Corp. (Minpocor), which will take over management ownership and operations of Agus and Pulangi, will be refiled soon in Congress,” he said.
Mr. Montenegro explained that the plan was to spin off the facilities from PSALM and transferred to government-owned Minpocor for an amount, which he said would be “at market price.” The move would ensure that revenues derived from the hydropower plants are plowed back to Mindanao, he said.
Based on data from the Department of Energy (DoE), Mindanao as of 2015 has an installed capacity of 2,414 MW, of which 2,044 MW are considered dependable. It accounts for nearly 13% of the country’s total 18,695 MW installed capacity.
Mr. Montenegro estimates Mindanao’s demand for electricity to have increased at a pace between 4.7% and 5.3% in recent years, but he considered the growth rate as “suppressed” in light of a supply shortage that resulted in power interruptions when a dry spell ensued because of the El Niño phenomenon. The island sources at least 40% of its electricity from hydroelectric power plants. It is not connected to the Luzon and the Visayas grids.
“Initially we’re looking at an uptick of more than 10% for 2016 because that’s the natural tendency -- if you increase capacity everybody else will make use of it,” he said.
This year, several power projects are coming on-stream, including big ones such as San Miguel Consolidated Power Corp.’s 300-MW coal power plant in Malita, Davao del Sur and FDC Utilities, Inc. 405-MW coal plant in Villanueva, Misamis Oriental.
They account for the biggest portion of the 1,688 MW from ongoing power projects in Mindanao with target commercial operation dates between 2016 and 2018. DoE data show 47 other projects on the island are awaiting funding or completing their permitting process, potentially delivering 2,592 MW more.
“Up until we’ll be able to see a scenario where there is excess of supply in Mindanao for a period of five years, for instance, that’s the period when we can actually look at a more reliable forecast figure for Mindanao,” Mr. Montenegro said.
He said looking at how power demand was behaving in response to the economic growth in Mindanao, a growth forecast of 6-7% is likely to be reached.
“Our growth demand actually mirrors the GRDP [gross regional domestic product] growth,” he said. “Every 1% increase in GRDP in Mindanao translates to about 1[%] to 1.5[%] increase also in the demand.”
However, he said it was too early to come up with a “more confident forecast... given the rapid entry of investments in Mindanao in the last couple of months especially after the assumption of President [Rodrigo R.] Duterte.”
He added the government’s pronouncement to allocate 30% of the budget of the Department of Public Works and Highways to Mindanao might have an impact “in terms of drawing more economic activities across the island.” This is on top of businesses that have scaled up, and sectors that have attracted more investments such as business process outsourcing, real estate and malls.
“This is just Davao. If you look at Cagayan de Oro, General Santos and Zamboanga the growth of these industries are also growing at the same pace and therefore requiring electricity,” he said.
“Looking at this entire picture, that’s how we are able to assess that there is an uptick of around 10-12% of demand for Mindanao at least for 2016, and then it will taper off to its natural course at 6%, probably, for the next five years,” he said.
CRITICAL YEARS
He said he was confident of sufficient power supply in the next four to five years with the entry of new coal power plants, but the years 2022 to 2025 would be crucial.
“We’re looking at 2022 to 2025 as the next period where Mindanao should be having additional capacity,” he said.
“This is where we want the R.E. [renewable energy] projects going full steam so that they are available by 2022 and then adding capacity to the grid,” he said.
Mr. Montenegro said building up on renewable energy projects would allow the island to reach an energy mix of 50% coming from clean technology and 50% from conventional fossil fuel. With the current projects, he expects the mix at 80:20 in favor of fossil fuel.
He said the renewable energy projects that MinDA was tracking excludes Mindanao’s hydroelectric power plants along Agus and Pulangi rivers.
“The facilitation we’re doing right now are just confined to the small R.E. players especially those that do not have not yet the financial muscle to go through the challenges of regulatory processes. These are all 284 projects with a potential capacity of 3,700 MW,” he said. “Even if we just target around 1,000 MW of these R.E. projects, this is already a big addition in terms of renewable energy to our energy mix.”
He said the big R.E. project in MinDA’s list is the Agus III, the only one of the seven hydropower projects along the Agus river that was not completed. He said the plant’s target capacity is 250-260 MW. The proponent, Maranao Energy Corp., is yet to close a power supply agreement ahead of concluding project financing.
The Agus hydropower complex has an installed capacity of at least 700 MW, with the biggest coming from Agus VI in Iligan City, Lanao del Norte.
Pulangi IV hydroelectric power plant in Maramag, Bukidnon has three units each with a rated capacity of 85 MW. It is the first completed project of six facilities envisioned along the Pulangi river.
Mr. Montenegro said the proposed Pulangi V was awaiting DoE decision whether the project would be bid out or awarded to its original proponent, Greenergy Development Corp. Pulangi V, will have a dam, has a target capacity of 300 MW.
The existing Agus and Pulangi facilities are managed by state agency Power Sector Assets and Liabilities Corp. (PSALM).
“We are expecting that a bill for legislating the Mindanao Power Corp. (Minpocor), which will take over management ownership and operations of Agus and Pulangi, will be refiled soon in Congress,” he said.
Mr. Montenegro explained that the plan was to spin off the facilities from PSALM and transferred to government-owned Minpocor for an amount, which he said would be “at market price.” The move would ensure that revenues derived from the hydropower plants are plowed back to Mindanao, he said.
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