By Lenie Lectura - May 13, 2018
Power-industry stakeholders are
still clueless on how the Department of Energy (DOE) would implement its plan
to alter the country’s energy mix.
The DOE’s pronouncement, they said,
remains vague and ambiguous, thus, the need for further clarifications on
whether it is a policy or a mere guideline.
At the end of the day, energy
players stressed, market forces should be left as the deciding factor on which
energy mix the sector would follow.
The proposal involves a possible
shift of the current mix to 50-percent baseload and 50-percent flexible plants,
from the current 70-20-10 mix in favor of baseload, followed by mid-merit then
peaking.
The rationale of the proposal is to
accommodate renewable-energy (RE) projects that are coming into the grid.
Baseload plants are power facilities
that operate on a 24/7 basis, while flexible plants are those that are easy to
start up, and are able to ramp up their generating capacities immediately, such
as natural gas, geothermal and hydro. Mid-merit plants run on long hours, but
not on a 24/7 basis.
Policy or guideline?
“In my view, the key question is
whether energy mix is a policy or a guideline. If it is in fact a policy, then
the critical issue is how to formulate and enforce the rules. Without specific
rules, it becomes mere guidelines, and getting to an eventual mix would be
primarily market driven,” AC Energy Holdings Inc. President Eric Francia said
in an interview with the BusinessMirror.
Francia said as a matter of
direction setting, “It does make sense to prepare the system for the growth of
variable renewable energy.” This, he added, also would ensure adequate load and
minimize use of more expensive energy supplied by peaking power plants.
AC Energy currently has 1,300
megawatts (MW) of thermal generating capacity and 300 MW of RE. It plans to
ramp up its power portfolio to 5,000 MW by 2025.
Deciding factor
Aboitiz Power Corp. President
Antonio Moraza, meanwhile, in a text message, said that he is “not fully aware
of DOE’s thinking.”
“I am sure they have their reasons….
To me, market forces will decide [the] mix. Investors will respond to the
need,” he added.
At end-2017, Aboitiz Power’s energy
portfolio stood at almost 3,000 MW. It expects to add 536 MW more into its
generation portfolio with hydro plants Maris Canal and Manolo Fortich, plus its
baseload plants Pagbilao 3 and Therma Visayas online. It has set a goal of
4,000 MW by 2020.
Broad choice
Manuel V. Pangilinan, chairman of
Manila Electric Co. (Meralco), said prices play an important role in
determining what type of energy source one must purchase.
“You have two broad choices. One is
a predetermined mix of energy sources. The question is whether that is a wise
thing to do given the uncertainty of prices of crude, gas, solar and the
technological advances that will impact the pricing of fuel sources,” he said.
Pangilinan added: “The other option
is just to let the market drive your fuel source. So we don’t know. That is
really dynamic…so much uncertainty. Our tentative inclination is to let market
drive fuel source because, obviously, even Meralco is looking at least cost of
sourcing power. So, if anybody has a crystal ball, I am happy to talk to him.”
Biggest player
Meralco is the largest
power-distribution firm in the country. In April electricity bills, Meralco’s
total power requirement was sourced from the Wholesale Electricity Spot Market
at 15 percent, from independent power producers at 39 percent and from other
plants via power supply agreements at 46 percent.
The utility firm’s power-generating
arm, Meralco PowerGen, is developing coal power plants.
Consistency
Alsons Consolidated Resources Inc.
(ACR) Vice President for Business Development Joseph Nocos said an ideal power
mix must be consistent with the projected supply and demand.
“To the extent that the supply mix
is generally consistent with the projected load profiles, the resulting blend
will be close to optimal. I believe the major utilities will procure new supply
according to this principle,” said Nocos in a text message.
Alsons Power projects a total
generating capacity of 588 MW by 2021, or equivalent to 25 percent of
Mindanao’s projected peak power demand.
Coal factor
Government data showed that the
country’s total installed capacity in 2017 stood at 22,728 MW. Of this
capacity, coal still remained the dominant energy source with a share of 35.4
percent. Coal-fired power plants had a total installed capacity of 8,049 MW,
followed by RE at 7,079 MW, or 31.1 percent of the total.
Oil-based energy sources made up
18.3 percent of the dependable capacity at 4,153 MW, while natural gas had a
share of 15.2 percent, or 3,447 MW, as of end-2017.
The proposed change in energy-mix
policy was mainly on the account of the current trends as far as demand is
concerned and based on technologies that are coming in, the DOE said.
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