January 28, 2019 | 8:36 pm By Victor V. Saulon
“ELECTRICITY FOR ALL,” was Energy
Secretary Alfonso G. Cusi’s brief response when asked about his main goal for
the rest of his term.
“Hundred per cent electrification,”
he said in an interview a few days before the end of 2018. “The tasks have been
given to the DUs (distribution utilities), the electric cooperatives, and all.
I just have to make sure that [those] that were given the task, do their work,”
he said.
“An EO (executive order) will be a
big support,” he said, adding that a directive from the president would compel
those tasked to meet his full electrification target by 2022.
Mr. Cusi said when he started out as
secretary of the Department of Energy (DoE) around mid-2016 the country was
facing problems, the biggest of which were frequent brownouts.
“That we immediately addressed,” he
said by directing distribution utilities, energy generation companies and the
grid operator “to get their acts together” by generating reserve power.
He did not discuss in detail his
other initiatives but early in his term, he did away with the previous
administration’s energy mix policy and adopted instead a technology-neutral
stance that did not favor any energy resource.
He was also vocal about his
opposition to extending the feed-in tariff scheme, the past leadership’s
initiative to encourage the development of renewable energy, saying it had
served its purpose.
All these, despite admitting at
first that he was not an expert in the energy sector. His previous government
job was in the air transport sector, and in a private capacity, in shipping.
Mr. Cusi said the development of the
liquefied natural gas (LNG) industry had always been among his objectives at
the onset.
“LNG was included when we were
checking on the problem of surging electricity rates, especially during the
maintenance of Malampaya,” he said.
“Those dependent on gas were using
alternative fuel, condensate, which is more expensive,” he said, citing the
P10-billion increase in electricity cost that had to be shouldered by consumers
at that time.
The DoE has since issued Department
Circular No. DC2017-11-0012 or the Rules and Regulations Governing the
Philippine Downstream Natural Gas Industry, and is now in the process of
reviewing proposals to build an LNG import terminal.
Ahead of the depletion of the
Malampaya gas field starting in 2024, the country needs to develop the
infrastructure for LNG receiving, storage, liquefaction and regasification, Mr.
Cusi said.
“We are hoping that we can do it
before the year ends,” Mr. Cusi said when asked about when he expects to
announce the final selection of the LNG hub proponent.
“The timeline is within 30 months,
two-and-a-half years to three years,” he said on the completion of the
facility.
Building an LNG import terminal
would allow continuity for the five gas-fired power plants in Batangas province,
which have a combined capacity of 3,211 megawatts (MW). It will also provide
fuel for other proposed gas-fired power plants.
While the DoE is evaluating the
project proposals, it has coordinated with the Senate Committee on Energy to
draft a law governing the natural gas industry.
The legislation will make sure that
there are off-takers of the imported fuel’s power output, ensuring that the
proponent of the import terminal will have a ready and lasting market for its
infrastructure. Should it be passed into law, it will also institutionalize
third-party access to the terminal.
In November, the DoE launched the
Philippine Conventional Energy Contracting Program (PCECP), which heightens the
agency’s intent to develop the petroleum exploration industry.
The program is the revised and
transparent petroleum service contract awarding mechanism that would allow
investors to bid for exploration projects through a competitive selection
process or by nomination.
The LNG terminal project and the
PCECP were the biggest initiatives of the DoE in 2018. Among others, they will
help address the agency’s goal of achieving energy security and sustainability.
Based on DoE data, the country’s
total primary energy supply was 57.7 million tons of oil equivalent. Of this,
indigenously sourced energy accounted for 51%, while the rest consisted of
imported coal, oil and biofuels. The need to boost the development of
indigenous energy sources could reduce exposure to price vulnerability in the
international market.
The Philippines has a total
installed generation capacity of 23,687 MW, of which coal power plants have the
highest share at 37.3%, followed by renewable energy at 30.2%. Oil and natural
gas made up 17.9% and 14.6%, respectively.
Power demand in 2019 is expected to
peak at 11,200 MW in Luzon, nearly 4% higher than the 10,800 in 2018. In
Mindanao, the peak is expected at around 2,200 MW, up 10% from the expected
2,000 MW. It is also expected to register the biggest growth in power demand.
Peak demand in the Visayas is expected at 2,300 MW, up 9.5% from 2,100 MW.
Mr. Cusi has said that to ensure
energy security of power supply, the DoE’s simulation showed that with an
average annual economic growth rate of 5.7%, assumed power reserve margin of
25% above peak demand, the country will be needing an additional 43,765 MW by
2040.
The Luzon grid has 4,264 MW from
committed power projects, but will need 24,385 MW more by 2040. Visayas has 919
MW of committed capacity and will need 9,180 MW more. Mindanao, which currently
has excess capacity, will still need 10,200 MW by 2040.
The year 2040 may be far off, but
the DoE has been looking for short- and long-term solutions, including nuclear
energy.
“In the spirit of technology
neutrality, I decided to reignite the discourse on nuclear power despite its
being taboo,” Mr. Cusi said after meeting with members of the International
Atomic Energy Agency on Dec. 10.
He said the DoE was considering the
feasibility of introducing nuclear power into the energy mix in order to
provide uninterrupted, secure, reliable, sustainable, and affordable
electricity.
He said bringing down the cost of
electricity “is a longer battle” but nuclear energy could provide the answer.
Initial steps include the submission in April 2018 to the Office of the
President of the DoE’s proposed national position on nuclear energy. A
legislative bill to proceed with the regulatory framework on nuclear energy has
cleared third reading at the House of Representatives, he said.
The pending bills on natural gas and
nuclear energy may just ensure continuity of his goals beyond his term, should
they be passed into law.
Mr. Cusi said if his performance
were to be rated, it should be based on “what I did, the problems that I
solved. How did I solve, how did the DoE solve the intermittent power of the
past when you used to get red alerts, when you used to get brownouts.”
“Based on the way we are doing
things, you can see a better year, better 2019. And I hope that will be better
access to electricity for our people, and we are better secured in our energy,”
he said.
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