Mindanao crisis: The winding road to solutions (Last part)

Manila Bulletin 
By Myrna M. Velasco 
Published: May 27, 2013 
Construction workers set stone beds for the river rehabilitation efforts inside the 300-MW power plant of AboitizPower in southern Davao City. Close to 1,500 workers are working on the project which is expected to bring relief to the Mindanao power crisis by 2015. Have you ever heard of a brownout-style haircut? This is just one of the interesting crisis-related stories I had been apprised of while in Mindanao.
A media colleague explained it to me that: ‘This is a half-done haircut because it was interrupted by brownouts and that the customer will be asked to come back tomorrow to have it completed.”
For us who are not experiencing rotating power interruptions – or, at least not yet – this may sound amusing, but for those who are actually suffering from it, these situations are annoying.
Simply talking will not bring the tangible solutions to the power crisis. In fact, this is the time – chiefly for energy policymakers and industry players – to make the tough decisions and choices.
Quick fixes
Time already ran out for “quick fixes” to be implemented. But to restore the Mindanao people’s faith that there is indeed a solution to their “brownout woes,” real progress must be shown when it comes to remedies that can immediately ease supply deficiency in the grid as well as concretely showcase investment flows for long-term capacity additions.
In the goal of beefing up power supply at least in this year’s summer months – especially during the critical election period, the government and industry players collaborated and have been resorting to various means – from repowering the Iligan diesel power plant; cloud-seeding, tapping the excess supply of embedded generation facilities to the proposed deployment of modular generator sets and the establishment of the Interim Mindanao Electricity Market (IMEM).
For the modular gensets alone, Department of Energy (DOF)Secretary Carlos Jericho Petilla calculated that the government will be spending P4.8 billion – and the proposal is to draw it from the Malampaya fund. The cost impact on consumers would be a staggering P1.80 to P4.00 per kilowatt-hour (kWh) – to be added to the prevailing blended generation charge they have been paying for.
Based on DOE’s estimate, the cost of running the gensets would be at P17 to P18 per kWh – because relatively, diesel is an expensive option in generating electricity.
To be clear, not all areas in Mindanao are suffering from the reported 4-8 hours of rotating power interruptions. Major cities like Davao and Cagayan de Oro are being spared because their servicing distribution utilities were prudent enough in securing buffer supply by integrating embedded facilities into their systems – albeit, with a cost impact painstakingly explained to their customers.
Even with these short-term measures though, Mindanao can’t still get out of its brownout predicaments. The sad scenario is: Consumers will have to continue gnashing their teeth out of frustration because power interruptions will continue pestering them in the next two years. The multiplier effect, of course, will be economic activities razed to the ground because of electricity supply lack.
Baseload
The real long-term cure will only be in place in 2015, when baseload capacities of about 500 megawatts will be commissioned in the grid, courtesy of the investments of the Aboitiz and Alcantara groups. Past their investments, other power projects are expected to rise in Mindanao from 2015 onwards – including those planned by FDC Utilities Inc. of the Filinvest Group, the expansion of the Steag power plant and the plan for massive renewable energy installations in the grid. Alongside these power project developments is the proposed interconnection of the Visayas and Mindanao grids to eventually enable the sharing of reserves within these systems.
Joseph C. Nocos, Conal Holdings vice president for business development, has opined that “continuous investment in different types of generation must be maintained over the long-term,” albeit he cautioned that “this must be done in a well-coordinated manner to ensure that we don’t overbuild and end up with stranded capacity.”
The prognosis was echoed by Aboitiz Power first vice president for Mindanao affairs Manuel M. Orig as he optimistically asserted that in time, “we believe that the entry of more private sector players in Mindanao and the ensuing competition will result in more reliable power and the competition among the players will result in better service and more competitive rates.”
He similarly sounded off that “a more realistic and practical approach to the challenges of private sector participation is definitely needed to solve the Mindanao problem in the long term.” At the cusp, Mr. Orig noted that Aboitiz Power braved the investment risks and concomitant hurdles “but the private sector definitely needs government policy support.”
Mr. Nocos similarly emphasized that “Mindanao’s baseload requirements will be supplied by real baseload power plants.” It was thus planned by design that the near-term capacity additions for the grid will be coal-fired because it is the suitable technology that can address its baseload needs.
He added that once the coal plants will be on-line, the raging controversy over tariff increases will also ease, because less utilization of diesel generating facilities will “taper down power rates.” By then, coal will be the baseload and hydro will take intermediate and peak capacities in the merit order, thus, diesel will end up having less influence in the blended cost.
And while renewables are also very much in the radar of other investor-groups, the cautionary approach will be to go for installations “of which effects on rates will not become prohibitive for consumers.”
MinDA director for investment promotions and public affairs Romeo Montenegro explained that they have been advocating the integration of RE in Mindanao’s power mix because it will provide much-needed balance to reduce the grid’s carbon footprints with the forthcoming entry of the coal plants.
Indeed, the recurrence of this new round of power crisis in Mindanao brings grim reminder of what the public and a country ought to loss with electricity lack – a basic commodity for survival and the backbone of a growing economy.
The endless public suffering and the opportunity losses plaguing businesses have been drowning thousands of speeches promising bright economic future for the country – for after all, the people of Mindanao, are Filipinos, too!  source