(The Philippine Star) | Updated November 29, 2016 - 12:00am
MANILA, Philippines - Coming
up with an energy mix policy should be among the priorities of the Philippine
government in order to shield consumers from price surges affecting specific
power plant fuels like coal, Lopez-led First Gen Corp.’s top official said.
The call was made as
prices of coal, the dominant fuel for Philippine power plants, have turned
volatile this year, First Gen president and COO Francis Giles Puno said in a
statement.
“Prices of coal have
more than doubled between January and October this year. Such price volatility
should give us reason to pause and think of other fuels we can use to protect
consumers from erratic fuel price movements. One solution is to cap the share
of specific fuels we use to generate our electricity,” he said.
As of June, the
Philippines gets 33 percent or 6,666 megawatts (MW) of its electricity supply
from coal-fired power plants based on data from the Department of Energy (DOE).
This is expected to
expand further in the coming years with 4,600 MW of committed and another 6,900
MW of indicative coal-fired power plants in the pipeline, according to think
tank Institute for Climate and Sustainable Cities (ICSC).
This would mean the
country’s dependence on coal would increase to as much as 80 percent by 2030,
according to global analytics firm IHS.
While coal has an
important role in the country’s energy mix, its dominance will not be good for
the economy “especially now when coal prices have turned volatile,” First Gen’s
Puno said.
Coal prices, based on
the benchmark Newcastle, traded as low as $49 per metric ton at the start of
2016, but surged as high as $108 in late October. So far this month, coal
prices have hovered between $90 to over $110 per MT.
“Coal’s volatility
would expose consumers, including business establishments, to drastic and
unpredictable changes in their power bills. Households and businesses would
find it challenging to budget and manage their expenses,” Puno said.
The DOE is currently in
the process of reviewing the fuel mix policy “to find the correct mix.” The
agency is looking at 65 percent from baseload plants such as coal, natural gas,
nuclear and hydropower; 25 percent from mid-merit plants and 10 percent from
peaking plants.
Among other baseload
sources, Puno said other energy sources, particularly natural gas from the
Malampaya project, remain stable—if not cheaper than coal.
The fuel source is
largely indexed against a basket of oil products that include Dubai crude. The
Brent oil benchmark, which closely tracks Dubai crude, traded as high as US$112
per barrel in 2014, but its price now hovers below US$50/barrel.
“If the share in the
mix of other power plant fuels such as natural gas is clear, they can help
absorb price shocks from coal for the benefit of consumers,” he said.
Natural gas from
Malampaya provides the fuel for First Gen’s 1,000-MW Santa Rita and 500-MW San
Lorenzo combined-cycle power plants located in Batangas City.
Apart from natural gas
plants, the Lopez firm also has geothermal, hydro, wind and solar plants
totalling 3,470 MW in combined capacity.
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