Perspectives
on the Philippine power system 2021-2025
By Romy Bernardo, Vice Chairman of the
Foundation for Economic Freedom (FEF) At the StratBase webinar, Nov 11,
9-11:30AM
<Slide 1 - presentation title>
As more than 25,000 delegates from over 150
countries conclude another historic COP in Glasgow, bringing to a close a
climate conference that plots the future of our planet, it is very timely that
we gather today in this webinar that explores the energy needs of our country.
Thank you, Professor Dindo Manhit and the
StratBase team, for this opportunity to present my perspective on the
Philippine power system up to the middle of this decade. I title this talk
“Only as strong as the weakest link”.
I begin by having a look at the global energy
crisis, which uncovered vulnerabilities of other countries' energy systems.
What can we learn from their experiences? What were their weak links?
<Slide 2 - BusinessWorld news clip, ‘It's not
easy being green’>
This global energy crisis is a product of many
converging factors, and while my forthcoming points are not exhaustive, these
illustrate a perfect storm of constrained energy production, tight supply for
fuels, and high energy demand. I’ve explored this confluence in my column
published by BusinessWorld a few days ago, entitled “It’s Not Easy Being Green”1 which I invite you to read.
<Slide 3 - Global news clippings>
biofuel, to 4-year lows5. In China, coming from a cold winter drawing down energy stockpiles, heavy rains and floods in mid-year closing down coal mines, seem to be the main culprits.
Isn’t it ironic that right before the start of
the world’s most important climate conference of the year at Glasgow, the UK
had to turn on fossil fuel plants, to provide much needed power? 6
Reports from COP26 go on to say that while many
leaders pledge to remove fossil fuels from their energy diet, they are having a
hard think about the vital role of coal, oil and natural gas, while at the
event.
<Slide 4 - Adding RE to the system increases
dependence on the weather>
Adding renewable energy sources to the grid
reduces dependence on fossil fuels - this is good. However, we fail to realise
that with more renewable energy in the system, energy supply becomes
increasingly dependent on the weather, which is a challenge. This brings to
fore the need for a balanced mix of energy sources, planned excess capacity,
and storage capabilities in a country, or have the ability to trade energy with
neighboring countries, when there is deficit or surplus energy production.
<Slide 5 - A balanced and resilient
transition>
Based on the lessons dealt to more advanced
nations just this year, we can surmise that the decades-long transition to
cleaner energy sources must be done in a well calculated manner. It has to be a
transition that is balanced and resilient, which can sustain shocks caused by
supply or demand fluctuations, or by both.
It has
to be a transition that does not expose weak links in the energy system.
Let us
now turn our attention to the prospects of the Philippine power system, which
is the topic
I have
been asked to speak on today.
There is no one size fits all, nor single energy
transition pathway for all countries, simply because each nation’s energy
system and the national development aspiration that the energy system serves,
is unique.
<Slide 6 - chain>
Imagine
a chain.
At one end is power generation, or simply the
production of electricity. On the other end are consumers, the ones who use
electricity to preserve and cook food, to work and study during the day, to
keep the lights on at night, and to tune in to this webinar today. In the
middle are transmission and distribution, the means by which power is
delivered.
<Slide 7 - Figure 1 | Total Installed
Capacity (existing, committed and new build in MW,
2021-2026>
You will see from this graph7 that installed capacity and power demand are closely following each
other, often with very little reserves for the next 5 years. Note that
installed capacity is not the same as actual power generation output, since it
is subject to capacity factors, for example, solar PV plants have a capacity
factor of around 16% versus its installed peak capacity.
<Slide 8 - For generation …>
Government must promote the exploration of
indigenous fuel supply and emissions free power production technology, for
example, near field oil & gas exploration around SC-38 (Malampaya), more
geothermal, hydro, wind and solar.
Simply put, our country will need all of the
energy and all forms of energy that we have in our portfolio, to meet the needs
of our developing country. All of these need to work safely and reliably, while
we build more and cleaner energy sources.
It is not fossil fuel energy “or” renewable energy. It has to be “and”.
For consumers, we will need the help of the
government, private sector and civil society to drive greater energy
efficiency. Government should promote electrification in transportation, so
that more of how we move people and goods can be powered by renewables.
According to the
DOE, in
2020, electricity powered only one tenth of a percent of the country’s
transportation-related final energy consumption.8 We need
to explore opportunities for greater efficiency and flexibility through
behind-the-meter power generation and storage, with support from the
government.
The
middle links, transmission and distribution, should work flawlessly, safely and
efficiently.
<Slide 9 - Transmission …>
Transmission has to grow, in step with generation, in order to transport power from where it is produced, or where there is too much, to where it is needed. Investments have to be made to ensure that the system is stable and responsive, due to the complexity brought about by more intermittent renewable energy in the grid. Even more investment is needed to connect the main island grids of Luzon and Mindanao, and the Visayas islands, so that power supply and demand can be balanced throughout the country, and not just within each geographical region.
<Slide 10 - Distribution Utilities …>
Distribution Utilities (DUs) need to improve efficiency and uplift service delivery nationwide. Innovations like fully digital substations that improve control, reliability and safety must be promoted. Inefficient and ineffective DUs or cooperatives must consolidate, partner with, or give way to more professional operators who can and will serve the customers better and safer, so that the benefits of electrification can be enjoyed by more Filipinos.
These are just some suggestions that I’ve chosen
to highlight this morning. We do have limited time in this webinar and there is
much that must be done in the next few years.
Recognizing the criticality of the electricity
sector to our country, I commend the points raised by my co presenter and
Management Association of the Philippines’ Energy Committee chairman, Ernie
Pantangco, particularly on the crucial and urgent actions needed to secure
energy supply to meet energy demand when our economy recovers from the
pandemic.
As I
conclude my presentation, I would like to leave you with this final perspective
on the
Philippine
power system, and that is, to consider the whole chain.
<Slide 11 - the whole chain>
I think this is the most important lesson that
we derive from the experience in Europe, the Americas, and our Asian neighbors.
The government must lead and develop an energy transition plan that has
national development potential in mind, and is firmly anchored at the
upliftment of Filipinos and care for our environment.
Only then can our country attract investments,
technology providers, and long term partnerships that will help bring about a
robust and resilient energy ecosystem that will stand the test of shocks and
time, throughout our energy transition journey.
Every country has a unique energy system. It is
up to us to build the energy system of our future, and to make every link a
strong link.
1
https://www.bworldonline.com/its-not-easy-being-green-balancing-energy-security-and-decarbonization-fo r-an-emerging-economy/
2
https://www.bloomberg.com/news/articles/2021-09-15/what-s-behind-europe-s-skyrocketing-power-prices
-quicktake | “wind speeds in the North Sea earlier in 2021 among the slowest in 20 years”
3
https://www.reuters.com/business/sustainable-business/inconvenient-truth-droughts-shrink-hydropower-p ose-risk-global-push-clean-energy-2021-08-13/
4 https://www.independent.co.uk/tv/climate/brazil-drought-energy-supply-threatened-v11df1ffa
5
https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/081921-spotlight-brazil-sugarc ane-harvest-failure-hampers-biofuels-growth-raises-refinery-runs
6
https://news.sky.com/story/uk-had-to-turn-on-coal-power-plant-to-help-national-grid-cope-with-low-winds-
12400835
7 Source: DOE Philippine Energy Plan 2020-2040
8 https://www.doe.gov.ph/sites/default/files/pdf/pep/pep_2020-2040_signed.pdf
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