April 16, 2023 | 5:00 pm
Introspective By Romeo L. Bernardo
Cyclical and counter cyclical
patterns affecting energy supply and demand during the dry season in the
Philippines
On March 21, PAGASA declared the official
start of this year’s summer season. Almost immediately after, I recall feeling
a drastic change in the temperature… and a bit of dread over possible summer
power shortages.
During our hot season which runs from
March until May, temperatures peak at above 37 degrees centigrade in many parts
of the country. This naturally leads households and businesses to turn on their
cooling appliances to help alleviate the discomfort of the extreme heat.
Dedicated appliances involved in cooling such as refrigerators and freezers
work harder to do their job of keeping their internal temperatures low since
the external environment’s temperature is much higher.
Thus, power demand reaches peak
levels in these summer months. For the Luzon-Visayas grid, peak demand last
year was recorded in May at 14,380 MW, up 20% as compared to the peak demand
during the cooler months of January and February of the same year. According to
the Department of Energy (DoE), for every one-degree Celsius increase in
temperature, demand also goes up by around 100 MW of additional power.
One could argue that we shouldn’t
fret so much since summertime means it is the cyclical peak for solar farms
power production. That is true. Longer days and more irradiation mean more
clean power production from the sun’s rays. However, solar farms contribute
around just 1% to 2% of the grid’s requirements since it is available only
during the day; hence, this makes a very small impact against the backdrop of
the demand needed at peak times. And while it may seem that a lot of sun means
a lot of electrons generated, actually too much sun can cause the solar panels
to heat up, which degrades their production efficiency by as much as 10-25%.
The summer season is also the
country’s dry season. This is bad news for another form of renewable energy —
hydroelectric power. During the rainy season, our rivers are flowing with
surface water and our dams become filled with it, leading to peak power
production for our hydro facilities, which comprise 13% of the country’s
installed generation mix. Counter cyclical to solar farms, hydroelectric power
plants have their lowest generation availability in the summer, simply because
water flows from rivers are less and stored water in the dams are lowest.
An interesting case is that of
Mindanao which sources 38% of its power requirements from hydroelectricity.
During the rainy season, the region has excess generation capacity due to the
supply coming from the combination of all their power generators, including
hydroelectric facilities. This excess capacity would come in handy for the
Luzon and Visayas grid, which experiences tightness in power supply during the
summer. Unfortunately, surplus capacity is reduced significantly during summer
due to the counter cyclical conditions I mentioned, wherein the output of
Mindanao hydro plants is halved. Plus, the Mindanao-Visayas grid connection, a
transmission line that connects the Mindanao grid to the Luzon and Visayas
grid, is not yet operational; hence, there is no power export or import
possible.
This leaves the Luzon and Visayas
grid in a conundrum: how to bridge the supply-demand gap during the summer
months?
Through collaboration with all
sectors of the industry — regulators, generation, transmission, and
distribution companies, and even large customers — there are several solutions
available and are being readied again as the cycle repeats itself this year.
First is on the supply side. The
industry works together to ensure that all generation and transmission
facilities are up and running. Plant maintenance is done before or after
summer, in accordance with a Grid Operations Maintenance Plan, to make sure
that all plants are available during the peak months of the year. Fortunately,
there are two pieces of good news. One, fresh new power generation is coming
from the GNPower Dinginin power plant in Bataan which came on stream mid last
year. At 1,336 MW, it is the largest power plant in the country today. Two,
news reports say that the Ilijan power plant, the largest natural gas-powered
generation facility in the country, is expected to receive its first LNG
shipment in the next couple of months, which means it should resume operations
soon after. The plant, which accounts for 10% of the installed capacity of
Luzon, has not been operating since June 2022.
Second is on the demand side.
Recently, Meralco announced that they signed up more participants to the
Interruptible Load Program (ILP) wherein large power consumers like factories
or shopping malls voluntarily disconnect themselves from the grid during
scheduled peak periods, turn on their own power generators, and allow other
consumers to partake of the limited power from the grid.
Third is building sufficient supply,
transmission, and energy storage capacity to meet the cyclical fluctuations in
demand. While this has no impact on our situation this year, I find it
worthwhile to mention that there are promising developments here.
To be able to grow at around 5-6%
annually, our country needs around 600 MW to 700 MW of new generation capacity
per year. Many power generation projects are in the pipeline, per the DoE, but
most of these are in the form of renewable energy. We need to be aware of the
limitations of variable renewable energy like wind and solar. For example,
using the rule of thumb that 1 MW of solar PV installed capacity requires one
hectare of land, 700 MW will need a land area almost three times the size of
Bonifacio Global City (BGC) in Taguig. What is more, solar PV plants have a
capacity factor of around 17%, i.e., the installed capacity of 700 MW produces
an output 83% less than its peak capacity due to the intermittency of solar
irradiation. Hence, to approximate the output of a coal-fired base load plant,
the scale of land use would have to be multiplied several times over,
considering too that space would have to be set aside for energy storage
facilities to enable the solar farms to discharge energy when there is no sun.
Given that, we will need a mix of all
generation technologies that are available and reliable during the periods of
cyclical shortness of supply. This is to ensure that there will be available
and sufficient power for the months when the rivers are dry and the dam levels
are low, as well as for the other months when it is raining and cloudy.
In the meantime, some to-dos to
include:
1. Cut the delays and red tape
associated with building new power plants, for all types of generation
technologies.
2. Develop energy storage facilities.
Along with fast ramping turbines powered by natural gas and even our legacy oil
powered internal combustion engine coupled generation, energy storage needs to
kick in when the sun does not shine or the wind stops blowing. Recently, San
Miguel Corp. inaugurated their battery storage facility in Bataan which the
company said functions like a huge power bank. I suppose this is true as a very
simple analogy but just like any power bank that we have stashed in our bags or
desk drawers, it will help deal with short duration troughs in power supply
during the day but won’t do the trick when the troughs last over the summer
months. Nonetheless, this is a welcome addition to our energy system especially
if priced affordably as committed.
3. Accelerate investments in
transmission and distribution. Blame is often laid on the generation sector for
failing to supply power. However, much can also be said about the hundreds of
MW of available capacity that remain stranded in various parts of the country
as there are no transmission and/or distribution lines to bring them to the
cities and the industries that need it badly. Investments have to be made in
all three segments. Like a chain, for it to be strong, all links have to be
equally strong.
4. And finally, as consumers, we are
the fourth part of the power chain. Just like the large power users enrolled in
the ILP, we can also do our part in conserving power this summer, and all year
round.
Romeo L. Bernardo is principal
Philippine Adviser to GlobalSource Partners (globalsourcepartners.com). He
serves as a board director in leading companies in banking and financial
services, telecommunication, energy, food and beverage, education, real estate,
and others. He has had a 20-year run in the public sector including stints in
the Department of Finance (Undersecretary), the IMF, World Bank, and the ADB.
