Electricity Supply in the Visayan islands had improved since the 1990’s but brownouts and power reliability are still problems overall and electricity rates to the consumers have actually risen.

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This paper is a viewpoint of many in the business sector in the Visayan region.

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The Luzon and Mindanao grids appear to have sufficient installed capacities in their islands to cover the power needs of their regions and still have comfortable level of reserve generating capacities. Theoretically the inter-connection of the three main grids of Luzon, Visayas, and Mindanao is commonly believed to bring power reliability to all regions with each one sharing their excess capacities and supposedly lower costs of the other to augment supply and to bring down electricity prices. An efficient and properly sized transmission system however is necessary to bring power to each grid and to enable generating facilities in these islands to bring power to the cities and load centers.

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1. Assuring Ample Power Supply and lower costs of electricity

 

The twin objectives of assuring the development of additional generating capacities in a sustainable manner and of reducing power costs can be achieved by a range of complementary energy policies that should be consistently implemented.

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a. Meaningful access to energy markets through truly open and competitive bidding

 

The Epira law that was passed 20 years ago on June 2001 went to great lengths to try to promote competition, prevent monopolies and discourage market manipulation including cartelization. It also tried to discourage concentration of installed generating capacities. Yet, most of the major power projects in the country are being contracted with a few players and there is a continuing concentration of power generating capacity and cartelization if not monopolization. Consequently, generation rates have not come down sufficiently to really benefit the consumers and the business sector.

 

A big reason is the effective limit to market access specially to the major areas like the national capital region covered by Meralco, and the other major cities like Cebu, Davao, Iloilo, etc. A meaningful access to these major service areas will reduce the barriers to entry for many business and investment groups to enter the generation market and hence institutionalize a sustainable development of new power projects by the broader private sector to meet the continuing growth in the power needs of the country.

 

The government took a big step towards promoting competition in the procurement of power supply whose rates will be charged to the consumers. Called, “competitive selection process” or CSP provides sufficient guidelines and safeguards supposedly to promote true competition and protect the consumers. Loopholes, including the seemingly lukewarm imposition of “cross ownership” restrictions between electric distributors and the generators, would need to be addressed to enable and encourage genuine market access to many local and interested investment groups.

 

This will not only result to a sustainable supply of power that would be driven by a broader private sector and truly competitive rates, but to open a heretofore controlled power generation sector to a dynamic and active market place with many players.

 

b. Generation or Energy Mix policy

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We propose that the government once and for all determine an energy mix policy with clear national objectives and a resolute and consistent pursuit of those objectives. It is time to determine our goals for energy security, for environmental and climate change, for lower costs, and broad macro-economic promotion.

 

Only a few years ago, our energy mix policy was technology and fuel based evidently trying to balance the lower costs and environmental damage of coal. It aspired to limit coal to 30%, other technologies 40%, and renewable and clean energy 30%. Quietly this was redefined to be a functional mix where it is now defined as 50% base load, 30% mid-merit, and 20% peaking and reserve. Effectively, there is no more limit on coal which is now sanitized to be called “clean coal technologies”.

 

The aspiration for LNG

 

Several big groups were granted licenses to develop big LNG import terminals but progress had been slow. Many people wonder if the reason is the groups that were granted LNG licenses are the same ones that have been actively developing and contracting big coal power projects, exactly the competitor of LNG.

 

Introducing LNG into the country’s generation or energy mix is to introduce n our energy sources that will enable the country to better deal with upheavals in supply and demand situations and world prices of each type of fuel. This promotes energy security and reduce risks of being overly dependent on a single type of fuel like coal.

 

c. Alternative fuels and technologies – Renewable and Nuclear Energy

 

1. Renewable Energy

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Not all renewable energies are the same. Some can produce cleaner and cheaper energy consistently all day. Some are interruptible and limited, Some are very expensive and would require major government subsidies that eventually end up being paid for by the consumers. Some are disruptive to the stability of the grid like wind.

 

We propose that these renewable energies are developed in areas where they are appropriate and where they are compatible with the power system. Solar and wind have their limits. So does Mini-Hydro’s which are good where hydro water is good but it requires an economical reserve and backup system to deal with drops in their output during the dry and summer season when water is low.

 

In the right places biomass have potential without requiring high government subsidies.

 

Market trends and genuine competitive biddings have shown that solar can be supplied at market rates on par with coal and do not need to be spoiled with high and subsidized feed in tariff rates.

 

2. Nuclear Power

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Nuclear power is supposed to be one of the most competitive energy sources. For this reason, most countries seeking competitive power to support development of their industries adopt nuclear power.

Now there are safer and smaller nuclear power designs. If studied properly these new nuclear technologies can be a significant part of the country’s future energy strategy.

 

The country’s nuclear energy strategy should not be defined by what we do trying to revive the old and never operated Bataan nuclear plant. BNPP is not the be all and end all of our power development strategy.  Let us move on from that. If the Koreans believe that they can revive the BNPP for $1 billion and 5 years, why not let them take the risks. Let us buy the cheaper power if they are successful. But let us stop making the Filipino people take the risks again.

 

3. Power Reliability and Lower Costs in the Visayan Islands

 

As mentioned, the power supply in the Visayan region is a lot more reliable now than before when power from Leyte, Cebu, and Dumaguete were expected to energize through submarine cables and long overhead power transmission lines the rest of the Visayan islands. Panay, Negros, Bohol, including Boracay.

 

Power supplybecame more reliable in Panay, Cebu, and Bohol when power plants were built on those islands specially Panay from where the world famous Boracay also got better power supply.

 

There is one island that is the missing link in the Visayan power supply chain and that is Negros Island. It is an island that has about 400mw in total demand. For some reason it has no base-load plants.

 

Ironically Negros is commonly believed to have excessive power. 350mw of solar and 400mw of biomass power have been licensed under the expensive Feed In Tariff program. It is even being touted as the renewable energy capital of the Philippines. Due to inadequate transmission line system on the island, solar energy could not be transmitted to where they are needed. Biomass projects which are mostly licensed to Sugar Mills have been half developed for the same transmission line problems.

 

The island continues to be dependent on imported power through submarine cables from Cebu and Leyte in the east and from Panay island in the west. It gets some geothermal power in the southeast.Still, it suffers from brownouts whenever there are generation, transmission, and weather problems from the neighboring island sources.

 

A need for On-Island generation in Negros island

 

Negros island needs on-island generation to cover its base load power needs of about 250 to 300mw. Not one big plant but two or three smaller plants strategically located to serve the islands major load centers of Central Negros and the Dumaguete area. Properly implemented, the islands biomass projects from Sugar Mills can be its cheapest and cleanest energy sources.

 

Negros Island can depend on their neighbors for mid-merit, reserve, and peaking power requirements through the existing submarine cables whose capacity can also be used to export the islands excess solar energy power in the afternoons.

 

The Visayan islands can benefit as a whole by complementing each other’s power generating capacities that can be properly integrated by a carefully designed inter-island transmission system. This will also lead to lower WESM power prices.

 

Once again these on-island generating facilities should be subjected to a truly competitive bidding process to meaningfully benefit the Negrenses.

 

4. Brownouts in the Visayas due to the diversion of its power capacity to Luzon

 

One thing that has been perplexing many people from the Visayas is why the power capacity from these islands are being diverted to Luzon whenever there are shortages on those islands and hence causing brownouts in the Visayas.

 

Luzon island is supposed to have more than sufficient power generating capacity with the country’s largest generating plants being located there. Why does it need to take power and cause brownouts in the Visayas?

 

Could this be a consequence of the majority of the generating plants in Luzon being owned by a limited few? People have been wondering why coal plants seem to shutdown simultaneously during the months they are needed and also causing undue rises in the WESM prices that unfortunately benefits the other power plants owned by the same generating companies?

 

We hope that the Department of Energy and the Energy Regulatory Commission can implement rules that will prevent possible market manipulations that harm consumers and industries.

 

Worse it affects the reliability of power in the Visayan islands.