Energy and Economic Boom

In April this year, the Duterte administration unveiled an ambitious Build Build Build Program embodied in the Philippine Development Plan (PDP) of 2017 to 2022. 

The Build, Build, Build program aims to roll out trillions of pesos of infrastructure to support the country’s economic development as embodied under the PDP.

The PDP is anchored on the Ambisyon Natin 2040 collective’s long-term vision and aspirations of the Filipinos for a better life by 2040 backed by a stronger economy, which would also require a more resilient, stable, affordable and efficient energy sector.

Thus the Department of Energy (DOE) launched its own Philippine Energy Plan 2040 in anticipation of the higher energy demand between now and 2040.

According to the DOE’s projections, the country’s demand for energy will triple between 2016 to 2040. Petroleum products will continue to dominate the country’s final energy demand by 2040 to 40.5 million tons of oil equivalent (MTOE) by 2040 from 13.9 MTOE in 2015, representing a three-fold increase.

Energy Secretary Alfonso Cusi said electricity demand is anticipated to grow four times from its 2015 level.

“On a sectoral basis, the transport sector will have the highest demand in 2040 at 30.08 MTOE. As a likely result of the government’s push towards industrialization and urbanization, the energy demand for the industrial and residential sectors is projected to double or even triple by  2040,” said Cusi.

Cusi said the total energy supply requirement of the country is seen to reach 134.2 MTOE by 2040 from 52.2 MTOE in 2016 with fossil-based sources continuing to get the lion’s share in the total supply mix.

The DOE’s primary energy mix shows that coal’s share in the primary energy mix will reach 41.6 percent in 2040 from 20.5 percent followed by oil at 32.2 percent from 35.5 percent.

The average share of RE resources, according to DOE, shall be 28.2 percent across the same period.

Biomass will get a 9 percent share of the mix in 2040 from 14.4 percent in 2016 while geothermal will go down to 7.1 percent from 18.2 percent last year.

Natural gas’ share is also expected to go down to 4.1 percent from 6.3 percent and hydro at 1.9 percent from 3.9 percent.

Other technologies are projected to get a 3.1 percent share in 2040 which Cusi views “as a calculated result of the DOE’s pursuit of a policy that aims to develop technology-neutral energy sources in meeting the ideal proportion of 70 percent busload, 20 percent mid-merit and 10 percent peaking requirements for power generation.

Cusi said the forecasted new technologies in the mix may include nuclear although this still needs careful study.

“This is the so-called 70-20-10 ordeal proportion…Rather, it is the ideal energy mix targeted by the Administration as part of its inclusive growth agency in the energy sector,” Cusi said.

According to Cusi, the Philippines will need an additional capacity of 43,765 megawatts by 2040 of which 25,265 MW are baseload requirements, 14,500 MW are mid-merit capacity and 4,000 MW are peaking power plants.

“Hopefully, with Dutertenomics attracting the adequate level of private investments, we can reach our targeted additional power capacity by year 2040--43,765 MW,” he said.

DOE records showed that the Philippines’ installed capacity has reached 21,423 MW as of 2016 from 18,765 MW in 2015 while dependable capacity was placed at 19,097 MW. The increase in capacity was attributed to the commercial operations of several power plants such as the 300 MW Southwest Luzon Power Generation Corp., 450 MW San Gabriel natural gas plant, FDC Misamis coal plant, 150 MW SMC Malita coal plant, 135 MW Palm Concepcion coal plant and 132.5 MW Helios solar farm.

Energy Security

Cusi said the energy sector’s strategic directions are aligned with the administration’s vision of inclusive growth, high trust society and a globally competitive knowledge economy.

“They may be encapsulated in the following bite-sized elements: energy security; expanding energy access; low-carbon future; strengthened partnerships, both local and international; consistency with plans and roadmaps, proactive pursuit of relevant legislative agenda and strengthened consumer protection,” he said.

Cusi assured that the department will continue to ensure energy security through the development of proven indigenous energy resources.

“We are determined to achieve the ideal and dependable 70-20-10 energy mix, through massive infrastructure and development with the indispensable participation of the private sector,” he said.

“The quest to explore and use local or indigenous sources of energy, like renewables, fossil fuels and alternative fuels, will continue as a matter  of policy. And this age of rapidly developing technology, as we will even encourage the entry of clean, efficient and smart technologies in the market,” the energy chief said.

Cusi said the downstream natural gas industry shall be developed to attract further investments and in the short-term, the government will build a common liquefied natural gas (LNG) receiving and distribution infrastructure.

“We will also develop and retrofit our energy infrastructure to not only be efficient but also resilient against natural and man-made disasters, and with the necessary and effective response emergency measures,” said Cusi.

Crucial to the strategic directions of the department in ensuring energy security is the issuance of the executive order on DOE declared energy projects as  national significance, he said.

“Energy efficiency and conservation, natural gas, liquefied petroleum gas and declaring energy projects of national significance are particular areas of concern that are in urgent legislation right now,” he said.

He said DOE will also ensure transparency and predictability in the power generation, transmission and distribution permitting process and accelerate the privatization of energy assets of the Power Sector Assets and Liabilities Management Corp. to meet the mandated goals prior to the end of its corporate life in 2026. PSALM manages the assets and liabilities of National Power Corp.

Cusi adds that the department will expand energy access to ensure affordable, reliable and sustainable and modern energy for all.

DOE will exert best effort to achieve 100 percent electrification of targeted identified households in three major islands and connect the Mindanao grid with the Visayas and Luzon grids to increase power supply reliability and resilience. As of 2016, household electrification stands at 90.7 percent.

“It is our ultimate desire to make the vision of one-grid Philippines a reality, where there is grid interconnectivity between and among our major island regions. While we pursue the vision of an integrated national grid, the DOE is now studying the implementation of distributed generation which may be more natural and appropriate to our archipelagic nature,” Cusi said.

The DOE will also continue to promote a low carbon future by increasing renewable energy capacity and promoting technology innovation through research, development, demonstration and deployment of clean, efficient and smart energy technologies and infrastructure for next generation vehicles.

“While we remain closely attuned to the marching order of President Duterte to ready the energy to fuel our industrialization and agricultural development, we remain equally mindful of our social and international obligations to protect the environment and lessen our carbon footprint,”  the official said.

Cusi said DOE is committed to increase RE capacity to 15,000 MW in 2040 from 5,000 MW in 2010.

Challenges Ahead

“All these ambitious energy plans are not without their share of challenges that delay or prevent their fruitions,” Cusi said.

These challenges includes ensuring energy security, reliability and reasonably-priced energy, passage of energy-related bills; harmonization of laws/policies; social acceptability of energy resources or technologies; energy resource development hindered by transnational/geographical boundaries; among others.

“With tenacity and consistency in adhering to all these well-considered plans and roadmaps, we will prevail against the usual bane of ningas-cogon, mediocrity and shortsightedness, and prove capable of achieving the long-term energy objectives of the country for the benefit of the present and future generations of Filipinos,” the energy secretary said.

Topics: Duterte administration , Build Build Build Program , Philippine Development Plan (PDP) of 2017 to 2022 , Department of Energy , Philippine Energy Plan 2040 , Secretary Alfonso Cusi
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