Power shortage expected to hit Luzon in 4 years

posted May 01, 2018 at 07:45 pm
by  Alena Mae S. Flores
Power industry executives expressed concern over potential supply problems by 2022 or 2023 amid the slow construction of new power plants and rapidly increasing demand.

Officials of the energy sector said while there was currently enough power in the Luzon grid, the low reserve margin, deteriorating power plants and regulatory delays should be addressed soon.

GE Philippines chief executive Jose Victor Emmanuel De Dios said power supply was “still healthy,” but new capacity would be needed over the next few years.

“My view is that the greater the reserve margin, the better, since it can easily take five years to develop large-scale power projects. Some of our Asean neighbors have much greater reserve margins than the Philippines, ensuring energy supply security,” De Dios said.

The Luzon grid suffered two instances of supply “imbalance” last week, resulting in a few minutes of power outage after a large power plant went offline, reflecting the need for more power reserves.

Power demand also continued to rise with consumption growing 4 percent last year, according to data from the Energy Department.

Power consumption in the Philippines reached nearly 95 million gigawatt-hours in 2017, up 4 percent from 90.798 million gWh in 2016. Residential customers had the highest consumption at 26.792 million gWh last year, followed by industrial customers with 25.573 million gWh and commercial establishments with 22.767 million gWh.

De Dios said there were not enough plants being built to address increasing demand.

“Maybe Mindanao has more than its current demand but with the HVDC [high voltage direct current] project being planned, power can be exported to Luzon and the Visayas. We probably need more plants in Western Visayas and Luzon,” he said.

Joseph Nocos, vice president for power development of Alsons Power Group, said a power shortage in the future “would depend on the timing of the entry of new plants, the retirement of the old ones and the growth in demand for power.” 

“The interconnection of Mindanao to Visayas and the rest of the country could also affect the speed at which the excess capacity can be digested by the country as a whole,” Nocos said.

Nocos said he was hoping that the slowdown in construction of new generation plants was only temporary.

“There are still major projects that are in the pipeline awaiting regulatory approvals so the slowdown could be temporary,” Nocos said.

De Dios said no new major plants were being built “because there are no new PSAs [power supply agreements] being approved.” 

AC Energy Holdings Inc. chief executive Eric Francia said power plants with a combined capacity of 3 gigawatts were currently under construction all over the country.   “Our supply should be enough to meet the growing demand for the next four to five years,” Francia said.

Francia and  De Dios, however, raised concern over the thinning reserves at the Malampaya natural gas project in Palawan.

“With the imminent decline of Malampaya, aging of older plants and delays faced by new power projects, we could be facing supply challenges in 2022 to 2023,” Francia said.

Francia said building power plants became challenging, “given the short term supply-demand equation and rising interest rates.”

Topics: GE Philippines , Jose Victor Emmanuel De Dios , Alsons Power Group , Eric Francia , Joseph Nocos
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