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Friday, March 29, 2024

Energy sector braces for surging demand

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The energy sector braces for the further surge in power demand which has already breached the pre-pandemic levels.

President Ferdinand Marcos Jr. said in his first State-of-the-Nation address that the availability of cheap and reliable energy is one of the fundamental requirements for economic growth. Marcos said the country should look at all power technologies such as renewable energy and nuclear power.

“At present, our demand for energy far exceeds our reliable supply. We must increase the level of energy production.

We must look at every possible option that would be appropriate for the Philippine situation,” the president said.

“There is some room to expand our present power supply through existing power sources, but this is only to a very limited extent. We must build new power plants. We must take advantage of all the best technologies that are now available, especially in the areas of renewable energy,” Marcos said.

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Data from the Independent Electricity Market Operator of the Philippines showed that peak demand for 2022 reached 14,380 megawatts in May, up 4.57 percent from the 2021 peak of 13,752 MW and 6.91 percent from the pre-pandemic level in 2019 at 13,450 MW.

In Luzon, where most businesses are situated, peak demand reached 12,103 MW in May, up 4.32 percent from 11,601 MW in 2021 and 7 percent from 11,307 MW in 2019.

The Department of Energy’s Power Development Plan originally forecasted a higher Luzon peak demand at 11,841 MW in 2021 and 12,387 MW in 2022, but the COVID-19 pandemic tempered this.

It forecasts Luzon’s peak demand to continue to increase, reaching 13,125 MW by 2023, 13,917 MW by 2024 and 14,769 MW by 2025.

“Peak demand is expected to increase by almost four folds from 2020 to 2040 under the low and high gross domestic product growth scenarios, equivalent to about 7 percent AAGR [average annual growth rate],” the report said.

The DOE said Mindanao would have the highest annual growth at 8 percent, followed by the Visayas grid at 7 percent and Luzon at 6 percent.

Energy Secretary Raphael Lotilla acknowledged that the power supply remained “inadequate” to meet the anticipated increase in demand.

“The President pointed out that our power supply is, however, inadequate. This is particularly true with the loss of Malampaya natural gas for the 1,200-MW Ilijan plant due to declining field production,” Lotilla said.

More capacity

The DOE said to support this demand, the Philippines’ installed capacity should increase by four times to 91,701 MW by 2040, coming from existing, committed and new build capacities from 22,317 MW in 2019.

The simulations showed that new build capacities from RE should be added to the grid with a total of 44,903 MW. This would comprise 31,316 MW solar, 11,565 MW hydro, 1,452 MW wind, 480 MW geothermal and 90 MW biomass.

New gas plants will also have to be built with combined capacity of 19,060 MW.

The new build capacities added for this scenario would result in the Philippines’ power generation mix comprising 40-percent natural gas, 35-percent RE and 25-percent coal.

The DOE said some 7,628 MW committed power generation projects and an additional 2,110 MW battery energy storage systems are expected to be operational from 2021 to 2027, based on data as of June 30, 2021.

About 50 percent will come from coal, 31 percent from natural gas, 13 percent from RE and six percent from oil.

About 35,086 MW of indicative power generation projects and an additional 1,047 MW of BESS projects are expected to be operational from 2021 to 2032.

“Significant progress in the natural gas industry is also necessary to meet the large additional capacities and support flexible power generation in the future,” it said.

The DOE said infrastructure in the whole power supply chain, such as the generation, transmission and distribution, should also be operationalized on time.

“Lastly, policy and regulatory support must be timely and effectively put in place to realize the vision and advance the developments in the country’s electric power industry,” it said.

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