Energy is an essential resource in everyday life and a key driver of economies worldwide. Expensive and lack of access to energy have posed a barrier to economic development.
Amid the energy crisis faced by economies and the challenges brought about by the pandemic, the Marcos administration vowed to pursue energy security, energy access and a low-carbon future.
Energy Secretary Raphael Lotilla said President Ferdinand Marcos Jr. wanted to achieve energy security through the development of indigenous energy resources, providing access to energy and transitioning to a sustainable low-carbon future.
Lotilla said the Philippines is “very energy-insecure” as only 43 percent of the country’s total energy comes from domestic or indigenous sources.
He said this dependence is a cause for concern, especially in the wake of the Ukraine-Russia conflict, which exposed the country’s “vulnerability to volatilities in global prices.”
He said one solution the President is looking at is reviving the upstream natural gas industry.
“He wants to make sure that the policy environment for investors in the upstream is going to be one, certain; two, stable; and three, absolutely clear. We are addressing the desire of the president to make sure that the investment climate and the legal environment for the investment in the upstream become absolutely clear,” Lotilla said, referring to President Marcos.
Lotilla said the government’s plan to maximize indigenous resources drew strong interest from foreign investors such as Australian firm Nido Petroleum Philippines Pty. Ltd., the technical operator of Service Contract 6B.
Nido is proceeding with the site survey of the Cadlao oil field in the fourth quarter. The activities will pave the way for drilling two wells—one exploration and one appraisal—by the first half of 2023.
Cadlao is an old oil field that produced over 11 million barrels in the early 1990s.
Lifting of barriers
Recognizing the private sector’s role in promoting energy security, the DOE is pushing for the entry of more foreign investors.
“Private sector investments are central to achieving our renewable energy targets and vision for the Filipino people, and this is a welcome development for our foreign investors to invest in renewable energy production here in our country,” Lotilla said.
The agency sought clarification and received a favorable opinion from the Department of Justice on the foreign ownership limit on renewable energy resources.
The DOJ issued a legal opinion that exploration, development and utilization of inexhaustible renewable energy sources are not subject to the 60:40 foreign equity limitation as provided under Section 2, Article XII of the Constitution.
The DOJ opinion means that foreign ownership restrictions that hamper the flow of investments in the RE sector may now be relaxed.
“This will certainly contribute to our target share of renewable energy in the power generation mix of 35 percent by 2030 and 50 percent by 2040,” the energy chief said.
Off-grid electrification
Meanwhile, the DOE is pursuing the electrification of households nationwide as there are still more than a million unserved households or families without electricity access.
Lotilla said off-grid areas should continue to have power even as electricity costs had sky-rocketed amid the high price of diesel.
Oil accounted for 89 percent of the fuel used by power plants in off-grid areas.
Lotilla said the National Power Corp., mandated to provide electricity to off-grid areas under the Electric Power Reform Industry Act of 2001, is looking at ways to address the problem.
“The longer-term solution, however, is to move from again, the President said, over-dependence on imported sources. We have to go for more indigenous sources,” Lotilla said.
He said the key is transforming state-run Napocor “into dynamo work for missionary electrification.
Lotilla said another aspect of the president’s legislative agenda is initiating reforms in electric cooperatives to help ensure electricity access in the countryside.
“We will have to take a close look at how we should help, we should reorganize, we should strengthen the EC. The concept of an EC is a development agent,” Lotilla said.
“There are areas in the country which, up to now, still need that developmental support.”
Nuclear solution
President Marcos directed the DOE to re-examine the Philippines’ strategy on building nuclear power plants.
“In the area of nuclear power, there have been new technologies developed that allow smaller-scale modular nuclear plants and other derivations thereof,” Marcos said in his State-of-the-Nation Address early this year.
SMRs are advanced nuclear reactors with a capacity of up to 300 megawatts, about a third of the generating capacity of traditional nuclear power reactors. SMRs are smaller than conventional power reactors and easier to install.
“The challenge before us, which the President has also indicated, is that we will be open, and we’ll look into the options for nuclear because nuclear is non-carbon emitting,” Lotilla said.
“For the small modular power plants, we will attend to them when they become commercially available. But right now, we will focus instead on one, for example, establishing the regulatory framework,” he said.
Lotilla said the Philippines would abide by the requirements of the International Atomic Energy Agency, especially after the Fukushima accident in Japan, where compliance requirements were reinforced and strengthened.
Lotilla said one of the most critical points is to address the concerns of the host communities.
“We would have to strengthen the trust and confidence of our people in the ability of the government to regulate safely, to put up necessary standards. We can even look at this from the regional standpoint,” he said.
Lotilla said the DOE does not ban technologies. What the Constitution bans are nuclear weapons, and not the peaceful uses of nuclear energy, he said.
Challenges ahead
Lotilla admits power supply remains thin, and the DOE is preparing for a possible “difficult” power situation in May and June next year.
“For 2023, the situation is a bit difficult, especially in the summer months, and the scenario again assumes that Ilijan will not be available, and it shows several yellow alerts and the possibility of red alerts in 2023,” the energy chief said.
“These are the ones we are attending to with some urgency and which is to plan for how to bridge this particular gap,” Lotilla said.
The DOE hopes that energy facilities, particularly on liquefied natural gas, will come on stream next year to help meet demand.
Data from the DOE show that yellow alerts or tight supply situation would occur 17 times, with three red alerts in Luzon in May and June.
Lotilla said transmission constraints should also be addressed to improve the supply in the Luzon grid and avoid any red alerts.
This can be done by improving system operations to maximize available plants, timely completion of transmission projects, and identifying specific segments where the government is the reason for the delay (e.g., local government units and courts’ timely action on right-of-way issues) and provision of necessary intervention.