San Miguel mulls clean energy investments

MANILA, Philippines - Diversifying food and beverage conglomerate San Miguel Corp. (SMC) plans to explore new investment opportunities in the power generation sector, particularly those that could supply clean energy for the country.

“We only want clean energy sources and those that utilize clean technology,” SMC president Ramon Ang told The STAR.

He said once completed, the smart grid being worked on by the National Grid Corp. of the Philippines (NGCP) and Energy Regulatory Commission (ERC) would be able to address the power supply shortfalls being experienced in some island grids. The smart grid is expected to be completed in a year or two.

Ang explained that the present supply shortfall is due to the fact that the producer-side grid line is simply too small and could not efficiently transfer excess supply from one island to the other.

SMC earlier announced that in addition to the 2,000 megawatts of capacity that is has acquired in 2009, it plans to build 3,000 MW more in three to five years. This includes a plan to put up a 300-MW coal-fired power plant in Mindanao estimated cost $300 million.

SMC, through San Miguel Energy Corp., has acquired 100 percent of the outstanding capital stock of Daguma Agro Minerals Inc. and is considering maximizing the utilization of the coal deposits of Daguma in South Cotabato. It is also evaluating the viability of constructing and operating a mime-mouth power plant in the vicinity of Gen. Santos City.

Ang said in an interview that Daguma has a very good potential in terms of coal reserves. “We aim to help address the capacity shortage in Mindanao. We hope we can find a good partner in Mindanao, an operator utility,” he said.

“Because of what happened in Malampaya, Mindanao had no reserve power. In Luzon, the El Nino reduced capacity from hydro. In fact, with the onstream of 246 MW in Cebu, Visayas even has an excess of 100 MW. Probably, in Visayas, what is needed is standby power, a diesel plant that can generate 300 MW or more.  In Mindanao, the peak shortfall is 700 MW and again, the solution is standby power. There is no real shortage, just problems caused by lack of standby power,” he said.

Despite the absence of a real shortage in power supply, Ang emphasized that there is a huge opportunity to invest in power generation, especially cheaper but cleaner sources. “In Mindanao, we can produce at a cost of P2 per kilowatthour from the present P6. Visayas produces at P10 per kwh. We have a submarine cable that can bring excess capacity from one island to the other but it is too small. We need to add wires,” he pointed out.

NGCP said the grid project that should have connected Leyte with Mindanao could not be justified due to lack of sufficient power in Mindanao that could be imported into Visayas or even Luzon. Officials said it might take another five years before this project could take off. Interconnecting Visayas with Mindanao would be more costly because of the distance between the two islands, they explained.

Aside from hydro as a clean energy source, Ang said they are producing power from coal using only clean technology.

SMC won the bidding for the 620-MW Limay combined cycle plant in Bataan. Through San Miguel Energy, it also bagged the bidding for the 1200-MW Sual coal-fired power plant in Pangasinan. It is also bidding for the 246-MW Angat hydropower plant as well as the contract for the 1,200-MW Ilijan natural gas facility in Batangas.

Through Strategic Power Development Corp., SMC has also submitted the highest bid of $450 million for the contract to manage the 345-MW San Roque multi-purpose hydroelectric plant.