Lopez Group firm on renewables, shuns coal

CEBU CITY, Philippines — The Lopez Group is sticking to its commitment to build clean energy projects as the power grid is expected to require generating facilities with more flexibility and faster capacity ramp-up with the entry of variable renewable energy platforms, displacing coal-fired power plants in the equation, its top official said.

During the conclusion of the 2nd Philippine Environment Summit here, First Philippine Holdings Inc. chairman and CEO Federico Lopez said the group would keep its course toward clean and green energy.

In 2016, First Philippine Holdings vowed it would not invest, build, or develop any coal-fired power plants, as more companies become conscious about greening their footprints and supply chains.

“In the Philippines we’ve been seeing some electricity customers specifically coming to us because they want to green their supply chains with renewable power,” he said.

Investing in green platform will also aid in a more competitive landscape of the Philippine power market.

“The Philippines is primarily a services driven economy. Retail competition and open access (RCOA) that’s underway and progressing will disaggregate that demand. Our portfolio that blends flexible natural gas fired plants and geothermal (which is the only competitive 24/7 RE technology today) is a better combination for serving this type of demand called mid-merit,” Lopez said.

RCOA is mandated by the Electric Power Industry Reform Act of 2001 which aims to institutionalize competition in the supply of electricity, allowing electricity end-users to choose their suppliers based on low price and other factors.

Lopez also said improvements in technology are moving very fast, bringing exponential cost reductions on solar, wind and battery storage over the last few years.

And as more renewables come onto the grid and are used down to the consumer level, the demand curve would change, he said.

“Economically priced renewable energy is here, will only get cheaper and in due time will permeate our lives whether we like it or not. There is no stopping that,” Lopez said.

As an example, the company official cited the progression of renewable energy in California between 2011 and 2016, when end-users installed renewables on rooftops of homes and businesses. People use less electricity from the grid during daylight hours, but require more supply from the utility as the sun sets.

Lopez said coal-fired power plants cannot keep up with that kind of variability and may likely end up as underutilized or stranded assets in 10 years or less given the rapid pace of renewables.

“In countries like Australia, Germany, and some US states like California with even modest renewable energy penetration, they are already experiencing coal and even gas plants being utilized less or being idled,” he said.

That said, power developers should focus instead on developing flexible power plants such as renewables or gas plants, Lopez said.

“Because coal plants do not have the needed ramp up flexibity, they pollute more, have much higher carbon emissions and are now even more expensive than combined cycle gas turbines running on natural gas, it begs the question: Why do we even need to put up new coal plants?” he said.

First Philippine Holdings is the parent firm of First Gen Corp. and Energy Development Corp.

First Gen has four natural gas-fired power plants: the 1,000-megawatt (MW) Santa Rita, the 500-MW San Lorenzo, as well as the newly constructed 97-MW Avion peaking and 414-MW San Gabriel mid-merit power plants.

Its subsidiary, First Gen Hydro Power Corp. (FG Hydro), also owns and operates the 132-MW Pantabangan-Masiway hydroelectric power plant complex located in Nueva Ecija.

Meanwhile, EDC owns and operates several geothermal power plants as well as a wind and solar power plant.