Energy aspirations
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Our energy aspirations, as amplified in the President’s SONA last week, sounds pretty ambitious, almost as ambitious as the P20/kilo rice. We can only hope the President’s energy plans are doable and he can deliver on the aspirations before his term expires.
Frankly, I doubt that. Even with the so-called green lanes that will supposedly facilitate the grant of permits to the developers, there are really big challenges that have slowed project completions. For financing, a developer needs three years of validated wind data. Financing may take four years. In all, seven years to complete a project.
Anyway, here are the President’s dreams.
“When it comes to energy, renewable energy is the way forward. We are aggressively promoting renewables so that it provides a 35 percent share in the power mix by 2030, and then on to 50 percent by 2040. To accelerate the realization of this green energy goal, we have opened renewable energy projects to foreign investments.
“Since last year, an additional 126 renewable energy contracts with potential capacity of 31,000 megawatts have been awarded. To date, we have over a thousand active projects spread all over the country: 299 of these are solar; 187 are wind; 436 are hydroelectric; 58 biomass; 36 geothermal; and nine are ocean-powered.”
If I had no background in the old Ministry of Energy, I would probably be impressed by the numbers. But the devil is in the details.
For starters, they are planning 2,000 MW of offshore wind projects in Ilocos. That’s a big number. We get power red alerts in Luzon sometimes because we have a few hundred megawatts deficiency when a power plant suddenly trips.
Another consideration is pricing. Will the pricing of offshore wind be at grid parity like solar? In Taiwan, the cost of offshore wind electricity is P9.80/kwh and sold only for P4.60/kwh. The government pays the subsidy. Here, consumers will likely be asked to subsidize through the feed-in tariff or FIT.
Also, I am not sure if we are ready to be that dependent on wind, a power source that isn’t always there. Will it be backed up by batteries? How much standby conventional power plants using coal must be available to pick up if wind power falters?
I wonder if offshore wind is the least cost option. Put another way, why do we have to go offshore, some 10 to 20 kilometers from the shoreline to put up more expensive facilities? Will an onshore facility nearby deliver considerably less power?
Hopefully, we are not doing offshore wind power for the novelty of it… or because it is sexier than the onshore wind we now have.
Nevertheless, our DOE has signed contracts with Copenhagen Infrastructure Partners for our first wholly foreign-owned offshore wind projects. The contracts call for three wind farms with a combined capacity of 2,000 MW and run under 25-year operating licenses.
The three projects are to be developed in Burgos, Pagudpud, and Bangui in Ilocos Norte. Once implemented, the three projects are expected to generate enough power to supply about one million households.
The joint venture between Copenhagen Energy and PetroGreen Energy Corp. is expected to begin commercial operations by 2028. They have already secured a service contract and have submitted a system impact study, including the electrical design and proposals on how to bring power to the grid.
One of the country’s main power distributors, Aboitiz Power, is also currently undertaking a feasibility study exploring the potential for up to three GW of offshore wind by 2040. They are expected to complete the study by mid-year. Someone should do a wind study around the vicinity of Batasang Pambansa. There is a lot of hot air there.
DOE said that to date, 57 Offshore Wind Service Contracts have been awarded with a total potential capacity of about 42,000 MW that will be developed.
I wonder if we will have enough transmission capacity for all that power.
Since power demand in Northern Luzon is considerably less than 2,000 MW, the power must be transmitted to the rest of Luzon through the NGCP grid. If they are really able to produce that much power, the current power “highway” may not be enough. NGCP will most likely have to build a parallel “expressway” to complement the current lines in the same way that MacArthur Highway complements NLEX.
Building that power “expressway” isn’t going to be easy based on past experience. The biggest problem will be acquisition of right of way for about a thousand kilometers of new grid lines that must be ready by the time the offshore wind projects are ready to deliver power. For the Ilocos projects alone, they need some 300 kilometers of new lines from Ilocos Norte to Pangasinan. That means NGCP must start planning the route and start ROW negotiations. They can only start building the new lines after they have taken possession of the land. It takes more than five years to do all that.
Speaking of the grid, here is what the President said:
“We finally have a unified national grid, with the interconnection of the Luzon, Visayas, and Mindanao grids. The “One Grid, One Market” will enable more efficient transfers and more competitive pricing of electricity throughout the country.
“However, 68 grid connections are much delayed, according to the ERC’s count. We are conducting a performance review of our private concessionaire, the National Grid Corporation of the Philippines. We look to NGCP to complete all of its deliverables, starting with the vital Mindanao-Visayas and Cebu-Negros-Panay interconnections.”
The President is right. The faster we get into “One Grid, One Market” the better for system reliability.
But as for the NGCP delays, the President must look into why. Business sense makes it imperative for NGCP to get projects completed so it can be added to the rate base. But they are helpless with ROW problems, the root of delays.
DOE by itself doesn’t have the political muscle needed to move projects faster. The President should assign an action person in Malacañang to deal with ROW problems, including talking to judges and mayors who are often abetting delays. That’s how things will get done.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on Twitter @boochanco
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