MANILA, Philippines — The country’s massive buildup of renewable energy (RE) capacity will require the support of natural gas to ensure stable power supply, according to Lopez-led First Gen Corp.
Federico Lopez, company chairman and CEO, stressed that a just energy transition hinges on two crucial elements: reducing carbon emissions and ramping up energy efficiency efforts.
“The most important point is that by 2050, we will need five times the electricity we use today, and we will need 10 to 12 times the clean energy in use today,” he said.
Under the Philippine Energy Plan (PEP), the government wants to expand the share of renewables in the energy mix to 35 percent by 2030, 50 percent by 2040 and over 50 percent by 2050.
Lopez said, however, that PEP estimates peak power demand to surge to nearly 70,000 megawatts by 2050 from 16,596 MW in 2022, equivalent to an annual average growth rate of 5.2 percent.
While RE power plants provide clean power, he said these energy sources are not enough to ensure grid stability and reliability due to their intermittency.
For instance, solar panels only generate electricity when the sun is shining, while wind turbines only operate when there is sufficient wind.
“Natural gas has the ability to do two things: it can generate a kilowatt-hour with half the emissions of a coal plant,” Lopez said.
“Secondly, as more and more REs come into the grid, which are intermittent, you will need to have power plants that can ‘load follow,’ that can ramp up and down very quickly. Natural gas can do that; coal cannot.”
First Gen, through subsidiary FGEN LNG Corp., owns and operates an offshore liquefied natural gas (LNG) terminal in Batangas City, the construction of which was aimed at ensuring fuel for its natural gas plants.
It currently has four existing gas-fired power plants with a combined capacity of 2,017 MW at the First Gen Clean Energy Complex.
Furthermore, plans are now underway to develop another natural gas-fired facility: the 1,200-MW Santa Maria power plant.
Meanwhile, as the price of imported LNG is on the rise and inching toward $16 per MMBTu (million British thermal unit) or the fuel cost, the chair of the Senate committee on energy highlighted anew the need to prioritize indigenous gas.
Sen. Pia Cayetano, the sponsor of Senate Bill 2793 or the Philippine Natural Gas Industry Development Act, also debunked claims that current LNG prices are lower than indigenous or Malampaya gas.
Data from the natural gas market however show Malampaya gas costs only $12.8 per MMBtu while LNG is currently at $15.3 inclusive of all regasification and other costs to generate power. LNG prices are expected to go even higher as winter approaches.
Cayetano said the proposed legislation would ensure that the country will not be dependent on foreign fuel.
“Let’s take a stand. Prioritize indigenous (natural gas). Support indigenous. And buy indigenous,” Cayetano earlier said.
“It ensures a continuous and stable energy supply in the country, even or despite unpredictable events occurring in the global market,” she added.
Cayetano said SB 2793 will incentivize the full exploration and development of the country’s indigenous natural gas resources to address energy security concerns using Filipino gas first.
She lamented that the country’s indigenous gas resources has been neglected through the years following the discovery of the Malampaya wells off Palawan province.
She said the proposed law is key to revitalizing indigenous gas exploration which has been nearly abandoned because of the absence of clear-cut policies.
“From 150 wells in the 1970s, there have been no additional drilling efforts since 2019. Are we going to let this industry die? Are we going to be dependent on imported natural gas?” she said.
She said indigenous gas is the best energy solution because it is readily available, owned by the Filipino people and is a major source of state revenue, with 60 percent of Malampaya proceeds remitted to the government.