Our energy requirements could quadruple in three years

Despite uncertainties in the global outlook, there is confidence that the Philippines will be able to achieve its economic growth target of 6 to 7 percent for 2023 as it continues to outperform many countries not only in Asia but other parts of the world. It goes without saying that recent economic reform measures have made the Philippines attractive to foreign investors, among them the Retail Trade Liberalization Act, the Foreign Investments Act and the Public Service Act that have relaxed restrictions on foreign participation in key high-growth areas.

The recent trips of President Ferdinand Marcos Jr. to various countries, especially in the United States, has also brought a lot of attention to the Philippines as the smart business choice, with billions of dollars’ worth of investments committed by top US companies engaged in different industries.

Certainly, things are looking up. But at the rate our economy is growing, plus the fact that we are trying to attract more investments from abroad, one major concern that must be given a lot of serious attention is the demand for energy that will grow exponentially. According to the Department of Energy’s Power Development Plan, peak demand is expected to “increase by almost four-fold from 2020 to 2040 under the low and high gross domestic product growth scenarios, equivalent to about 7 percent AAGR (average annual growth rate).”

The President is fully cognizant of this, saying in his first State of the Nation Address in July last year that our demand for energy far exceeds our reliable supply, which is why the level of energy production must be increased.

“There is some room to expand our present power supply through existing power sources, but this is only to a very limited extent. We must build new power plants. We must take advantage of all the best technologies that are now available, especially in the areas of renewable energy,” President Marcos stated.

The recent Fitch Solutions Country Risk & Industry Research commentary on the Philippines’ renewable energy sector noted that the government has been “increasingly supportive of renewables through its policies and also by opening the market to private and foreign companies.” Last year, the government amended the Renewable Energy Act to allow full foreign ownership in RE projects – which in turn has spurred investor confidence and made the country attractive to foreign firms.

In an opinion piece by Gavin Maguire, published at Reuters, titled “Philippines set to go from renewable laggard to leader in SE Asia,” he said that “The Philippines is set to leapfrog Vietnam as the main renewable energy producer in Southeast Asia, thanks to an aggressive project development pipeline that will result in a 15-fold boost in combined solar and wind power by 2030.”

The author noted “a key policy shift… in late 2022” that removed strict restrictions to foreign ownership, plus “a strong energy demand growth” that is “expected to lure growing interest from global firms engaged in renewable energy construction.”

During his official visit to Washington, the President met with top executives from companies engaged in renewable and clean energy, among them Ultra Safe Nuclear Corporation, a global leader in the deployment of “fourth-generation gas-cooled microreactors.” USNC has developed a micro-modular reactor energy system utilizing cutting-edge, proprietary technology that brings an “unprecedented level of safety as well as improved economics and reduced environmental impact for remote power applications.” In short, USNC – which is seriously considering the Philippines to become its hub in the region – aims to deliver energy that is safe, clean and cost-effective.

The President also met with executives of NuScale Power, a company that designs scalable small modular reactors and has expressed keen interest in investing in the Philippines. Maxeon Solar Technologies will also be investing $900 million to expand its operations in the Philippines. Maxeon designs and manufactures advanced solar panels and has been in the Philippines since 2003.

I spoke with Energy Secretary Popo Lotilla on the phone a few days ago and he agreed – and, I might add, committed – to move quicker on the “123 Agreement” that is required by the United States to pave the way for technology transfers on small modular power plants. The legally binding “123 Agreement” provides a framework for peaceful nuclear cooperation between the US and partner nations, with specific standards outlined for a multitude of areas including peaceful uses as well as “prohibitions on enriching, reprocessing and transfer of specific material and equipment” without the consent of the US.

While we know that the administration of President Marcos is doing what it can to move quicker on developing renewable and clean energy projects and ensure the availability of a cost-effective and reliable supply of energy to address the growing demand and avert a power crisis, we should also look at potential investors in energy transmission infrastructure projects.

We have been talking to the National Grid Corporation of the Philippines and they assured me that they are committed to finish critical projects to boost the country’s transmission system, among them the Hermosa-San Jose transmission project, Cebu-Negros-Panay interconnection projects and the Mindanao-Visayas interconnection project that would greatly increase capacity and improve the transmission of power from one place to another.

As I have said in previous columns, there is so much investor interest coming our way, and I’m sure that at some point in time, these commitments would be realized, creating thousands of new jobs for Filipinos. There is a strong possibility that President Marcos’ aspiration would become a reality: Filipinos will no longer leave the country by force of circumstances – but purely as a matter of choice.

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