Plans for an LNG venture between Manila Electric Company (Meralco) and Osaka Gas currently “take a pause”, the companies said, suggesting they need time to reassess the dynamics of the Philippines' electricity market. The JV was meant to help Meralco develop an LNG import facility in Atimonan, Quezon – yet the utility's power generation arm may have already shifted to coal technology on a nearby power plant.
Meralco President Oscar S. Reyes said both parties are trying to re-evaluate the role of gas in the country’s emerging power mix, considering the rising penetration of renewables and ascent of battery storage. “As far as we are concerned, we are doing our own studies, they (Osaka Gas) are also doing their own studies,” he told local reporters.
Osaka Gas initially aimed to complete its own feasibility study by the end of last year but things have taken much longer than expected.
New-build generating capacity is certainly needed: Government estimates call for additions of up to 450 MW annually for Luzon’s grid alone, based on forecast of a 5% economic growth a 1.8% growth in population annually.
Investment in a new LNG import facility would only be viable, if the future supply-demand scenarios indicated that the Philippines will see substantial additions of gas-fired power generation capacity. Yet, this is increasingly uncertain as wind and solar powers as well as biomass generators make inroads.
According the Meralco head, gas will certainly “have its spot in the energy mix” – yet questions over its future market share have cast a shadow over timely investment in new integrated LNG-to-power projects.
“The earliest that LNG can come in – given the government and regulatory approval processes plus the time to build, you’re talking about 2020 or farther out,” Reyes reckoned, suggesting “it reduces the gap towards the end of Malampaya.”