Advancing much-needed power projects, the Philippines’ Department of Energy (DOE) has cleared 23 plant proposals for the conduct of a grid impact study (GIS) – a precondition before developers can proceed with the actual construction. If built, these projects will have a combined capacity of just over 2,750 MW.
The cleared projects are based on a variety of fuel sources: Therma Batangas has plans for three combined cycle gas turbine (CCGTs) power plants with a combined output of 1,100 MW, while Global Luzon Energy Development is pushing to add a 2×335-MW coal power plant.
As for renewables, Greenergy Solutions seeks to add 400 MW through four solar projects, Strategic Power Development plans a 300-MW pumped-storage hydropower plant and an array of smaller developers have also given the greenlight to process with biomass power and small-scale solar PV projects.
Yet even if all new-builds can be realised on target, Philippines will remain severely exposed to power supply shortages as capacity additions have not kept up in recent years. Electricity consumption is forecast rise 73.2 TWh this year to reach 111.8 TWh in 2025.
Aware of the supply gap, the government in Manila has called on utilities to fast-track 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.
Questions over LNG-to-power project
A much-observed LNG venture between Manila Electric Company (Meralco) and Osaka Gas is still stalling after the two partners decided in September to “take a pause”, suggesting they would need to reassess the dynamics of the Philippines' electricity market.
Meralco had been seeking to develop an LNG import facility in Atimonan, Quezon – yet it seems that its Japanese partner got cold feet. Despite the gas supply glut in the Pacific Basin, gas as a fuel for power generation still remains less profitable than coal, notably in countries with significant domestic coal reserves such as the Philippines and Indonesia.
Coal stays king for baseload power
Coal production in the Philippines is on the rise and will keep expanding through 2020, as the country seeks a “cheap and quick fix” for its growing energy needs. Coal currently covers a third of electricity production, Philippine Energy Plan 2012 – 2030 targets that over 55% of new-build capacity will be coal-fired: a total of 26 new plants are on the drawing board.
Most of baseload power supply in the Philippines will continue to be covered by coal; energy secretary Alfonso Cusi simply said that "as a developing country we cannot afford not to have coal.”
Domestic coal mining companies, notably Semirara Mining Corp. are set to benefit. The company operates one opencast mine, with plans to open another before the end of 2016 and a third at a later stage – it seeks to boost output from 8.46 million tons in 2014 to 10.75 million tons in 2020. Even though, BMI Research expected coal demand in the Philippines to outstrip domestic output, requiring an increase in imports.