Philippines: Former DOE chief offers his view on 'energy mix economics'

Philippines: Former DOE chief offers his view on 'energy mix economics'

To get discussions moving to the next level on the proposed energy mix for
the country, former Energy Secretary and PHINMA Energy President Francisco
L. Viray offered insights on what metrics the energy planners shall be
assessing and taking into consideration for the policy.

At this stage, energy mix had become the industry's buzzword but the
Department of Energy (DOE) is still at ground zero when it comes to the
specifics of the plans and parameters for such policy crafting.

The fixed 30-30-30 prescription of technology sharing for coal, gas and
renewables remained a deep puzzle and still too-complicated terrain for the
industry players, hence, they have been seeking for clarity of the energy
mix economics being presented by the energy department.

In an exclusive interview, Viray noted that the starting point for the DOE
planners shall be to analyze the power system's load duration curve (LDC),
and from there, they should "determine the mix on the basis of the
components of the load curve - namely, the system's need for base load
capacity, mid- to peak load and then the system's need for ancillary
services (reserves)." A load curve is applied in power generation to
demonstrate the relationship between the generating capacity requirements of
a system and how that capacity is being utilized.

Viray said it is paramount for energy planners to "determine technologies
for each component of the load curve using basic rule of power system
economics of a vertically-integrated utility."

In essence, that must reflect realities that the base load capacities "are
supplied by technologies with high capital expenditures (capex) and low
variable fuel costs," he said. In the Philippines, that reality is the
dominance of coal-fired power plants; while for mid-merit to peak load
capacities, these are often supplied by technologies with "low capex and
high variable/fuel costs."

Following that, Viray emphasized the need to distribute the mix among the
technologies based on the realities of power developments trended by the
private investors in the restructured electricity sector.

Factoring all of that, he emphasized that the other important step for
energy planners would be to optimize such capacities, but with consideration
of the constraints posed by each technology.

The deeper technical and economic analysis of the proposed energy mix will
then require them to flesh out the more detailed elements, such as cost of
electricity generation, environmental impact, and security of supply
relating to indigenous versus imported fuels; weather dependency of
technologies and geopolitics.

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Ref:
http://www.mb.com.ph/former-doe-chief-offers-his-view-on-energy-mix-economic
s/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com