Philippines: FPI endorses DoE policy focusing on baseload stability

Philippines: FPI endorses DoE policy focusing on baseload stability

THE Federation of Philippine Industries (FPI) has backed the Department of
Energy's (DoE) move to do away with a policy that sets a cap or a quota on
the kind of technology to be used in building a power plant.

"[DoE] Secretary [Alfonso G.] Cusi's pronouncements are consistent with
FPI's stand on certain issues, especially on supporting industrial growth by
ensuring stable baseload power supply," said Jesus L. Aranza, chairman of
the federation.

Based on the DoE's assessment, the Philippines requires 70% baseload power,
which is provided by plants running on coal, natural gas and geothermal
power on a 24-hour basis.

Around 20% will be needed from mid-merit plants, mostly running on natural
gas that quick to switch on but costlier to operate than baseload plants.

Only 10% will come from peaking plants or mainly oil-based facilities and
renewable energy resources such as wind and solar, whose output peaks at
around the same time that the demand reaches its highest level.

The DoE under the previous leadership followed a 30% coal, 30% natural gas
and 10% renewable energy as the fuel mix that the industry should aspire
for.

Mr. Cusi said the 70%, 20% and 10% power system requirement is in line with
the DoE-drafted Philippine Energy Plan for 2016-2030, which will require
17,338 megawatts (MW) additional power by 2030 based on an 8% economic
growth rate and a 1.5% rise in population.

As of the first half of 2016, existing power plants have an installed
capacity of 20,000 MW, although available power was only 13,877 MW, or 69%
of what was in place.

In its statement, FPI said the DoE's aspiration "would indeed promote a more
competitive market and eventually lower the power costs that consumers pay."
It added that the move "will ensure ample supply of power for the country as
it moves towards industrialization."

FPI cited the country's need to diversify energy resources "but this can be
achieved even without mandating a strict power generation mix that will
limit the technologies that will be developed by the private sector."

"Allowing all kinds of fuels to compete in the market, as Mr. Cusi argued,
would actually lower the power rates because the least costly capacity will
be dispatched first," FPI said.

"Mandating an energy mix policy that caps the technologies will not only cut
out flexibility but will also go against the idea of having a competitive
market, where all suppliers can make offers," Mr. Aranza said. "Also,
limiting the kind of technology to be developed will just unnecessary block
development of power plants and hinder more investments."

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Link to Original Article:
http://www.bworldonline.com/content.php?section=Economy&title=fpi-endorses-d
oe-policy-focusing-on-baseload-stability&id=137567

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com