PCCI Energy Committee - TWG on Power
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Transcript of PCCI Energy Committee - TWG on Power
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7/27/2019 PCCI Energy Committee - TWG on Power
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Ensuring
Energy Security, ReliablePower Supply and AffordablePower Rates
PCCI Energy Committee
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Energy Security
International Energy Agency (IEA) Definition1. A dequate
2. A ffo rd ab le
3. Reliab le
European Commission Definition
Uninterrupted physical availability of energy products
on the market, at a price which is affordable for all
consumers (private and industrial)
Consider ing the above defin i t ion, one can say that the Phi l ippin e
energy is NOT SECURED because we have been experienc ing the
cyc le of power capacity def ic iencies and high pr ices
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Source: R. del Mundo, et. al., Philippine Electric Power Industry Market and Policy Assessment,
University of the PhilippinesNational Engineering Center, 2011
1 day/yr LOLE = 28.7% Reserve
LOLEnumber of days
that there will be powercurtailment
(Daily peak demand will
exceed available
generating capacity due to
simultaneous scheduledand forced outages of
power plants)
1 day/year Loss-of-Load
Expectation to meet the
optimal level of reliability ofpower supply in the
Philippines [Viray & del Mundo,UPNEC, 1991]
Adequate and Reliable Power Supply
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Luzon Grid
Year
Capacity
(MW
Demand
(MW)
Reserve
(%)
LOLE
(Days/Yr)
2011 9583 7581 26.41% 5.07
2012 9624 7827 22.96% 12.08
2013 9657 8085 19.44% 5.27
2014 9657 8356 15.57% 82.27
Generation deficiency started
in 2010. WESM prices reflects
this first stage of power crisis.
There will be generation
deficiency even with BacMan
rehabilitation (2012) and
GNPower new 600 MW Power
plant in (2013)
Worst situation in 2014
Malaya and Limay Oil ThermalPlant cannot be retired
(uneconomic dispatch)
Assuming Malaya Oil Thermal Plant
will not be operated
New Power Plant
Capacity added courtesy
of PPAs signed in 1990s
US & European criteria
Adequate and Reliable Power Supply
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Adequate and Reliable Power Supply
Luzon Grid (in addition to 600MW Mariveles CTPP) 200 MW Peaking Plant (2013)
600 MW Baseload Plant (2015)
600 MW Baseload Plant (2015 for Malaya Retirement)
Visayas Grid 50 MW Intermediate Plant (2017)
100 MW Intermediate Plant (2018)
Mindanao Grid 600 MW Baseload Plant (ASAP)
100 MW Baseload Plant (2015)
100 MW Baseload Plant (2016)
100 MW Baseload Plant (2017)
Minimum Requirement to maintain 1 day/year LOLE
Source: R. del Mundo, et. al., Philippine
Electric Power Industry Market and Policy
Assessment, University of the Philippines
National Engineering Center, 2011
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Visayas Grid had power crisis in 2009 after whichDistribution Utilities signed power supply contracts withGencos to build new power plant.
Mindanao Grid is currently in crisis. Modular Diesel plantswere recently procured by ECs for emergency power andpower supply contracts signed to build new capacity (20152017).
Luzon Grid will soon experience power crisis
DUs signed contract only with existing plants
DUs hesitated to sign power supply contract for newcapacity because of threat of Open Access and Retail
Competition [Concern on contracted capacity that will be
stranded]
Adequate and Reliable Power Supply
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Power Generation is liberalized and competitive(deregulated) sector of the power industry DOE Power Development Plan only provides outlook.
Private Generation Companies will decide what capacity, what type
of plant, when and where to build power plants
NPC no longer allowed to build new power plants or sign new PPAwith IPPs
EPIRA in 11 Years :
Plan d id no t con vert to Plant on t ime
Power Rates also went up ins tead o f reduct ion
Lack of po l icy, regulat ion and implementat ion mechanism that
wi l l ensure new power plant capacity w i l l be avai lable on tim e to
meet grow ing demand in the l iberalized and com peti t ive
electr ic ity market .
Energy Security under EPIRA
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Energy Security under EPIRA
SanMiguel27%
Aboitiz
18%First Gen20%
PSALM14%
AES6%
SEMCalaca
5%
NPC2%
Others8%
Luzon Grid
Global28%
Salcon15%First
Gen12%
Aboitiz6%
NPC2%
PSALM
34%
Others3%
Visayas Grid
Aboitiz18%
NPC52%
PSALM28%
Others2%
Mindanao Grid
Ownership of Installed Power Generating Capacity, 2011
Source: DOE
Big 3 in Electric
Power Industry
control 65% of supply
in Luzon Also owners of
Distribution Utilities
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Source: MERALCO
Energy Security under EPIRA
AVERAGE POWER RATE OF MERALCO
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0
5
10
15
20
25
30
Brunei Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam
Residential Commercial IndustryUS/kWh High
Electricity Prices of SEA countries
Energy Security under EPIRA
Source: JICA (Sep. 2013)
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Energy Security under EPIRA
Report of
MERALCO
Consultant onSubsidies:
Other cou ntr ies
are usin g
subsidy for
strategiccompeti t ive
advantage in the
shor t term
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Energy Security under EPIRA
Source: JICA (Sep. 2013)
9.92
7.14
14.28
20.8
6.21
0
5
10
15
20
25
Thailand Indonesia withSubsidies
IndonesiaWithout
Subsidies
Philippines Vietnam
USCents/kWh
Comparison of Tariff with Indonesias subsidies
(2011)
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Long-Term Power Supply Security Framework
UncontractedDemand
Long-termPS
Contract
PowerPlant
Project
Financing
Power PlantDevt. &
Construction
Qualified
GENCOBid
LenderFinancing
InvestorCapital
Baseload: 3-5 Years Peaking: 1-2 Years
New Power Plant
Demand
Forecast & PSContracts
Additional
GeneratingCapacity
Competi t ive Electr ic i ty
Market wi l l only work if
Supp ly def ic iency is avoided
Long-Term Contract for New Capacity
Short-Term Contract for Existing Capacity
166 Permits & Licenses
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Options for Energy Security
1. Aggregation of Electric Cooperatives
20 ECs in Mindanao bidded 330 MW of baseload.
Signed long-term power supply contract at
Php4.09/kWh requiring Genco to supply from new
power generation capacity (405 MW in 2017)
12 ECs in Central Luzon bidded (October 18,
2013) 300 MW of uncontracted demand starting
2018. Genco is also required supply from new
capacity. Lowest bid less than Php4.00/kWh
Lessons: Economy-of-scale, Competi t ive Select ion
Process, and Lon g-term contract ing fo r new capacity!
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Options for Energy Security
2. Aggregation of Large Customers in RetailCompetition and Open Access (RCOA)
Industry associations and Economic Zones to
organize power supply aggregation similar to
Electric Cooperatives Minimum of 100 MW (preferably at least 300 MW) Long-term contract (at least 10 years). The longer the
term, the lower the price.
Unbundled transmission and distribution wheelingfees are already in place. Hence, will require only
metering, billing & settlement protocol to
implement
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Options for Energy Security
3. Embedded Combined Heat and PowerSystem in Economic Zones for Self-sufficiency and affordability
Economics of CHP based on waste heat utilization
(for heating/cooling) after gas turbines (for power).Efficiency at least 60% compared to 30% of
conventional thermal plant
Avoids transmission wheeling charges
(~Php1.00/kWh) Needs Liquified Natural Gas Terminals in
Batangas and Bataan and Transmission pipelines
to Metro Manila through the economic zones
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Options for Energy Security4. Distribution Utilities Mandatory Bidding of
Uncontracted demand of Captive Customers
Lesson from Latin America (Brazil and Chile) wherespot market did not produce new capacity.Government designed auction of Long-Term Power
Supply Contracts as mechanism. Mandatory for all DUsto submit forecast and auction uncontracted demand.Winning Gencos in auction will build power plants
Limit Open Access for Large customers only (at least 1MW demand) for 10 years. Possible Declaration of ERCof lower threshold and eventually full retail competitionwill continue to threaten DUs.
This will also solve cross-ownership between
generation and distribution under EPIRA!
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Policy and Regulatory Measures
1. DOE to mandate and oversee a regular internationalpower generation supply bidding for DUs and largecustomers.
2. ERC to use market-based rules as default inapproving power supply contracts of DUs (for captivecustomers) with reserved price such as the pricesBest New Entrant (BNE). Cost-based rules to be usedonly if price from competitive selection process didnot achieve competitive results (i.e., higher than
BNE).3. Declare Power Projects and Fuel Explorationas
National Major Strategy Programs (Shovel Ready).Streamline & shorten Permitting and Licensing
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Policy and Regulatory Measures
4. Certify as urgent the following pending bills inCongress:
Uniform Franchise Tax on DUs in lieu of any and all taxes
Reduction of electricity rates through utilization of government
share in the discovery, exploration, development, and/or
production of indigenous resources
5. Fastrack the establishment of ancillary reservemarket and provide mechanism for transparentprocurement and rules on determining optimal level
required and dispatching.
6. Fastrack Natural Gas program (e.g., accelerated PPP)and establish regulation (technical and price) tomake LNG for power and industries available ASAP.
7. .
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Policy and Regulatory Measures
7. DOE to tighten the power program in Mindanao thatwould assure adequate, reliable and reasonablypriced power supply and total electrification for smalland large utilities and consumers.
8. ERC to simplify and make more transparent andunderstandable the Rate Setting Methodology fortransmission and distribution utilities.
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PROF. ROWALDO Wali DEL MUNDO
National Engineering Center
University of the Philippines
Diliman, Quezon City 1101
Tel/Fax (02) 981-8500 Loc. 3014 / Fax (02) 926-1516
Email: [email protected]
Cellphone: (0929) 564-2772
EnsuringEnergy Security, Reliable Power Supply and
Affordable Power Rates