By Maya M. Padillo and Carmelito Q. Francisco
DAVAO CITY — An additional power supply of about 3,000 megawatts (MW) is projected to be required by the Mindanao grid by 2030, according to Mindanao Development Authority (MinDA) Assistant Secretary Romeo M. Montenegro.
Mr. Montenegro, who also heads the technical working group of the Mindanao Power Monitoring Committee, said this projection covering all sectors is based on the Department of Energy’s (DoE) outlook using a 7% to 8% growth rate in demand.
“(It is) based on forecast of 7% to 8% annual growth demand by DoE. For instance, Mindanao’s peak demand in 2012 was around 1,210 MW, but as of November 2017, new highest peak demand was recorded at 1,760 MW. Hence, total capacity for Mindanao, with additional 3,000 MW shall be around 5,000 MW by 2030, which will also cover the required reserve margin such as regulating, contingency and dispatchable reserves,” Mr. Montenegro told BusinessWorld in an interview.
The Mindanao grid, based on data from the National Grid Corp. of the Philippines, currently has a system capacity of more than 2,200 MW.
Mr. Montenegro said while MinDA continues to push for more renewable energy projects to achieve a 50-50 mix with fossil fuels, the more readily available sources are existing diesel-fired plants that are prepared for expansion.
“For now, there are no new investors in power as Mindanao still has a surplus, but the big players in Mindanao have power plants that are capable of expansion and scaling up.”
Among these are Aboitiz Power Corp. subsidiary Therma South, Inc. (TSI)’s plant in Davao and SMC Global Power Holdings’ Malita plant in Davao del Sur.
Mr. Montenegro said it would be easier now to attract new investment in the power sector with the expected completion of the Visayas-Mindanao grid interconnection by 2020.
“When that happens, we will be already under one grid — the Luzon, Visayas, and Mindanao — so that even if you have a power plant in Mindanao you can sell it all the way to Luzon. It’s the same case happening now when Singapore buys cheaper hydro(power) from as far as Laos that has massive power plants,” he said.
Meanwhile, a Davao City business leader said the government must now revisit the policy on electric cooperatives (ECs) to make them more responsive in their franchise areas, particularly the emerging urban centers.
Arturo M. Milan, president of the Davao City Chamber of Commerce and Industry, Inc., told BusinessWorld that the law on ECs should be revised to allow them to build up financial capability, which could then be used to improve services.
“The ECs in urban centers must not only be able to expand their services through rural electrification, but must also be able to immediately respond to the needs of their customers. At present, they cannot do it because they have no financial capability,” Mr. Milan, who was a former top executive of Davao Light and Power Co. before his appointment as advisor of Aboitiz Equity Ventures.
Under Presidential Decree 269 of 1973, which established the National Electrification Administration (NEA), ECs are non-stock, nonprofit entities that are intended to serve as power distributors.
Unlike other cooperatives, ECs do not adhere to voluntary membership as their consumers automatically become the members, and they are under NEA supervision, including the designation of the management team.
Under this present setup, said Mr. Milan, ECs have no autonomy to immediately act on key issues such as providing more power supply to their customers.
Expanding membership participation would also strengthen accountability, he added.
“The members can demand for better service, unlike now when they will only be allowed to participate in the general assembly (to choose their board of directors),” he said.
Energy Assistant Secretary Redentor E. Delola, in a separate interview, agreed that the status of ECs needs to be reassessed to allow them to meet growing demand, including those from prospective business ventures.
“Personally, I believe that, especially those in the growing areas, ECs must be capable enough to answer the needs of the consumers by becoming financially stable,” Mr. Delola said.
“It is very hard for ECs to immediately respond because they do not have that flexibility as they need to apply for capital expenditures, which takes time to approve,” he added.
On the other hand, NEA Administrator Edgardo B. Masongsong said ECs must not be allowed to shift as for-profit entities unless they have been able to meet their main purpose, which is to serve all “lifeline consumers.”
Based on NEA data, about 30% of the country’s 12.18 million household consumers are still under a “lifeline” level, meaning consumption is only up to about 50 kilowatt hours a month.
“But we are open to converting ECs… in a case-to-case basis,” Mr. Masongsong said, noting that there are several that have been performing efficiently.