DoE bans new coal-run power plants

The Energy department said it will impose a moratorium on the endorsement of greenfield coal power plants. — PHILIPPINE STAR/ MICHAEL VARCAS

THE Department of Energy (DoE) on Tuesday declared a moratorium on new coal power plant projects, while allowing foreign investors to fully own geothermal plant projects in the country.

The decision to halt the endorsements of greenfield coal-fired power plants came after its recent assessment showed the need for a shift to a “more flexible” power supply mix.

“This would help build a more sustainable power system that will be resilient in the face of structural changes in demand and will be flexible enough to accommodate the entry of new, cleaner, and indigenous technological innovations,” Energy Secretary Alfonso G. Cusi told world leaders in a virtual conference held in Singapore on Tuesday.

Mr. Cusi said the DoE is committed to accelerating the development of the Philippines’ resources, while “pushing for the transition from fossil fuel-based technology utilization to cleaner energy sources to ensure more sustainable growth for the country.”

The DoE is in the process of updating its Philippine Energy Plan for the next two decades.

However, the ban on endorsing new coal-fired power plants will not affect those that were already given prior endorsements, Energy Undersecretary Felix William B. Fuentebella told reporters in a message.

“We need to prepare for the influx of RE (renewable energy) under the recent policies issued by the DoE. Hence, the need for more flexibility,” he said.

As of August, there are 3,436 megawatts (MW) of committed coal-fired power projects in Luzon, including the big projects of Meralco Powergen Corp. and GNPower Dinginin Ltd. Co., a joint venture of the Ayala and Aboitiz groups.

The DoE has also endorsed 135 MW of coal-run power projects in Visayas, and 420 MW of such projects in Mindanao.

Also, there are almost 10,000 MW indicative coal-fired power plant projects across the country, some of which may not receive government endorsements. “That one we need to sort out,” Mr. Fuentebella said.

The ban will remain in effect until such time that the country will be needing additional baseload power, according to the DoE official.

Although it welcomed the order, sustainability think tank Center for Energy, Ecology, and Development (CEED) said there are still environmental concerns over the existing coal-run power plants in the country.

“That is still concerning and alarming vis-a-vis pollution, climate imperative, and costly electricity in the country,” CEED Director Gerard C. Arances said.

FOREIGN OWNERSHIP
Meanwhile, the upcoming open bidding round for renewable energy service contracts will allow the participation of foreign players that will own large-scale geothermal exploration, development, and utilization projects.

The DoE passed on Oct. 20 a circular providing the guidelines for the third Open and Competitive Selection Process (OCSP3) in the awarding of renewable project contracts.

“From an investment perspective, OCSP3 allows for 100% foreign ownership in large-scale geothermal exploration, development, and utilization projects,” Mr. Cusi claimed.

Big geothermal projects are those with an initial investment cost of about $50 million and are under Financial and Technical Assistance Agreements (FTAAs), signed off by the Philippine president. — Adam J. Ang