power sector action plan in the philippines...philippine power sector analysis (2) electricity...
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Power Sector Action Planin the Philippines
March, 2017
Suggestion: Promote introduction of power generation equipment with high load following capability such as LNG power generation and pumped storage power plants for mid-merit power and to supply peaking.
Philippine Power Sector Analysis (1) Supply and Demand Outlook
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Electricity Demand and Supply
Source) World Bank
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(Source) World Bank
(Source)DOE
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Philippine GDP Growth
Gross domestic product per capita, current prices (U.S.dollars, RHS)Gross domestic product, constant prices (percent
change, LHS)
estimates
(Source) IMF
Along with economic growth, power supply and demand continue to increase. In order to meet future demand growth, it is necessary to ensure sufficient supply.
According to DOEʼs estimate, investment in mid-merit and peaking power supply has not increased sufficiently.
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Philippine Power Sector Analysis (2) Electricity Tariff
In recent years, the electricity tariff in the Philippines has decreased with resource prices, but it is still the highest price in Asia.
Also, the addition of FIT allowance introduced in 2015 is a factor for the future rise.
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(Source) Prepared by EY based on JETRO data
2015 Index (Electricity Tariff / GDP per Capita)
Suggestion: Improve power generation efficiency by rehabilitation of power generating facilities which have decreased in efficiency, thereby reducing power generation costs.
Suggestion: Improve power generation efficiency through human resource development for the purpose of improving operation technology and operation management, thereby reducing power generation costs.
(Source) METI
Difference in power generation efficiency between coal-fired power plants in Japan and the Philippines
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Electrification rate per administrative district (barangay) is almost 100%. However, on a customer base, there are areas with low electrification rates. The electrification rate of Mindanao is especially low at 71%.
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Electrification level by region, as of 2014
Philippine Power Sector Analysis (3) Electrification Rate
Suggestion: Strengthen power distribution network for areas with low electrification rates.
Suggestion: Introduce renewable energy (i.e. geothermal, wind power) in regions rich with energy resources.
・Davao
・Manila
(Source) SEC
Energized/Completed
Energized/Completed
To date To dateⅠ 3,027 3,027 100% 976,400 925,231 95%Ⅱ 2,369 2,369 100% 770,500 711,072 92%CAR 1,112 1,112 100% 379,500 332,086 88%Ⅲ 2,236 2,236 100% 1,367,300 1,316,469 96%Ⅳ-A 1,946 1,945 99% 737,900 703,457 95%Ⅳ-B 1,416 1,416 100% 622,700 511,974 82%Ⅴ 3,410 3,408 99% 1,055,200 939,946 89%Total Luzon 15,516 15,513 99% 5,909,500 5,440,235 92%Ⅵ 3,209 3,208 99% 799,200 739,353 93%Ⅶ 2,156 2,156 100% 748,100 718,246 96%Negros Island Region 1,219 1,219 100% 821,000 732,108 89%Ⅷ 4,372 4,372 100% 874,100 749,693 86%Total Visayas 10,956 10,955 99% 3,242,400 2,939,400 91%Ⅸ 1,865 1,865 100% 654,000 463,960 71%Ⅹ 1,843 1,843 100% 750,700 625,762 83%XI 896 896 100% 555,600 425,380 77%XII 1,230 1,230 100% 892,000 558,142 63%ARMM 2,447 2,441 99% 483,600 171,904 36%CARAGA 1,310 1,310 100% 593,600 549,297 93%Total Mindanao 9,591 9,585 99% 3,929,500 2,794,445 71%Total Philippines 36,063 36,053 99% 13,081,400 11,174,080 85%
Region
Barangays
Potential %
Connections
Potential %
Suggestion: Utilize imported LNG as alternative to future depleting domestic natural gas to improve balance currently dependent on imported coal.
Suggestion: Utilize domestic coal to improve energy self-sufficiency rate.
Balance between base load, mid-merit, and peaking power is required for stabilizing electricity supply and demand.
Moreover, improvement of self-sufficiency rate is necessary to enhance energy security.
Additional power supply capacity required by 2030
Unit(MW) Luzon Visayas Mindanao Total
Base load 4,320 1,968 2,100 8,388Mid-merit 4,800 1,500 1,500 7,800Peaking 950 150 50 1,150Total Grid 10,070 3,618 3,650 17,338
Base load:coal, geothermal, natural gas, biomass, hydraulicMid-merit:natural gas etc.Peaking:oil, solar power, wind power
(Source) DOE “Energy Programs and Investment Opportunities”(Source) DOE
Unit(MW) Existing Committed CapacityAddition
Base load 11,277 3,091 8,388Mid-merit 0 876 7,800Peaking 2,600 111 1,150
Philippine Power Sector Analysis (4) Balance of Power sources
Power generating capacity by energy source (2014)
42.78%
7.39%
24.19%
13.34%
11.83%
0.20% 0.02%0.25%
Coal
Oil
Natural Gas
Geothermal Power
Hydraulic Power
Wind Power
Solar Power
Biomass
Total power generating capacity77,260,997MWh
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The Philippines is the third-most-vulnerable country to natural disasters in the world (World Risk Report 2016), and reducing disaster risks for power sector is necessary.
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(Source) United Nations University
Suggestion: Japan's efforts, such as enhancing electricity distribution network, can be utilized to reduce natural disaster risks, as Japan also has valuable experience dealing with continuous natural disasters.
World Risk Report 2016: Inadequate Infrastructure Pushes Up the Risk of Disaster
Philippine Power Sector Analysis (5) Disaster Resiliency
Improve power generation efficiency by rehabilitation of existing coal-fired power plants which have decreased in efficiency, and by improving operation management, thereby reducing power generation costs.
Proposal for overcoming obstacles(1) Improve power generation efficiency by renovating existing power plants
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Coal fired power plant X
Improve power generation efficiency, Reduce power generation cost
Select model plants which have decreasedpower generation efficiency
Apply to similar plants to improve power generation efficiency everywhere in the Philippines.
Rehabilitation of power generation equipment
Improvement of operation management
Package Proposal
Implementation of F / S
PlantOwner
Improve electrification rate with natural energy such as geothermal and wind power, mainly for island areas. Improve energy self-sufficiency rate by utilizing domestic coal.
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Geothermal resources
Geothermal resources
Suitable for wind power
Reducing powergeneration costs
through rehabilitationof existing hydroelectricpower plants which havedecreased in efficiency
Utilize preliminary extracted geothermal
wells to improve electrification rates
in island areas
Introduce wind power generation facilities
to improve electrification rates
in island areas
JICATwo-Step
Loans
Geothermal resources
Proposal for overcoming obstacles(2)Introduction of renewable energy etc. by utilizing abundant natural resources
Proposal for overcoming obstacles(2-1) Improve power generation efficiency by renovating existing power plants Improve power generation efficiency through rehabilitation of existing hydroelectric
power plants which have decreased in efficiency, and by improving operation management, thereby reducing power generation costs.
Select model plants which have decreased power generation efficiency
Hydroelectric power plant X Rehabilitation of power generation equipment
Improvement of operation management
Package Proposal
Implementation of F / S
Improve power generation efficiency Reduce power generation cost
Apply to similar plants to improve power generation efficiency everywhere in the Philippines.
Loan JICATwo-Step
Loans
PlantOwner
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The Philippines is one of the world's foremost geothermal resource countries and geothermal power plants are located mainly in islands.
To improve electrification rate of the islands, utilize the preliminary extracted wells in existing geothermal plants
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Geothermal resources
Geothermal resources
Geothermal resources
Introduction of geothermal power plants
Improvement of management ability
Package Proposal
Effective use of geothermal resources improves electrification rate
Geothermal Power Plant
Owner
Loan
Implementation of F / S
Proposal for overcoming obstacles(2-2)Improve electrification rate of islands by utilizing preliminary extracted wells
JICATwo-Step
Loans
Improve electrification rate by introducing wind power generation for islands with stable wind conditions and fewer typhoons
Proposal for overcoming challenges(2-3) Promoting introduction of wind power generation facilities in islands
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Package Proposal
Introduction of wind power plants
Improvement of management ability
Suitable for wind power
Effective use of natural energy to Improve electrification rate
Business owner
Loan
Implementation of F / S
●Davao
Surigao●
Cagayan de Oro●
●Zamboanga
JICATwo-Step
Loans
Strengthen power distribution network development capacity in areas with low electrification rate, mainly in Mindanao.
Also, enhance disaster resiliency of power distribution network and reduce natural-disaster related risk.
Proposal for overcoming challenges(3) Improve electrification rate and reduction of natural disaster risk through enhancement of electricity distribution network
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Grant Aidfrom Japan*
The Government of the Philippines
Grant of maintenance equipment for distribution networks
Quality control of equipment,Human Resource Development
for Disaster resiliency
Grant of equipment for utility pole construction
Improvement of electrification rate reduces natural disaster risks
The National Electrification Administration(NEA)
Package Proposal
Implementation of F / S
Electric Cooperatives (EC)
*JICA Two-Step Loan is another possible option
Malampaya gas field is responsible for 1/3 of power supply in Luzon Island, but production volume is expected to decline from around 2024.
Introduce LNG base and utilize imported LNG to improve energy balance.
Proposal for overcoming obstacles(4) Improvement of energy balance through introduction of LNG terminal
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Submarine gas pipeline
Luzon Island Manila
Malampayagas field
Gas-fired power plant
Package Proposal
Introduction of LNG base
Providing operation management technology,
Support for demand development
Financial support by Japan
Government organizations of the Philippines
Improvement of energy balance, Improvement of electrification rate
Introduction of satellite base
Implementation of F / S
Private Companies
(Source) Malampaya HP
Wind power generation in Calaga area· Introduction of the first Japanese wind power generator in the Philippines.
· Expected to be the first wind power generation project in Mindanao.
· There are no power plants in Caraga area including Butuan City, and electricity is supplied from Irrigan City, which is far away. High costs due to long distance transmission and power transmission loss are problems.
Agus Hydroelectric Power Plants· Operated by National Power Corporation (NPC).· Account for 70% of hydroelectric power generation in Mindanao. (Hydroelectric power generation is responsible for 30% of power supply in Mindanao.)
· Power generation efficiency will be improved by rehabilitation of the oldest power plant, No. 6.
Power Sector Action plan in Mindanao
●Davao
Surigao●
●Cagayan de Oro
●Zamboanga
Improve power generation efficiency of main power supply which occupies 20 % of total power demand in Mindanao
Introduction of the first wind power generator in Mindanao
Enhancement of electricity distribution network project in Bangsamoro area (Grant aid)· Providing maintenance equipment for distribution network (work vehicles, utility poles, distribution lines, ground wires and pillar transformers) to Electric cooperatives (EC) in Conflict-Affected Areas in Mindanao (Bangsamoro area), stabilizing the power supply in the area.
· To be implemented from April 2017.
Improvement of electrification rate forareas with extremely low electrification rate (36%)
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Japanʼs proposed solutions
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1.Improve generation efficiency and Stabilize Power supply / demand Rehabilitation of existing low-efficiency coal-fired power plants Human resource development aimed at improving operational technology and operational
management Introduction of LNG power plants and pumped storage power plants for mid-merit and peaking
power supply Improvement of disaster resiliency of power distribution network
2.Improve Energy Security and Self-sufficiency Rate Promoting introduction of LNG terminal Effectively utilizing clean coal technology with domestically produced coal Promote introduction of renewable energy such as geothermal and wind power
3.Improve Electrification Rate Enhancement of electricity distribution network in areas with low electrification rates Effectively utilize domestically produced coal with clean coal technology (Re-listed) Introduction of storage batteries to maintain the stability of transmission networks with the increase
of renewable energy
Some of the measures which will solve the problems are: introducing following power plants, transmission & distribution systems and energy facilities, utilizing technology, and capacity building etc.
Japan is prepared to provide different forms of assistance by utilizing technology and know-how to solve problems facing the power sector in the Philippines.
[Financial scheme (tentative)]
・ Overview of the Project(1) Two-step loans: Preferential Terms could be applied to the Yen Loan. Funds pass through financial
institutions before the end-beneficiaries (e.g. IPP operators) receive them. Eligible subprojects are to be discussed with JICA during Appraisal Mission.
(2) Technical Cooperation could follow.
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JICATechnical
Cooperation
JICATwo-Step
LoansBusiness owner
Loan
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Action 1 Diagnosis of selected Model Plants (Starting from April, 2017) Experts from Japanese companies will visit power plants selected as Model Plants, diagnose issues in power generating efficiency, and propose a plan for rehabilitation in terms of high quality infrastructure (e.g. Life Cycle Cost), supported by METI subsidies.
Action 2 Rehabilitation of Model Plants (from 2018)JICA could support the implementation of rehabilitation of model plants through a two step loan scheme.
Action 3 Applying practice of ʻhigh quality infrastructureʼ to plants in addition to Model Plants (from 2019)JICA could support the rehabilitation of those plants, in addition to Model plants, complying with standards of high quality infrastructure through two step loan scheme.
Action 4 Institutionalizing ʻhigh quality infrastructureʼ among all IPPs (Until 2021)Application of ʻGuideline of high quality infrastructureʼ to all newly built and/or rehabilitated plants by all IPPs during approval procedure by ERC (Electric Regulation Committee).
Introduction of high quality power plants to the Philippines nationwide.
An Example of standards of high quality infrastructure
(Source)APEC Guideline for Quality Electric Power Infrastructure
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