Energy sector ensured adequate energy supply during the first year of Marcos Jr. Administration; government to make sure needed transmission infrastructure will be delivered on pace required by the country’s power needs

The Administration of President Ferdinand Marcos Jr. in its first year ensured adequate energy supply through immediate and short-term measures despite enormous challenges in the wake of the war in Ukraine and the huge spike in coal and fuel prices in the international market.

“This is not withstanding the loss of 1,200 MW Ilijan power supply due to the expiration of its Malampaya gas supply agreement and the absence of alternative natural gas supply and in the Luzon grid,” Energy Secretary Raphael P.M. Lotilla said.

He added that a massive power failure in the missionary areas due to higher diesel prices was avoided with the President’s approval of budgetary support and credit lines to make up temporarily for the shortfall in the Universal Charge for Missionary Electrification (UCME).

“The strict compliance of the private power generators with their maintenance schedule made our supply manageable”, the Secretary stressed.

Eight (8) new generation facilities also became operational from July 2022 to June 2023, increasing the country’s installed capacity by 930.8 megawatt (MW) and dependable capacity by 801.6 MW. Additional capacities from the uprating of existing power plants also contributed to the increase in installed capacity totaling 1,174 MW.  On the other hand, the dependable capacity increased by 1,764 MW due to the return of the service of the Ilijan Power Plant, which dependable capacity was considered zero since June 2022.

This Administration has also progressed in developing the country’s natural gas industry. With the expected decline in Malampaya production, Service Contract (SC) 38 has been renewed to ensure the field’s full production and to kickstart the timely drilling of the nearby fields. To make up for the shortfall in Malampaya gas, we now have two (2) reception and regasification facilities for imported liquefied natural gas (LNG). These facilities will support the gas-powered plants needed to stabilize the increasing volumes of variable renewable energy (RE).

Meanwhile, the call for greater RE use is being intensified with policies geared towards achieving the government’s target of increasing 35 percent of RE in the power generation mix by 2030 and 50 percent by 2040. With an array of permits and licenses needed for RE projects, the DOE is now in the process of integrating the remaining relevant agencies and entities into the Energy Virtual One-Stop (EVOSS) System platform such as the Department of Environment and Natural Resources (DENR), National Grid Corporation of the Philippines (NGCP), Energy Regulatory Commission (ERC), Department of Agrarian Reform (DAR) and National Water Resources Board (NWRB). Additional agencies will also be included as identified under Executive Order No. 21 such as the Philippine Ports Authority (PPA), Civil Aviation Authority of the Philippines (CAAP), Maritime Industry Authority (MARINA), and Philippine Coast Guard (PCG).

One hundred twenty-six (126) RE contracts, with potential capacity of 31,131.74 MW were also awarded by the DOE from July 2022 to June 2023. Of these, 72 contracts cover solar projects, 30 are wind, 20 are hydro, 2 are biomass, 1 ocean and 1 geothermal. We have also adopted a game-changing reform by opening the RE sector to full 100 percent foreign ownership. As a result, three offshore wind contracts with a combined capacity of two gigawatts were awarded to Copenhagen Infrastructure New Markets Fund, a wholly owned foreign company.

“Notwithstanding all these accomplishments, there is much more to be done and the energy sector is ready to take on the challenges cited by the President in his second State of the Nation Address (SONA)”, the Secretary said.

The NGCP has 68 delayed transmission projects based on the data of the ERC. Out of these, 37 projects were approved by the ERC outside the Third Regulatory Period (TRP) and were issued show cause orders.

Meanwhile, 31 delayed projects which were included in the TRP in 2009 but have yet to be issued show cause orders as the ERC is currently evaluating if the proper recourse is to make the necessary adjustments in the on-going reset under the Fourth Regulatory Period. Overall, delays in transmission projects take 1 to 9 years while completion takes 8 to 10 years.

Further, a closer look at the Transmission Development Plans (TDPs) submitted by the NGCP to the DOE reveals that since 2009, the transmission grid only increased by 8 percent in terms of line expansion. During the pre-pandemic years, NGCP’s line expansion, on average, was only at 1.05 percent progress rate per year.

“For one, we will make sure that grid connections, the needed highways for electricity, will be completed in a timely manner so that additional generation capacity will be delivered down to the distribution sector and ultimately to the household level. For this, we will make the NGCP accountable to complete all its deliverables including the vital Mindanao-Visayas and the Cebu-Negros-Panay interconnections. Moving forward, the government will see to it that transmission lines and related infrastructure, as well as System Impact Studies (SIS), are carried out at the pace required by our country’s power needs”, the Secretary stressed.

On the performance review of NGCP, the DOE issued in June 2023 Department Order (DO) No. DO2023-06-0018 which created the performance assessment and audit team for the operations of the transmission network provider and system operator. The DOE has already completed its audit work plan, and together with the ERC, will commence the actual audit of NGCP.

The energy section of the Philippine Development Plan (PDP) 2023 – 2028 likewise outlines the general directions for the sector during his term and the DOE is making sure that all its planning and policies for the long term period will be embodied in our updated Philippine Energy Plan (PEP) for 2023 – 2050.

“We will continue to work on long-term solutions in accordance with the clear goals set by the President to develop indigenous sources of energy, particularly renewables. We commit to pursue our mission and respond to emerging energy challenges and issues to ensure sustainable, stable, secure, accessible, and reasonably priced energy”, the Secretary said. ###