With new management in DOE and ERC, perhaps some lengthy standing points that hold our energy scenario iffy will now get some consideration. These are troublesome points that contain a number of energy sector stakeholders however vitality officers can’t simply shut their eyes and hope these points go away.
Now we have simply been fortunate during the last yr as a result of the climate wasn’t El Niño sizzling and demand was down. There was additionally extra rainfall so our hydro reserves had sufficient water to generate electrical energy.
Energy demand in Luzon declined by 1.6 % thus far this yr to 13,786 MW from 14,016 MW final yr. Complete nation is at 19,141 MW, a decline of 1.4 % from final yr’s 19,406 MW.
Financial slowdown contributed to the weak point of demand. GDP within the first and second quarter of 2025 grew at a slower charge (2025 Q1 5.4 %, 2025 Q2 5.5 %) as in comparison with the identical intervals in 2024 (2024 Q1 5.9 %, 2024 Q2 6.5 %). The nationwide elections held within the first half of 2025 didn’t transfer the needle on the financial system.
Some vitality officers had been congratulating themselves that there have been no blackouts throughout the summer time months.
However that’s solely as a result of they ordered plant house owners to go on deferred upkeep. In fact, the delayed upkeep caught up with a yellow alert early this month within the Visayas regardless of a wetter than common wet season.
An anti-coal foyer group, the Institute for Local weather and Sustainable Cities (ICSC), instantly took the yellow alert discover to focus on the issues we’re having with our dependence on getting older coal energy vegetation.
9 coal-fired energy tasks, which had been authorized earlier than the 2020 moratorium and complete 2,255 MW, are anticipated to spice up the nation’s major energy grids by 2028, in accordance with the DOE.
DOE has recognized nearly 3,800?MW price of 20?yr?previous coal vegetation for attainable early retirement, utilizing standards like inefficiency, emissions depth, and well being influence in densely populated areas. DOE claims it’s encouraging voluntary early and orderly decommissioning or repurposing of coal-fired vegetation however has not give you a plan.
Based on DOE figures as of April 2024, two vegetation are between 36–40 years previous, and two vegetation over 40 years previous; 5 vegetation are between 26–30 years previous; three are 21-25 years previous; three are between 16-20 years previous; 10 vegetation are between 11-15 years previous; 23 vegetation are between 6-10 years previous and 15 vegetation are about 5 years previous.
A snapshot of the facility scenario reveals that on Aug. 4, 2025, the next baseload energy vegetation remained offline as a result of unplanned outages as monitored by ICSC:
DCPP Therma South Unit 1 (150MW, coal): offline since July 31; SMC Malita Unit 2 (150MW, coal): offline since July 30; FDC Misamis Unit 1 (135MW, coal): offline since July 24; Sarangani Vitality Corp. Unit 2 (118MW, coal): offline since July 31; STEAG Unit 1 (116MW, coal): offline since Aug. 4; STEAG Unit 2 (116MW, coal): offline since July 12 and went on-line on Aug. 2; Powersource Philippines Vitality Corp. (20MW, coal): offline since July 5; Panay Vitality Improvement Corp. Unit 1 (83MW, coal): offline since July 22.
Aggravating the reliability downside of the older coal vegetation is the introduction of extra variable renewable vitality like photo voltaic and wind into the grid.
Coal vegetation are designed for regular and steady operations as baseload vegetation. Nevertheless, as ICSC factors out, they’re more and more being compelled to ramp up and down to satisfy VRE necessities in in the present day’s grid operations. This will increase put on and tear that results in extra frequent breakdowns, greater upkeep prices, and declining reliability.
As ICSC defined, a single unplanned outage of a baseload coal plant can take away a big quantity of provide from the grid. Issues worsen when a number of outages happen concurrently, as seen within the Aug. 1 and 4 grid alert incidents.
A number of coal vegetation are exceeding the outage limits set by the ERC. Now, even comparatively newer amenities are experiencing frequent compelled outages.
ERC fines and show-cause orders is not going to clear up outage issues. Why these are occurring will possible reveal unattended fundamental points. DOE orders for deferred upkeep additionally add to the issue.
These outages drive distribution utilities to purchase from the spot market and customers find yourself bearing the excessive substitute prices.
DOE and ERC should evaluate insurance policies, just like the WESM worth caps, that discourage extra investments in energy vegetation. The present tight provide and demand steadiness within the grid leaves little room for eventualities like plant breakdowns.
The market knowledge assumptions used about 10 years in the past in setting the value caps want revalidation. The first cap was made everlasting in January 2016 and the secondary cap was made everlasting in December 2014.
WESM’s secondary worth cap, whereas defending customers from excessive spot worth spikes, discourages investments in a lot wanted new producing capability.
For mid-merit and peaking vegetation, which usually depend on excessive spot costs throughout peak hours to recoup investments, the cap undermines their enterprise case. With out dependable returns, traders are much less inclined to construct or keep these versatile capacities, that are very important for grid reliability.
Business gamers need the extent of worth caps to make sure service provider turbines can nonetheless “earn cash” within the spot market. Investor confidence should be restored to safe the wanted capability cushion for the grid.
In the long run, populism bites again the customers who find yourself realizing having no energy is costlier.
ERC delays on the speed resets of the utilities and NGCP are lingering huge complications. There are nonetheless roughly P600 billion price of grid enlargement or capex tasks for NGCP nonetheless pending.
We additionally haven’t heard of how DOE plans to handle the facility necessities of information facilities that are large, with over 1,500?MW in tasks underway or deliberate. If left unaddressed, we’ll find yourself with insufficient provide and that may increase energy charges for everybody.
Boo Chanco’s electronic mail handle is [email protected]. Comply with him on X @boochanco
