Energy security to sustain growth

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A considerable swath of the Visayas—including entire provinces—succumbed to days-long blackouts following the 6.5-magnitude earthquake that hit Leyte last week. The tremor damaged facilities in Ormoc and Samar, prompting the National Grid Corporation of the Philippines to place the Visayas grid under yellow alert as reserve power supply plummeted below the minimum of 647 MW.

As of Saturday, July 15, power has been restored in the Leyte capital Tacloban and some parts of the province, but supply remains unstable resulting in continuous power interruptions.

Notwithstanding the impaired facilities and transmission lines, that NGCP has been scrambling to source power from neighboring islands serves to underscore the crucial need for adequate supply buffers, especially during emergency situations (the central part of Negros Occidental, including the capital Bacolod, was spared from the blackouts because of approved reserve load).

Going by the Philippines’ inherent and man-made vulnerabilities to natural disasters, this need becomes even more urgent, if not an utter necessity. The timely restoration of electricity after a calamity is crucial not only in guaranteeing the continuation of everyday life but sometimes a matter of survival and, after that, the rebuilding of the local economy.

An adequate, stable power supply has long eluded the Philippines. This, even as the Energy Regulatory Commission seems to dilly-dally on the approval of pending power supply agreements, which industry groups say is crucial in economic development.

The Federation of Philippine Industries, an umbrella group that comprises 34 industry associations and 120 corporations, said the delays in more than 90 PSAs significantly affect the development of baseload power plants that can produce reliable, round-the-clock electricity.

Manufacturers, which create much-needed jobs, need stable and reliable energy supply for their unhampered operations, the group said. Affordable, stable energy also translates to cheaper production costs for the industrial, agricultural, and services sectors of the economy, which in turn can translate to cheaper goods and services and, broadly, a more vibrant economy.

The inaction, they noted, also seems contrary to the spirit of President Rodrigo Duterte’s Executive Order No. 30, which created an Energy Investing Coordinating Council, envisioned to lead national government efforts to harmonize, integrate, and streamline regulatory processes, requirements, and is relevant to the development of energy investments in the country.

Energy security is also a pillar in the government’s ambitious and much-lauded Build Build Build mantra, geared to boost and rehabilitate the country’s crumbling infrastructure.

ERC’s slow action is ostensibly in reaction to calls by some groups who are against coal-based power plants for environmental grounds. It is important to put this into context. The country’s use of coal is miniscule vis-à-vis the rest of the region. In 2016, the Philippines consumed nearly half of what Malaysia and Vietnam used, just a third of Taiwan’s, and almost a fifth of Indonesia’s.

In particular, anti-coal groups have targeted seven coal plants that entered into PSAs with Meralco in 2016, which all in all could produce a total of some 3,500 MW of stable and affordable energy for some 20-million Filipinos in Metro Manila and nearby provinces, including Bulacan, Rizal, Cavite, Laguna, and parts of Batangas and Quezon. The demand for power in the growing cities and municipalities in these provinces cannot be sidelined arbitrarily.

The opposition, paired with the glaring lack of alternative to this ready supply, is suspicious at best. Given the expensive and paltry capacity provided by wind and solar facilities, it is fair to ask who could possibly benefit from this concerted campaign to pressure the ERC. If the seven coal plants are successfully blocked who will be happy to come in to take over the lost base load capacity and at what cost?

Thus, the ERC must carefully consider the strategic impact of its policy decisions on energy security and ensure adequate supply of electricity at the lowest cost. The nature of the power sector as a long-term, high-investment industry must enter the picture. It must recognize the false dichotomy between energy security and environmental protection. The development of renewable resources can go hand-in-hand with improving energy efficiency and allowing our industries to exploit economic opportunities to sustain our growth and create millions of jobs.

If we want more development, we need more megawatts now.

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