More flaws in the DoE plan raise baseload bloat to 103%

Aprevious piece identified one serious flaw in the DoE’s Philippine Energy Plan (PEP) 2016-2040: the DoE still assumes that baseload plants will retain their 70% share in the electricity mix until 2040.

This will not happen. Steadily dropping solar prices will make market- driven solar penetration inevitable. The rising solar share in the capacity mix will initially displace peaking and midrange flexible plants.

But as solar penetration goes beyond 25%, the baseload share will start to shrink.

With fewer baseloads to meet the nighttime demand, more flexible plants will be needed, to be started up late afternoon and shut down the next morning when the sun rises high enough. Baseload plants cannot play this role since they must run 24/ 7 to run efficiently. Thus, in the future, we will need more flexible plants, less baseloads.

The piece estimated that if the solar share in the peak demand reaches 50% by 2040, the baseload share in the capacity mix will shrink to only 43%.

By ignoring this trend, DoE overestimates the country’s 2040 baseload requirements by 63% (70 divided by 43, minus 1).

The DoE plan has three more flaws.

Together, these flaws raise the DoE’s baseload bloat to more than 100%.

If the DoE succeeds in implementing its plan, we will end up with huge stranded assets: coal and nuclear plants that cannot sell half their output. We will also be locked in to technologies that are toxic, expensive and risky.

This analysis of the three flaws is based on the demandsupply outlook ( p.44) in the DoE’s PEP 2016-2040, which is on the DoE website.

Including reserves in baseload share calculations

Before Secretary Cusi took over the DoE, the baseload share was calculated as 70% of peak demand.

Under Cusi, the baseload share is now calculated as 70% of total supply. Since total supply equals peak demand plus reserves, the baseload share is now 70% of peak demand, plus 70% of reserves. This change does not make sense, because baseload plants must run 24/ 7 while reserves must be flexible plants that can start up or shut down quickly. Hence, baseload plants cannot used as reserves.

Before we can calculate how much bloat this flaw adds to the DoE’s baseload plan, we need to know the reserve requirement first.

RAISING THE RESERVE REQUIREMENT TO 25%

Under Secretary Cusi, the DoE has raised the reserve requirement to a flat 25% of peak demand.