PH growth requires reliable, inexpensive electricity
THE stability of electricity supply must be consistently reliable and its prices must be reasonable to help sustain and invite investments that would further spur the growth of the Philippine economy, industry experts said at The Manila Times economic forum, titled “Insights 2024: Immersive, generative globalization.”
“What we need to do is make sure that the country has enough stable, reliable and cost-effective [power] capacity to power the economy. That’s what we need to do first and foremost,” Aboitiz Power Corp. President and Chief Executive Officer (CEO) Emmanuel “Manny” Rubio said during the fireside chat portion of the program at Sheraton Manila Hotel in Pasay City.
“As a real estate consultant, our clients are mostly the outsourcing firms. Last year, the record was $36 billion. So, it’s a big market for the country. Most of them are complaining about the electricity cost,” Lobien Realty Group CEO Sheila Lobien said as a fellow fireside chat panelist.
Electricity prices in the Philippines were among the highest in Southeast Asia. At the same time, the country’s electricity generation per capita was the lowest in the Association of Southeast Asian Nations or Asean.
Meeting a projected 6.6-percent annual increase in electricity peak demand from 2020 to 2040 remained critical, especially as it would coincide with growth targets of 6.5 percent to 7.5 percent for 2024, and 6.5 percent to 8 percent from 2025 to 2028 as well as of future projections set by the Philippine government.
Last year, the Philippine economy grew by 5.6 percent on the back of wholesale and retail trade, repair of motor vehicles and motorcycles financial and insurance activities and construction. All of these were energy-intensive industries, and their growth rate was the fastest in Southeast Asia.
Other recent economic indicators showed the lowest unemployment rate in nearly 2 decades in December 2023 at 3.1 percent as well as inflation meeting the 2-percent to 4-percent target band for the second consecutive month in January at 2.8 percent.
Amid the push for more variable renewable energy in the power grid, achieving a continuous and consistent supply of electricity at demand involved establishing a balanced portfolio that also contained traditional, non-variable energy sources.
The country targeted a 35-percent share of renewable energy in its power generation mix by 2030 and 50 percent by 2040 with the rest being allocated to nonrenewables.
“We want to point out that [regarding] power, it’s very important that the costs come down. A lot of the explanations and advocacies in power don’t point out [that] the actual utilization (capacity factor) of solar power plants is less than 20 percent, and you have to have back-up power for that, ”Integrated Development Studies Institute Director Geore Siy said also as a fellow fireside chat panelist.
“[There are] a lot of discussions about renewable energy at all costs, and yet, what’s not being discussed is the impact of a deep penetration of variable renewable energy into the grid. To balance the variability, you need a stable source of energy: gas or coal,” Rubio further explained.
The participants also urged the public to consider the full cost of electricity — encompassing the full system cost from maintaining grid stability up to delivery — aside from the levelized cost of electricity, which compared the lifetime costs of generating electricity from different technologies.
“We should analyze things in totality,” Siy added. “The cost of solar power generation is declining every year. [Solar] power generation cost is very low but not the cost of the entire system.”
“With the Green Energy Auction pricing, you can just imagine the effort of the industry to bring down rates [for renewables]. But the problem is, you’re only talking about the peso-per-kilowatt hour when solar is generating power. But what happens when there is no more sunlight? Then, you’d have to come up with a balancing power plant to meet that,” Rubio expounded.
“When [renewable power plants are] generating [electricity], it’s cheap because there’s no fuel. But when it’s not producing anymore, you need something to put there, and that should be in the equation when you compute the full cost of electricity,” Rubio concluded.