AC Energy calls for DoE power mix guidance

AYALA—controlled AC Energy Holdings, Inc. has joined in the clamor of power generation companies for the Energy department to come up with a clear guidance on the industry’s energy fuel mix policy.

“I know the energy mix seems like an old issue, but that’s important,” said John Eric T. Francia, AC Energy president and chief executive officer.

That mix, which generators use in deciding what technology to use in building their new power plants, has remained unannounced more than 100 days after the new leadership took over.

“That needs to be spelled out with reality in mind,” Mr. Francia said, referring to the existing power generation projects that are dominated by coal-fired power plants.

“Half of it is coal and diesel, right? That’s our current mix. That’s in terms of installed capacity. If you talk about actual generation or potential it’s going to tilt more towards the fossil fuels,” he said.

Under the previous administration, the Department of Energy (DoE) had espoused a mix of 30% coal, 30% natural gas, 30% renewables and 10% other sources such as oil-based power generation plants. The mix was questioned by Energy Secretary Alfonso G. Cusi when he took over in July.

As of end-2015, the country’s installed capacity of 18,695 megawatts ( MW) is a mix of 31.5% coal, 15.3% natural gas, 19.3% oil-based and 34% renewables. The share of renewables include traditional technologies such as geothermal and hydroelectric power, which account for 10.3% and 19.3%, respectively. Wind, biomass and solar make up a paltry 2.3%, 1.2% and 0.9%, respectively.

Despite the previous DoE guidance, however, coal- fired power plants have emerged as the technology of choice for new development projects largely because they are among the least expensive and the fastest to be built.

The Energy department’s latest “committed” and “indicative” power projects remain dominated by coal power plants. As of September, committed projects, or those with firm financing, are expected to add 4,515 MW to the country’s existing capacity. They account for 73.3% of the total megawatts that will come online in the next few years.

Of the indicative projects, or those that are in the process of securing regulatory permits or financial closing, 9,203 MW are for coal power plants or 52.6% of the total — a far cry from the target previously set by the DoE. Natural gas is a distant second for committed plants, and wind power for indicative projects.

Mr. Francia said the energy mix policy should factor in the ongoing projects.

“By clarity of energy mix policy — I don’t like the term policy because it’s equated to targets, which is not that meaningful… what I mean is, you start with an aspiration of where you think the energy fuel mix will go in the next five, 10, 15 years. That needs to be spelled out, but you have to go beyond that,” he said.

AC Energy has shifted its focus by announcing a target of 60% renewables for its additional 1,000-MW target between now and 2020. As of this year, it generates more than 90% of its 1,088- MW existing capacity from coal-fired power plants. It is keen on geothermal and natural gas — technologies in which it does not have previous experience. It has recently acquired license to also operate as a retail electricity supplier.

“Get to a starting point and you have to be realistic about how you evolve into your long-term goal considering for example renewables and gas,” he said. “And considering that there are actually plants being built already. A lot of them are coal plants.”

“Then you now determine… what’s our realistic/aspirational goal. It cannot be 30-30-30-10 in the next five or not even 10 years. Far from it. But clarify your goal [ and] more importantly, how do you get to that goal and what specific policies, incentives, programs, etc. that you’re going to put in place in order to reach that goal,” he said.

Other heads of power companies who have inquired about the energy mix policy include Manuel V. Pangilinan, chairman of Manila Electric Co. (Meralco), and Francisco L. Viray, former DoE secretary and currently president and chief executive officer of Phinma Energy Corp. —