Phl likely to remain coal-dependent

Coal remains a cheaper and more reliable option, particularly as resources in the Malampaya gas field depletes with limited scope for exploration success in alternative locations in the country

The country is likely to remain dependent on coal power over the next nine years despite efforts to reduce reliance on such, amid the lack of renewable energy (RE) resources in the Philippines.

In a report released on Wednesday, Fitch Solutions said it forecasts coal power to make up 59.1 percent of the total power mix by 2028 from the 52 percent as of end-2018, while non-hydropower renewables were expected to reach 10.2 percent.

“We expect the Philippines government to turn to coal to meet the country’s power demand surge, driven primarily by strong macroeconomic and demographic fundamentals, and government goals to achieve a 100 percent electrification rate by 2022,” Fitch Solutions said.

“Coal remains a cheaper and more reliable option, particularly as resources in the Malampaya gas field depletes with limited scope for exploration success in alternative locations in the country,” it added.

In July this year, President Rodrigo Duterte issued a directive aimed at cutting the country’s dependence on coal for power generation through switching to more of gas and renewables.

This prompted the Department of Energy to expedite two key renewable energy policies — the Renewable Portfolio Standard and the Green Energy Option — which will encourage development of the market.

This is on top of the existing favorable regulatory environment for private and foreign investment, including cost-reflective electricity tariffs and an established feed-in tariff.

Concurrently, liquefied natural gas (LNG) import capacity is expected to continue to be limited by infrastructural headwinds.

Lopez-led First Gen Corp., which proposed to build a $1-billion LNG plant, has deferred anew the construction of the project to 2020, subject to approval of the Department of Energy.

First Gen already broke ground on the LNG terminal in May this year but it has yet to complete its financial investment decision.

PRESIDENT Duterte has issued a directive to cut dependence on coal but a report by Fitch Solutions said the country will have to rely on coal for now to meet surging power demand.