DOE to re-validate Ilijan plant’s return to operation

The Department of Energy (DOE) is planning a site visit to the 1,200-megawatt Ilijan gasfired power facility this week to re-validate its targeted return to commercial operation this May 26, as earlier communicated to the government by South Premiere Power Corporation (SPPC) of the San Miguel group.

As of Monday, May 22, Energy Assistant Secretary Mario C. Marasigan said that SPPC has yet to give a new update on the Ilijan facility’s schedule to recommence operation, “so we are considering possible site visit within the week to validate.”

The energy department earlier stated that when the Ilijan electric generating asset would start contributing supply to the grid, the projected recurrence of ‘yellow alerts’ or tight supply predicaments in the Luzon grid will be eased because the plant could bring in up to 1,200MW of additional capacity to the system.

As noted by the DOE, there will be gradual ramp up of the plant’s generation capacity, but its overall impact would still be shoring up grid supply that could greatly aid in preventing rotational blackouts or service disruptions to the consumers.

Part of the Ilijan generated capacity will be supplied to Manila Electric Company (Meralco) as underpinned by an emergency power supply agreement (EPSA) stretching from March 26, 2023 until March 25, 2024.

When asked on the cost impact of Ilijan’s return to operation using liquefied natural gas (LNG) as fuel for electricity generation, Energy Secretary Raphael P. M. Lotilla conveyed that “the prices are still based on spot prices rather than longterm contracts for LNG.”

At present, he said, LNG prices have gone down considerably from their peak last year and according to some sources, they may even be competitive in relation to coal,. "So we hope that that will stay but there would be some volatility because we don’t know what the extent of factors that are going to happen,” he said.

As culled from industry reports, recent LNG prices for spot cargoes in Asia had already gone down to as low as $9 per million British thermal unit (MMBTU) this May 2023 from a peak of $61 per MMBTU in September 2022, following the energy crisis precipitated by the Russia-ukraine war.

Last month, SMC Global Power Holdings Corp. (SMGP), which serves as the parent unit of SPPC, announced that it already received the first LNG cargo that will fuel Ilijan plant’s commencement of operations.

SMGP has a tolling arrangement for the use of the offshore LNG import facility that was put by by Atlantic, Gulf, and Pacific International Holdings (AG&P) – and the Ilijan plant will be the anchor client of the LNG floating storage unit.

SMC President Ramon S. Ang emphasized then that “with the reintegration of the Ilijan power plant into the power grid system, the country will be better assured of energy supply security these coming summer months and beyond.”

He further asserted “hopefully, with all available power facilities operating--with no plants breaking down or going on unscheduled shutdown--we will have more than enough capacity for the rest of the year, and consumers will not have to experience brownouts or supply rotations.”

The Ilijan plant had been on extended outage since June last year following the expiration of its gas sale purchase agreement (GSPA) with the Malampaya consortium. And while on shutdown, SMGP pursued warranted retrofitting works on the facility to prepare its re-entry into commercial stream.