29 JUNE 2010

Power crisis looms over Luzon in 2011 — energy expert

An energy expert warned of a power crisis looming over Luzon next year, as the country’s energy supply would hardly be able to keep up with the increasing demand for power.

"Luzon will enter [the] supply-demand equilibrium next year, resulting in intermittent brownouts until new supply comes in by 2012," Dr. Alan Ortiz, former president and CEO of the National Transmission Corp., said Tuesday.

Outgoing Energy Secretary Jose Ibazeta earlier admitted that a power crisis might indeed happen in the absence of additional generating capacities.

"May be the new energy secretary could look at the power supply situation," Ibazeta said.

Aquino has named Jose Rene Almendras, president of Ayala-led Manila Water Co., to replace Ibazeta.

Ortiz said that Luzon faces a critical period next year, because generating capacity is expected to fall short of peak demands and required reserve margins, estimated at 23.4 percent above the peak demand for Luzon under the Philippine Energy Plan from 2009 to 2030.

He warned that Mindanao — which has suffered from long stretches of power outages in the summer months — would continue experiencing power shortfalls in the next three years.

About 74 percent of Mindanao’s energy supply comes from hydropower.

"Mindanao will continue to suffer shortfalls in power supply in the next three years until new capacity is brought on stream through private sector investment," Ortiz said.

Visayas, meanwhile, will have a "brief respite" next year when 400 megawatts of new electricity become commercially available.

Global Business Power Corp. is completing its coal-fired facilities this year, adding to Visayas' generating capacity, but Ortiz said this would not last long as demand for will surge from power-hungry Cebu and elsewhere.

"The real challenge is to build new capacity in the next five years to address surging demand. The situation is not hopeless if we act immediately to close the supply gap," Ortiz said.

He said only the private sector can provide the much-needed financing for about 8,000 MW of additional capacity in Luzon alone.

"At $1.6 million per MW, this amounts to about $12.8 billion or P602 billion. With a budget deficit of P300 billion, it is hard to imagine where government can raise the funds for Luzon's new power requirements alone," Ortiz said.

Ibazeta had said that renewable energy projects could help address the power supply shortage but investors were at a loss in the absence of clear policy directions that should cover the feed-in tariff rates, the electricity cost charged to every renewable energy technology.

Investors basically want concrete assurances from the government regarding a 12-year return on their investments.

"Renewables are important because they can contribute an additional 4,000 MW of additional capacity," Ibazeta said.

Read article source in GMA NEWS.TV, June 29, 2010