• 8 months ago
The Manila Times Forum: Environmental, economical generation

The Manila Times (TMT) recently held an energy forum titled “Environmental, economical generation” which tackled reliable, accessible and affordable power. Hosted by TMT Supplements and Special Projects Editor Dafort Villaseran, the event at Century Park Hotel Manila featured Energy Regulatory Commission Chairman Monalisa Dimalanta, Independent Electricity Market Operator of the Philippines President and Chief Executive Officer Richard Nethercott, Meralco First Vice President and Chief Sustainability Officer Raymond Ravelo, National Grid Corp. of the Philippines Assistant Vice President and head of Transmission Planning Redi Allan Remoroza, and Aboitiz Power Corp. President and CEO Manny Rubio. The fireside chats were moderated by TMT columnist Ben Kritz.

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00:01:12 Good morning to all speakers, guests, and colleagues.
00:01:17 Welcome to the first session of the Manila Times
00:01:20 columnist Ben Critts, moderator.
00:01:24 We will be having the Manila Times columnist Ben Critts as
00:01:28 the moderator.
00:01:32 All the talks and discussions today will center about how to
00:01:36 ensure reliable and accessible and accessible and
00:01:40 accessible and accessible and accessible and accessible
00:01:45 and affordable power for the Philippines.
00:01:48 So these involve new technologies in power generation,
00:01:52 transmission, and distribution, which are gradually getting a
00:01:56 foothold in the country as stakeholders in the energy
00:02:00 sector would be able to best serve the interests of our
00:02:04 fellow Filipinos. And now to be able to strike the
00:02:08 objective balance between both reliable traditional electrical
00:02:13 and traditional system implementation, we look forward
00:02:16 to being able to hear our speakers discuss these and more
00:02:20 as we go into our program in depth.
00:02:24 But in the meantime, please do allow me to introduce the
00:02:28 thought leader in our media and communications industry who
00:02:32 will give the welcoming remarks. Now aside from being the
00:02:36 chairman and chief executive officer or CEO of the Manila
00:02:41 Times Development Board, through which he hopes to nurture
00:02:44 better informed Filipinos, he also interviews government
00:02:48 officials, diplomats, and industry leaders in the Manila
00:02:52 Times Roundtable through which he hopes to encourage more
00:02:56 critical thinking among Filipinos. So esteemed guests
00:03:00 and attendees, let's have a round of applause for Dante
00:03:04 Klink Ang II.
00:03:09 >> Good morning, everyone. I'm sure you're all eager to
00:03:12 start today's program, but before we do, just allow me to
00:03:16 greet some of our speakers from whom you'll be hearing
00:03:20 today. Attorney Richard Nuttercott, president and CEO of
00:03:24 the independent electricity market operators of the
00:03:28 Philippines. I also will hear later on from
00:03:32 attorney Mona Lisa de Malanta, the chairperson of the
00:03:37 ERC. Raymond Ravolo later on also will be speaking. He's
00:03:40 the chief sustainability officer of Maralco. Engineer
00:03:44 Reddy Allen Remorosa, ABP and head of transmission and
00:03:48 planning of the NGC. Later on we'll have Emmanuel Rubio,
00:03:52 president and CEO of Avoid Dispower. My colleagues at the
00:03:56 Manila Times, ladies and gentlemen, thank you for being
00:04:00 here. In hindsight, this is a forum for the media, but I
00:04:05 think we should have organized this earlier in the year. I
00:04:08 think to be honest with you, we sort of put this together on
00:04:12 the fly, but I said it should have been at the forefront of
00:04:16 our list of things to do because energy is such a critical
00:04:20 subject matter. The entire country is now preoccupied with
00:04:24 maybe tinkering with the Constitution, but the aim goal
00:04:28 there, of course, is to attract foreign investments. And if
00:04:33 you -- not a few have said that really the energy requirements
00:04:36 are critical issues to discuss. Not only critical issues
00:04:41 regarding meeting supply, but also critical in attaining our
00:04:46 development aspirations of later on becoming a middle-income
00:04:51 country in the world. I'm not the expert. You know, for
00:04:56 those of you who are attending our event for the first time,
00:05:01 we hold a series of business forum. Basically what we do is
00:05:05 we interview the people, the experts, and we open up to
00:05:10 people like yourselves. And of course, we write stories about
00:05:15 it in the print and digital editions of the Manila Times,
00:05:19 but also we use these materials also for our various digital
00:05:24 and social media platforms. Very soon you may be interested
00:05:29 to know that the Manila Times is trying to develop a streaming
00:05:33 channel, so maybe by the middle of this year that is something
00:05:37 we will have also to offer our readers and others in the
00:05:41 public more information and direct access to people who can
00:05:45 authoritatively discuss various issues of the day. So thank you
00:05:49 very much for our speakers, and of course thank you to all our
00:05:53 partners who made this event possible. Aboid is Power,
00:05:57 Caruso, Restaurante Italiano, City Core Renewable Energy,
00:06:00 Meralco, our venue partner Century Park Hotel, our media
00:06:04 partners Rising Tigers Magazine, our own the Manila Times TV,
00:06:08 and of course all of you attending this event. I know
00:06:11 there are many things you could be attending here, but you are
00:06:15 here instead, so thank you for that, and I hope that you have
00:06:19 a productive morning. Thank you.
00:06:22 Thank you, Sir Klink, for the welcoming remarks. We shall now
00:06:26 proceed with our first keynote message.
00:06:28 Now our first speaker has been a practicing lawyer for over 20
00:06:32 years. She has also been a professor of law at the Ateneo
00:06:35 de Manila Law School and has been a member of the faculty of
00:06:38 the Ateneo School of Government. Prior to her present position,
00:06:41 she was the chairman of the National Renewable Energy Board,
00:06:44 laying the groundwork for the country's green energy auction
00:06:47 program and updating the 20-year National Renewable Energy Plan.
00:06:51 So she is now currently the Energy Regulatory Commission,
00:06:55 or ERC, chairman. Ladies and gentlemen, let's all listen to a
00:06:58 message from Mona Lisa de Manalanta.
00:07:01 Good morning, everyone. On behalf of the Energy Regulatory
00:07:06 Commission, allow me to first thank the Manila Times for
00:07:10 organizing this forum and for inviting us to participate in
00:07:14 this conversation. Personally, I am very happy to join you,
00:07:18 even if it's just virtually today, to talk about the
00:07:23 challenges we face as a nation and as a people living in
00:07:26 these very exciting times. I always welcome these
00:07:30 opportunities to engage in conversation about our nation's
00:07:34 energy journey. I think energy tops the list of the most
00:07:38 critical issues every nation in the world faces today.
00:07:42 It is right up there, together with food and national security.
00:07:47 While climate change or environmental hazards would be
00:07:52 included in that list as well, many are now of the view that
00:07:55 national security now encompasses issues relating to the
00:07:59 climate. This takes on a more significant role for us in the
00:08:04 Philippines as we feel more acutely the brunt of
00:08:08 environmental hazards. The World Risk Index is published
00:08:12 annually as part of the World Risk Report to measure the
00:08:16 susceptibility of 193 countries in the world to extreme
00:08:21 natural events vis-à-vis the structures in place to respond
00:08:25 quickly and provide assistance in cases of emergency.
00:08:29 According to the 2023 World Risk Index, the Philippines ranks
00:08:34 first among the top 10 countries with the highest risk,
00:08:38 followed by Indonesia, then India. The Philippines also
00:08:43 ranks fourth among the top 10 countries with the highest
00:08:48 number of populations exposed to disasters such as earthquakes,
00:08:52 tsunamis, and floodings. While we face this reality,
00:08:57 we likewise continue to face, as a country, a declining level
00:09:01 of energy self-sufficiency. That is, our ability to produce
00:09:06 or generate our own energy resources domestically without
00:09:11 relying extensively on imports. This includes our capacity to
00:09:17 meet the country's energy demands using resources available
00:09:20 within our borders, such as fossil fuels, renewable energy
00:09:24 sources, and other indigenous energy sources. Achieving
00:09:28 self-sufficiency is a key objective for ensuring energy
00:09:33 security and reducing dependence on external sources, thereby
00:09:37 promoting economic stability and resilience in the energy
00:09:41 sector. As you can see in this graph, the self-sufficiency
00:09:46 rate of the Philippines from 2008 to 2021 has been declining.
00:09:50 From 67.1% in 2008, it has decreased to 45.1% in 2021.
00:09:58 As energy self-sufficiency declines, the country becomes
00:10:03 more dependent on external sources for its energy needs,
00:10:07 which can pose challenges to energy security and
00:10:11 sustainability. On a positive note, according to the
00:10:15 Bloomberg New Energy Finance, Climate Scope 2023, the
00:10:19 Philippines emerges as one of the top five attractive markets
00:10:24 globally for clean energy investments, ranking fourth among
00:10:28 110 developing economies, a significant rise from its
00:10:32 previous ten spot. The Philippines' climb reflects
00:10:36 significant progress in transitioning to renewable energy
00:10:40 supported by measures such as our green energy auction,
00:10:44 feed-in tariffs and tax incentives. The Department of
00:10:47 Energy's second green energy auction awarded 3.4 gigawatts
00:10:52 of renewable energy capacity with supportive policies
00:10:56 stimulating growth in clean energy investment. The
00:11:00 country's clean energy investment expanded by 41% from
00:11:05 2021 to 2022, reaching $1.34 billion. The DOE aims to
00:11:13 increase our e-share in the power generation mix to 35% by
00:11:17 2030 and 50% by 2040. It undertakes initiatives to
00:11:23 propel investments in various energy technologies,
00:11:27 emphasizing resilience and climate adaptation in energy
00:11:31 infrastructure. But where are we today? This is a snapshot
00:11:35 of the Philippine energy sector as it stands at the moment.
00:11:40 We are the big stock of this power sector as of January
00:11:43 2024, where the ERC regulates an energy industry currently
00:11:48 valued at 630 billion pesos, comprised of the four sectors,
00:11:54 generation, transmission, distribution and supply. These
00:11:58 sectors continue to grow over the years. In 2020 to 2040,
00:12:02 the DOE targets to increase this value of the sector with
00:12:09 7 trillion peso investments in the Philippine energy plan of
00:12:13 2020 to 2040. This is what we call the clean energy scenario.
00:12:18 The number of investments is targeted to produce 92.3
00:12:23 gigawatts by 2040. This sector now comprises of about 226
00:12:30 generation companies operating 577 power plants in the
00:12:37 energy sector. We have a fully functioning wholesale
00:12:40 electricity spot market with 468 participants trading at
00:12:45 five-minute intervals per day. We also now have a reserve
00:12:50 electricity reserve market that now operates. The other
00:12:54 details are provided and we can also talk about them as we
00:12:58 go along. Some fun facts over the last two decades of this
00:13:04 industry. Gross electricity consumption has grown by more
00:13:08 than 100% with gross power generation also equally growing
00:13:14 at that level. But I think the story, the bigger story lies
00:13:19 with the comparison of growth from the utilization of coal in
00:13:24 our system and the utilization of renewable energy. As you can
00:13:28 see from the slide, the utilization of coal has grown by
00:13:33 more than 300% from 2008 to 2022. While the utilization of
00:13:39 renewable energy sector of renewable energy sources have
00:13:44 grown by about 20%. And what's curious about this period is
00:13:49 that this is the period when the Renewable Energy Act was
00:13:54 passed in 2008, late 2008, and started to take effect in 2009.
00:14:01 So, this is one area of the story of the Philippine energy
00:14:06 journey that we should also pay attention to. One aspect that
00:14:11 may be curious for all is the growth of also the transmission
00:14:17 sector where we have seen from the period that the concession
00:14:22 has taken place in 2009 to 2023 in terms of transmission line
00:14:28 and transmission facilities. And it has grown by only 8%. And
00:14:33 this is one area where it is also posing a challenge to the
00:14:39 growth of the generation sector where there is some stunted
00:14:44 growth within the absence of in the absence of transmission
00:14:49 line and transmission facilities. But today, let us not
00:14:55 forget the achievements that have been completed just over the
00:14:59 last few months. For the first time in our nation's history, we
00:15:04 have a unified power grid that with the completion of the
00:15:09 Mindanao Visayas Interconnection Project, today the three main
00:15:14 islands of the country, Luzon, Visayas, and Mindanao, are
00:15:19 finally physically connected via submarine cable that now allows
00:15:24 the transmission of electricity to the Philippines.
00:15:28 This is a major step forward for the Philippines. And it is
00:15:33 not just a step forward for the Philippines. It is a major
00:15:38 step forward for the Philippines. And it is a major step forward
00:15:43 for the Philippines. And it is a major step forward for the
00:15:48 Philippines. And it is a major step forward for the Philippines.
00:15:53 And as I mentioned earlier, the reserves market. In the next
00:15:57 few days, retail competition and open access or ARPOA will also
00:16:02 commence in Mindanao, allowing large customers in the island to
00:16:07 finally exercise their power to choose their own supplier and
00:16:12 negotiate their own power supply rates. As we move forward to
00:16:17 growing the Philippine power sector, the ERC works hand in
00:16:22 hand with the DOE in delivering our respective mandates. To meet
00:16:26 the goal of increasing the RE share by 35% by 2030 and 50% by
00:16:31 2040, the ERC has various programs and projects to support
00:16:36 this to support the meeting of these objectives. We have been
00:16:41 aggressively promoting the net metering program and supporting
00:16:46 the DOE in the conduct of the green energy auction program. The
00:16:51 feed in tariff program is still in place and still supplying
00:16:55 renewable energy to the entire system, together with the renewable
00:17:00 portfolio standard that has been already implemented since last
00:17:05 year. We likewise support the DOE in promoting energy efficiency
00:17:10 and conservation, as well as pursuing emerging technologies to
00:17:15 achieve energy security. We also have the mandate to promote a
00:17:20 new energy policy in the power sector, and we have been
00:17:24 performing this mandate more diligently over the last few
00:17:29 years. For 2024, we have various programs that we would that we
00:17:34 are targeting to issue, particularly to pursue energy
00:17:39 independence. We have already we have already conducted the public
00:17:44 consultations for some of these issuances, and some we will
00:17:49 commence public consultations this year. But definitely for all
00:17:53 these issuances that you see on your screen, these are all
00:17:58 targeted to be completed within 2024. For promotion of consumer
00:18:03 protection and consumer choice, let me just highlight two areas
00:18:08 among the list that you in the list that you see before you. First
00:18:13 is the amendment of the universal charge missionary electrification.
00:18:18 This is a new subsidy rate that will be provided by the main grid
00:18:22 consumers to the off grid consumers. Starting this week and
00:18:27 for the next five weeks, all five members of the commission will
00:18:32 be presiding over simultaneous hearings in the different islands
00:18:37 in the country. We aim to complete the hearings for the new
00:18:42 subsidy rates by the next month, by April, so that we can already
00:18:47 have a new subsidy rate within the year. This is aimed to promote
00:18:51 a more rationalized implementation of the subsidies for our off
00:18:56 grid islands, knowing and mindful also of the burden being carried
00:19:01 by our main grid consumers. The second item I want to highlight
00:19:06 here is the last bullet that you see, which is the omnibus rules
00:19:11 for customer choice programs. While we have separate programs that
00:19:16 you have seen in the other slides for net metering, retail
00:19:20 competition, green energy option, in this set of rules, we have
00:19:25 consolidated them and streamlined the requirements for consumers to
00:19:30 actively participate and for consumers to make an effective
00:19:35 exercise of their right to choose that is guaranteed under APERA
00:19:40 and under the Renewable Energy Act. So, this omnibus set of rules
00:19:45 for the programs in the retail electricity market is targeted to
00:19:49 be issued by next month by the commission. While we pursue all
00:19:54 these programs and as a way for us to pursue these programs, we are
00:19:59 also revolutionizing the way we do things at the agency. Last year,
00:20:04 we launched what we call ERC Link Code, which is our suite of
00:20:09 digital solutions to deliver services to the public. This platform
00:20:14 includes our digital system, the monthly reporting for our
00:20:18 distribution utilities, as well as our consumer complaints
00:20:22 ticketing system. Our website also now hosts an interactive map of
00:20:27 the country where you can locate all the generation facilities,
00:20:32 including the rates charged by these facilities under power supply
00:20:37 agreements approved by the commission. All these efforts on
00:20:43 behalf of the agency not only present their complaints to the
00:20:46 commission or for our stakeholders to submit their filings to the
00:20:50 agency, but in the greater scheme of things, promote what we call
00:20:55 energy democracy. Ultimately, the country's pursuit of energy
00:21:00 democracy, as well as energy affordability, should bring about a
00:21:05 greater ability for us to control our own future. In other words,
00:21:11 to define our own destiny. With this, we hope we are able to
00:21:15 contribute to the conversation this morning, and thank you again
00:21:19 for this opportunity. Maraming salamat po at magandang umaga.
00:21:24 We are grateful to ERC Chairman Mona Lisa for preparing her report,
00:21:30 despite her hectic schedule. Next up, we have our second keynote
00:21:34 message. Now, our second speaker has also practiced law for over
00:21:40 20 years, specializing in criminal litigation, commercial law, and
00:21:43 labor law. Likewise, he has been a professor at De La Salle
00:21:47 University, Manila. He has also had extensive experience in
00:21:51 government service, having worked in the Senate, Congress, and in
00:21:55 local government units. Now, prior to his current position in the
00:21:59 independent electricity market operator of the Philippines, or
00:22:03 IEMOP, he was its corporate treasurer and one of its pioneer
00:22:08 partners. Now, he is the IEMOP president and CEO. Ladies and
00:22:11 gentlemen, let's welcome Richard Nethercott.
00:22:15 [Applause]
00:22:19 Richard, the stage is all yours. The clicker is here on the podium.
00:22:24 [Music]
00:22:29 [Music]
00:22:32 >> Good morning. Good morning, everyone. First, I would like to
00:22:45 thank the organizers of this event, particularly Mr. Dante
00:22:49 Klinkang, and of course, Ms. Mercado, and Mr. Benquist, and of
00:22:55 course, the entire Manila Times family. So thank you for having
00:22:58 us here today. I am presenting today the market operator's role
00:23:04 in ensuring reliable, accessible, and affordable power. For those
00:23:11 who are familiar with the subject matter, I hope this
00:23:15 presentation will provide you new insights. For those that are not
00:23:22 yet too familiar, it is hoped that a proper introduction and
00:23:26 explanation of this subject matter are achieved by this
00:23:30 presentation. So first, let me start with an overview of the
00:23:40 WESM. So, okay. So the WESM was established pursuant to Section
00:23:51 30 of the IPERA, and its objectives are basically to
00:23:58 promote a level playing field among WESM participants, where
00:24:03 prices are governed as far as practicable by commercial and
00:24:09 market forces, where trading is facilitated among participants
00:24:15 in the spot market, thereby providing proper accounting and
00:24:20 provision of data, and where third parties are granted access
00:24:24 to the power system. And with all of these objectives,
00:24:29 hopefully efficiency is encouraged. So therefore, we can
00:24:35 say that the WESM objectives are fourfold. One is competition,
00:24:39 two is transparency, three is accessibility, four is
00:24:43 efficiency. Now, the WESM is operated by the market
00:24:49 operator, which is the independent electricity market
00:24:54 operator of the Philippines, and its duties and responsibilities
00:24:59 primarily pertain to the administration of the market, to
00:25:05 determine dispatch schedule and, of course, clearing prices, to
00:25:09 monitor daily trading activities, and to oversee transaction
00:25:15 trading and settlement procedures.
00:25:20 So the key concepts of the WESM, as provided under RA 9136,
00:25:28 are the following. It is wholesale. It only pertains to
00:25:32 large quantities of electricity, electricity being the commodity
00:25:36 traded, spot because transactions settled in the market are only
00:25:41 traded, and are bought outside of contracted capacities, or
00:25:45 those that are not covered by contracts. And it's a market,
00:25:49 it's a venue for buying and selling electricity.
00:25:55 So how does WESM affect electricity rates?
00:26:01 If you will examine your monthly electric bill, you will find
00:26:08 a system called generation charge. This generation rate is
00:26:12 basically a blended rate. It is a combination of the rates
00:26:16 passed on by generation companies through their power supply
00:26:20 agreements, and if they have purchases in the spot market, so
00:26:24 it's a blended rate. Now, a contracted price, of course,
00:26:28 a constant price within the period of the PSA, but in the
00:26:33 WESM, the prices fluctuate every interval, every hour, based on
00:26:39 supply and demand. However, WESM prices are settled
00:26:44 based on the concept of the so-called ESSP, or the effective
00:26:48 spot settlement price, which is the weighted average price
00:26:52 factoring in the quantity bought at the price at a certain
00:26:59 point. So to illustrate this, let me go to the next slide,
00:27:05 which is to give you the --
00:27:25 Okay, so this is the next slide. This is a summary of the
00:27:29 market outcomes for the past year, 2023. As you can see,
00:27:34 that dark blue portion of the graph, that pertains to the
00:27:39 quantity, percentage quantity of electricity procured through
00:27:43 the spot market. Okay, on the average, it's roughly
00:27:48 around 18%, most of the time, for every month.
00:27:54 Now, for the entire year of 2023, the spot market
00:28:00 accounted to about 17.5% of the total customer consumption
00:28:06 of electricity. And if you look at the effective spot
00:28:11 settlement price of 6.44 pesos for 2023, it's actually lower
00:28:17 than the previous year. Now, if you will compare this
00:28:22 with the expected PSA rates, you will discover that this is
00:28:26 actually competitive. If not lower, it is competitive.
00:28:31 And with that competitive price, we are provided certain
00:28:37 benefits. Now, the objectives of the WESM, as I said, are
00:28:41 competition, transparency, accessibility, and efficiency.
00:28:45 Achieving these objectives will allow for the consumer and for
00:28:51 the industry to experience the full benefit of the WESM.
00:28:55 And it is promoted and it is felt through tangible means.
00:29:03 Like, for example, the WESM allows for contracting flexibility.
00:29:10 Contracting flexibility means you can avoid now over-contracting
00:29:16 or under-contracting. Unlike before, where the only mode
00:29:20 of buying electricity is through PSAs or through contracts.
00:29:24 But with the WESM, you can only contract a certain level.
00:29:27 If you are the DU or the distribution utility or the electric
00:29:32 cooperative, you can contract a certain level and buy the rest
00:29:35 from the market. Now, through the market also,
00:29:39 generation companies can sell their non-contracted capacities
00:29:44 or even buy from the market what we call replacement power.
00:29:49 So if the generation, for some reason, cannot provide their
00:29:52 contracted capacity, they can source it to the market.
00:29:55 Also, this flexibility allows for distribution utilities to sell
00:30:00 in the market their excess capacity that they contracted.
00:30:04 Because as we know, demand requirements fluctuate.
00:30:08 It varies every interval. So another tangible benefit is to
00:30:15 allow investors the necessary data information to help them
00:30:19 come up with more informed decisions in crafting their plans
00:30:25 or strategy, their trading on when to invest, where to invest,
00:30:32 where to put up the plants, and what technology to invest in.
00:30:36 It also promotes increased and accelerated development
00:30:42 of renewable energy. As we have now seen in the market,
00:30:45 there are more than 30 facilities that are merchant power plants.
00:30:48 Merchant power plants are those that are exclusively selling
00:30:53 their electricity production in the market rather than through
00:30:57 APSA or through a hybrid scheme. So the market encourages this
00:31:03 through the -- by allowing power plants the flexibility of
00:31:10 selling their electricity through the market rather than
00:31:13 through a CSP or a PSA that is entered into through a
00:31:18 competitive selection process.
00:31:21 Okay, so basically that is the energy market.
00:31:26 But the WESM is not just the energy market.
00:31:29 We now have a co-optimized market.
00:31:31 We just recently launched the reserve market last January 26,
00:31:35 and I will talk about it a little later.
00:31:39 But I will instead inform you of the programs that we implement
00:31:43 in the WESM. We are also the central registration
00:31:46 body for our retail electricity market programs.
00:31:51 Basically our ARCOA and the GEOP, and later on I will discuss
00:31:55 with you the renewable energy market, which we hope will be --
00:31:59 will go into full commercial operation before the end of the year.
00:32:08 The energy market basically is similar to an energy market
00:32:10 where the reserve energy provider, in this case our system
00:32:18 operator, which is NGCP, can buy the ancillary services
00:32:23 requirement necessary to provide stability and reliability
00:32:28 to the grid. AS services or ancillary services
00:32:34 are energy required for frequency control or stability.
00:32:39 Okay, so basically that's the need for the reserve.
00:32:42 It's on top of the demand requirement that is consumed every day.
00:32:47 Now, with the advent of the reserve market, we have seen
00:32:51 increased compliance. As you can see from the tables
00:32:56 and the graphs in this slide, prior to the operation of the
00:33:02 reserve market, we were seeing compliance with the contingency
00:33:05 and dispatchable reserve requirements at around 50 to 60 percent level.
00:33:10 But after the reserve market, we are now seeing increased
00:33:14 compliance, like even in Mindanao. In Mindanao, it's now 100 percent
00:33:19 for all types of reserves. In Cebu -- in Cebu, sorry, in Visayas,
00:33:24 you still have a gap. Visayas, only about 60 percent,
00:33:29 but that has something to do with the available AS services
00:33:33 in the region.
00:33:38 Now, aside from a
00:33:43 optimized energy and reserve market, we now also have in the WESEM
00:33:48 the competitive retail electricity market programs.
00:33:53 Basically, right now, we have the ARCOA, or the Retail Competition
00:33:58 Program, which is the green energy options.
00:34:02 And we have the GEO, which is the Green Energy Option Program.
00:34:07 They are similar. They have minor differences, but they are similar.
00:34:12 ARCOA allows contestable customers. Contestable customers are those
00:34:17 that are consuming more than 500 kilowatts of electricity.
00:34:22 They can now migrate from being a captive customer
00:34:27 -- captive customer are the end users that are within
00:34:31 distribution utilities and electric operatives -- if you are consuming
00:34:36 500 kilowatts, you can now migrate or switch from being a captive
00:34:41 customer to a contestable customer. And being a contestable
00:34:46 customer allows you to decide which electricity supplier
00:34:51 you can source your power from. The establishment of ARCOA
00:34:56 is mandated by the Electric Power Reform Act of 2001, the IPERA,
00:35:00 to offer options to the end users and to grow the market.
00:35:05 Okay? So the demand threshold for ARCOA is 500 kilowatts.
00:35:10 However, with GEO, the demand threshold is lower. It is 100 kilowatts.
00:35:15 So GEO, or the Green Energy Option Program,
00:35:20 is a mechanism that allows consumers to choose
00:35:25 to source renewable energy from a licensed supplier
00:35:29 as opposed to consuming whatever supply
00:35:34 is provided by the distribution utility.
00:35:39 So GEO is exclusively renewable energy.
00:35:44 And the threshold is 100 kilowatts.
00:35:49 It was established for Su-1 to Republic Act 95-1-3,
00:35:54 also known as the Renewable Energy Act of 2008.
00:35:58 Conceptually, ARCOA and GEO are the same. There's one more
00:36:03 minor difference between the two. That is with regard to
00:36:08 opt-out. When can you get out? If you're into the program, when can you get out?
00:36:13 With ARCOA, you can opt out of the program when the ERC certifies
00:36:18 that for three consecutive months, your consumption has gone down the threshold.
00:36:23 Now, with the GEO, you can opt out any time.
00:36:27 So if you switch to being a GEO customer
00:36:32 and you want to get out of it and avail of perhaps
00:36:37 lower rates by the DU, then you can opt out any time.
00:36:42 So as the central registration body...
00:36:47 Okay, before I proceed to that,
00:36:52 there's one more detail that I want to talk about in this slide. As you can see in this slide,
00:36:56 retail market transactions now account to 22 percent
00:37:01 of the total transactions in the market. So that is
00:37:06 significant considering our aspirational target
00:37:11 regarding energy mix of 35 percent
00:37:16 by 2030. So the CRB, as I was saying,
00:37:21 as the central registration body, we are in charge, the market operators
00:37:25 are in charge of facilitating the initial switch
00:37:30 of customers that are qualified for the program and their
00:37:35 subsequent regular switches. Regular switch is when you change
00:37:40 suppliers from one to the other. Initial switch is when you
00:37:45 transition from a captive customer to a contestable customer.
00:37:50 So this is just to provide you
00:37:54 some of the demographics in the WESEM. As you can see, we now have 447
00:37:59 WESEM participants, and these are generation companies, distribution utilities,
00:38:04 electric cooperatives, metering service providers, directly connected customers,
00:38:09 and ancillary service providers and buyers. We now have
00:38:14 2,154 ARCO participants, mainly contestable customers.
00:38:19 We have 391 GEO participants, which are mostly also
00:38:23 retail customers. But more are coming. There are more
00:38:28 applications pending in our system as we speak.
00:38:33 So having given you a WESEM overview, let me now
00:38:38 delve into the other programs that we are advocating
00:38:43 in the WESEM. So what's next for the WESEM?
00:38:48 Okay, we are advocating
00:38:52 the operation of the spot market in the off-grid
00:38:57 islands of Mindoro and Palawan.
00:39:02 We intend to do this by implementing a day-ahead scheduling
00:39:07 and real-time dispatch mechanism. And why do we advocate the same?
00:39:12 We see that the market, the spot market, is not only about
00:39:17 technology and competitive pricing. It's also about retail
00:39:21 competition. So if we bring in the spot market in these island
00:39:26 provinces ahead of its interconnection to the national grid
00:39:31 through Batangas, then we can see
00:39:36 a more dynamic market in those provinces
00:39:41 where we can entice new generation, particularly RE.
00:39:46 In these islands, there are not much renewable energy generations.
00:39:50 We can encourage RE generation companies to invest in these islands
00:39:55 and therefore increase the number of
00:40:00 generation companies promoting or offering electricity.
00:40:05 We can then increase the number of participants
00:40:10 which will in turn promote competition. And with competition
00:40:15 comes more, shall we say,
00:40:19 affordable prices. Also, we see that with the market
00:40:24 operating in the off-grid areas, we can
00:40:29 accelerate and encourage the further development of the MIMA-ROPA grid.
00:40:34 The MIMA-ROPA grid, which will be a vital infrastructure
00:40:39 that would later on connect the entire island through Panay.
00:40:44 So, aside from the off-grid markets,
00:40:48 we are also advocating, and are in the pipeline,
00:40:53 the implementation of a capacity market in the Philippines,
00:40:58 and also later on the forwards market.
00:41:03 But these two markets are in their early stages of development,
00:41:08 and we might see them hopefully in the near future, hopefully in two years
00:41:13 or even sooner.
00:41:17 They are already in the pipeline, and we are doing this in close coordination with DOE and ERC.
00:41:22 But aside from this,
00:41:27 we are this year advocating the full commercial operation
00:41:32 of the renewable energy market.
00:41:37 Pursuant to the RE law, the renewable energy market was established
00:41:42 to serve as the venue for the buying and selling of renewable
00:41:46 energy certificates, so that mandated participants can
00:41:51 comply with their annual renewable portfolio standards by retiring
00:41:56 the number of RECs required for a particular compliance period.
00:42:01 As defined in the REM rules promulgated by the Department of Energy,
00:42:06 renewable energy certificates are market-based instruments
00:42:11 representing all renewable and environmental attributes
00:42:15 from one megawatt hour of electricity generation
00:42:20 sourced from an eligible RE generation facility.
00:42:25 So basically, one RE certificate is one megawatt hour, and it may be traded
00:42:30 for purposes of complying with the renewable portfolio standards.
00:42:35 The REM aims to assist the industry
00:42:40 in reaching these aspirational targets,
00:42:44 which is included in the National Renewable Energy Program of the DOE.
00:42:49 As I said, the aspirational target is 35 percent
00:42:54 contribution in the energy mix by 2030,
00:42:59 and increasing it further to 50 percent by 2040.
00:43:04 Now, to highlight the state of development of renewable energy,
00:43:09 in the electric power industry,
00:43:13 this slide will provide you
00:43:18 some basic information. For example, you will see here
00:43:23 highlighted that in 2023, RE has already contributed
00:43:28 almost 22 percent of our energy mix.
00:43:33 So we are on the right track. We can reach the aspirational target by 2030.
00:43:38 There are a lot of RE plants under development.
00:43:42 The DOE is fast-tracking the auction
00:43:47 of capacities for renewable energy.
00:43:52 So hopefully we meet those targets so that we can comply with our international obligations
00:43:57 to provide clean, affordable energy to all.
00:44:02 So, renewable energy in 2023 accounted for 23,100
00:44:07 1,168 gigawatt hours out of the total
00:44:11 106,901 gigawatt hours of total energy mix.
00:44:16 To wrap this up, I would like to synthesize this presentation.
00:44:26 So, the market operator's role in ensuring
00:44:31 reliable, accessible, affordable power may be summarized this way.
00:44:36 For reliability, we have 17 years of WESEM operations.
00:44:40 And in these 17 years, we have seen a growing population of trading participants.
00:44:45 We have seen increased generation capacity,
00:44:50 which translates to improved supply mix to match our growing demand.
00:44:55 With the integration of the reserve market, we have seen an improved reliability of the grid.
00:45:00 Auxiliary services required for frequency control are complied with
00:45:05 by committing more capacities to meet the required level of frequency control
00:45:09 auxiliary services or reserves. Such committed capacities, in turn,
00:45:14 were able to manage power frequency levels within acceptable levels for the different power grids.
00:45:19 All this illustrates a vibrant interplay between industry players,
00:45:24 promoting reliability.
00:45:29 As for accessibility, we now know that the three major regions
00:45:34 are interconnected. We now have a Luzon-Visayas-Mindanao National Grid,
00:45:38 where excess generation may now be sold outside of each region.
00:45:43 And conceptually, this trading can happen
00:45:48 from Luzon all the way to Mindanao.
00:45:53 These interconnections between the Visayas and Mindanao regions have been pivotal in addressing the power supply challenges
00:45:58 in Luzon and Visayas, all of which are facilitated through the SPAT market.
00:46:03 Now, as to affordability,
00:46:07 it is undeniable that Western prices fluctuate.
00:46:12 However, it is also undeniable that Western prices
00:46:17 offer an economical alternative to over-contracting or under-contracting.
00:46:22 With the retail market also, we have seen customers having the power of choice
00:46:28 from whom to buy their electricity requirement.
00:46:33 And all of this results in the lowering or the increasing of competition in the industry,
00:46:38 and this increased competition promotes affordable power, affordable electricity rates.
00:46:43 So, I would like to end my presentation with this slide,
00:46:57 and I'm very happy I was able to contribute to today's discussion.
00:47:01 Good morning again, and good day.
00:47:06 Thank you, Richard, for making your data and your strategies accessible not just to stakeholders,
00:47:11 but even the consumers at our forum.
00:47:16 Now, we'll be inviting you back later for our first fireside chat,
00:47:21 together with the Manila Times columnist Ben Critz.
00:47:26 Ben, good afternoon.
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01:31:31 Now, our fourth speaker for this afternoon has more than 18 years of work experience in the electric power industry.
01:31:39 Presently, he is the Assistant Vice President and the Head of Transmission Planning Department of the National Grid Corporation of the Philippines, or NGCP.
01:31:48 Prior to working with NGCP in 2009, he was the Head of the Luzon System Planning Division of the National Transmission Corporation.
01:31:57 He previously worked in the academe and manufacturing industry.
01:32:02 Ladies and gents, please give a round of applause for Reddy Alan Remorosa.
01:32:08 Thank you, Daport, for the introduction.
01:32:24 It's my pleasure to be here in this forum and share with you this presentation on grid developments and renewable energy.
01:32:33 And I would like to thank the Manila Times for giving NGCP this opportunity.
01:32:39 Good afternoon, everyone.
01:32:42 I will provide you with a grid overview of where we are today, grid expansions, or where we are going, and renewable energy.
01:32:55 Interestingly, this forum is titled Environmental Economical Generation, which signifies the need for a balance between having clean energy and economical energy sources.
01:33:11 On this slide, we have the bar chart of the peak load and the total dependable generation capacity in 2023 based on DOE data.
01:33:23 It will look like that we have more than enough generation capacity.
01:33:28 However, the available generation capacity at any given time can vary significantly due to planned or unplanned power plant outages.
01:33:41 Our highest transmission voltage is 500 kV, which is located in Luzon.
01:33:48 Here, we also have the data for the total circuit kilometers of transmission lines and total substation capacity nationwide.
01:33:59 Since the operation of NGCP in 2009, the country's peak load has increased by 83 percent, and total dependable generation capacity, on the other hand, increased by 86 percent.
01:34:16 In the map, we can see that there are unshaded islands that are not under NGCP operation yet, but we do have interconnection projects that will link the islands to the main grid.
01:34:31 The Philippine grid accommodated such increase in load and generation because of NGCP's asset growth.
01:34:44 Because of the grid expansion projects from 2009 to 2023, which resulted in a 14 or 11 percent increase in circuit kilometers of transmission lines, a 114 percent increase in total substation capacity, and a 225 percent increase in capacitors and reactors, and bar.
01:35:10 The capacitors and reactors are the equipment needed to maintain power quality in the grid.
01:35:17 The increase in transmission line length may seem small at 11 percent, but equivalent to more than 45,000 MVA due to the transmission capacity upgrades of various transmission backbone facilities.
01:35:34 One of NGCP's major achievements is the completion of the Mindanao-Visayas interconnection, which allowed the exchange of power among the three grids and allowed the optimization of the use of available energy resources.
01:35:54 It was first energized in April last year, and in January 2024, already at full 450 MW capacity for the Mindanao-Visayas power flow direction and vice versa.
01:36:10 NGCP will continue to expand the Philippine grid as set out in the transmission development plan.
01:36:20 In this grid map, we are showing a snapshot of where we are going.
01:36:26 We are developing new transmission backbone to support generation developments.
01:36:33 We are developing new substations for load growth, a states-by-states backbone loop configuration for improved resiliency, and new island interconnections.
01:36:47 These developments would require government support through regulatory approvals of the projects, of course, as well as support for right-of-way and permitting, which are the main challenges in transmission project implementation.
01:37:06 Historically, we relied heavily on generation from coal-fired power plants, but our country now aims to have an energy transition.
01:37:17 That is by increasing the renewable energy share from 21% share in 2020 to 35% share in the energy mix, increased to 35% by 2030 and 50% by 2040.
01:37:37 The variable renewable energy plants, wind, solar, offshore wind, would be expected as main contributors in achieving the RE targets.
01:37:50 Integrating high levels of variable renewable energy, however, could cause grid operation challenges because of its intermittent nature of operation.
01:38:03 Grid inertia reduction, which is about the strength of the grid, and voltage fluctuations.
01:38:11 So, what are the requirements?
01:38:14 Number one, indeed, we need transmission expansions to go to areas with RE resource potentials, such as northern Luzon.
01:38:25 Two, we need continuing enhancements in VRE forecasting to handle the intermittency better.
01:38:36 Three, we need flexible generators, generators with a fast ramping rate and low minimum stable load that can adjust to variations in solar and wind plant output.
01:38:50 Lastly, we need energy storage facilities.
01:38:54 We are not only talking about batteries, but also large-scale pump storage hydroelectric power plants.
01:39:06 We have a lot of RE potential.
01:39:10 For the competitive renewable energy zones alone, we have 35,000 gigawatts of total capacity for wind and solar.
01:39:20 In addition, we have more than 63 gigawatts of potential coming from the 78 or 82, 82 service contracts for offshore wind, which the DOE has awarded us of November 2023.
01:39:41 But what would be the optimal capacity mix for the renewable energy?
01:39:49 It would call for a capacity mix that would allow us to achieve the RE targets and at the same time result in least cost generation.
01:40:00 Significance of generation expansion plan in generation transmission plan alignment.
01:40:07 The chart here shows us the levels of committed generation capacity, indicative capacity, and capacity additions based on an optimal mix that would serve the demand forecast up to 2035.
01:40:25 This is based on DOE's power development plan issued in December last year.
01:40:31 For Luzon, we can see the substantial indicative capacity proposed up to year 2035, which is more than twice the required level determined in the generation expansion plan.
01:40:47 Given the many proposals, prioritization and generation transmission alignment would become very important.
01:40:57 As shown in the flowchart for power system expansion planning, there should be an iterative generation and transmission planning process with site planning as an additional critical step.
01:41:16 This slide here shows a portion of the generation expansion plan from the DOE.
01:41:23 This is for Luzon grid.
01:41:27 Let's look at the new offshore wind, or OSW.
01:41:32 Second row from the bottom, new OSW.
01:41:40 This is under the low offshore wind scenario. The optimal OSW capacity for Luzon by 2030 is 2,000 megawatts based on the DOE's generation expansion plan.
01:41:55 Site planning would indeed be crucial in establishing the priority areas or pilot areas for this 2,000 megawatt offshore wind development among the more than 20,000 megawatt offshore wind projects with grid connection applications now to NGCP.
01:42:16 Same kind of site planning would also be required for other RE technologies.
01:42:24 In my final slide, I have here three key takeaways.
01:42:29 First, the generation expansion plan, which involves the optimal capacity mix, is crucial in achieving generation transmission alignment.
01:42:40 New transmission lines could take longer time to implement than renewable energy plant projects.
01:42:48 Thus, the generation expansion plan together with site planning would aid in optimizing the available transmission capacity in the grid and in determining the prioritization of new transmission backbone projects.
01:43:05 Second, to continue the priority grid expansions, we need support through the regulatory approval of the projects as well as support in the right of way and permitting.
01:43:18 And finally, key to accommodating high levels of variable renewable energy in the grid, we need energy storage facilities, not only battery energy storage systems, but large scale pump storage, hydroelectric power plants as well.
01:43:40 These, in our view, would help achieve environmental, economical generation.
01:43:49 Again, good afternoon.
01:43:51 [Applause]
01:43:54 Thank you, Reddy, for providing the realistic projections of the NGCP.
01:43:57 We'll be inviting you again later for our second and final fireside chat after our sixth speaker.
01:44:03 Rather, our fifth speaker.
01:44:07 So, our fifth speaker began his career with the Aboitiz Group as CEO of SN Aboitiz Power, Inc.
01:44:15 He became COO of Aboitiz Power Generation Business Group and COO of Aboitiz Power prior to his present appointment as President and CEO.
01:44:25 At the helm of Aboitiz Power's transformation journey, he steers the company's generation portfolio towards significant growth in the next 10 years, aiming for a 50/50 balance between renewable energy and thermal capacities and supporting the country's sustainability goals.
01:44:42 Ladies and gents, it is my pleasure to introduce to you Emmanuel "Manny" Rubio.
01:44:46 Let's give him a round of applause, please.
01:44:48 [Applause]
01:44:58 Distinguished guests, industry leaders, and advocates for a brighter energy future, good afternoon.
01:45:04 Good afternoon to all of you.
01:45:06 Well, first of all, I'd like to thank Manila Times for organizing this forum and inviting me to share my insights on the Philippine energy landscape.
01:45:15 The energy industry is a growth enabler to many other sectors of the economy and society.
01:45:22 Energy will need due focus now and in the future, and it's good to have these conversations about what we should expect down the road.
01:45:32 The Philippines has seen impressive economic growth over the past decade, with GDP rising between 6% and 7% since 2012.
01:45:41 The previous presentation, I guess, showed you how much NGCP has invested in terms of infrastructure to transmit power, and quite impressive.
01:45:51 This positive trend is expected to continue, fueled by growing population and a vibrant business environment.
01:46:00 But with this economic boom comes rising electricity demand.
01:46:06 Elections indicate a jump of 6.6% annually until 2040, roughly starting at around 650 to 700 megawatts year on year.
01:46:16 Addressing this challenge requires expanding capacity across all forms of power generation, including energy storage, while maintaining base load capacity.
01:46:28 However, attaining a balance of energy security and affordability amid the urgency of climate change compels us to seek a more sustainable path.
01:46:41 The Philippines is at a crossroads concerning its energy system and the prosperity of its people.
01:46:47 The path we choose will determine the sustainability of our environment and the quality of life for every Filipino.
01:46:56 We must ensure that our pursuit of progress doesn't come at the cost of healthy and thriving future for generations.
01:47:06 A sustainable energy transition is essential.
01:47:10 It guarantees reliable power for Filipinos today while safeguarding a clean tomorrow for future generations.
01:47:17 And this broad transition calls for substantial investments in infrastructure, including new conventional and renewable power plants,
01:47:26 grid expansion to ensure reliable nationwide delivery, improved services, reach and efficiency of electric cooperatives and distribution utilities,
01:47:37 and improving energy security and resilience.
01:47:42 The country will need all forms of energy to sustain the nation's economic growth and development.
01:47:50 Aboid these powers, renewable and thermal capacities will help energize the Philippines' ambitions.
01:47:57 We aim to grow our total generation portfolio to 9,200 megawatts by 2030, half of which will come from renewable energy,
01:48:08 while the other half will come from traditional sources.
01:48:12 A recent entry into the gas space demonstrates our drive to bolster our lineup of baseload assets
01:48:19 and alongside over 1,000 megawatts of disclosed renewable energy projects.
01:48:25 This is like a dedication for helping ensure energy security and sustainability in our country.
01:48:33 But building new power plants is just one of the puzzles.
01:48:37 We need a robust, modern, and expansive grid to deliver energy efficiently nationwide,
01:48:43 integrating new RE capacities into the grid and helping meet the country's electricity needs.
01:48:51 Unlike thermal plants where we have land, we can put already the facilities,
01:48:58 renewable energy sources would have to rely on where the sources are.
01:49:02 So we need to ensure that transmission is also available.
01:49:06 Completing overdue transmission projects will unlock underutilized power sources in areas like the Visayas and Mindanao,
01:49:13 ultimately improving grid stability nationwide, and I believe we're well on our way.
01:49:18 A more interconnected grid will allow for higher electricity penetration,
01:49:22 facilitating import and export from neighboring areas with surplus of excess generation,
01:49:28 as what's happening now with Mindanao and Negros.
01:49:32 Ancillary services are also critical for maintaining a delicate balance between electricity supply and demand in the power grid.
01:49:40 They ensure the grid's frequency and voltage stay within acceptable limits,
01:49:46 even with fluctuations in power generation or demand.
01:49:50 Millions of Filipinos still lack access to reliable electricity,
01:49:55 hindering development, education, and health care, particularly in remote areas.
01:50:01 We must ensure that the benefits of the energy transition reach everyone.
01:50:07 Energy security is the bedrock of any thriving nation.
01:50:12 Without reliable power, investments flee, innovation stalls, and growth stagnates.
01:50:23 Reliable power is the fuel that propels us forward.
01:50:27 Furthermore, we recognize that this transition is a marathon and not a sprint.
01:50:33 While it would take years, even decades, to accomplish,
01:50:37 a well-defined strategy and collaborative effort can accelerate our pace.
01:50:43 As we look forward, a future powered by sustainable energy solutions,
01:50:47 it's crucial to focus on key areas that will shape our journey.
01:50:52 First, we need a more expansive transmission network, and that was highlighted already by the previous speaker.
01:50:59 This robust infrastructure will be the backbone of a rapidly growing industry,
01:51:04 ensuring it can keep pace with overall development and meet increasing energy demands.
01:51:11 Second, the rise of variable renewable energy sources like solar and wind is positive,
01:51:17 but we need to account for their intermittent nature.
01:51:22 They are called variable renewable energy because they are variable.
01:51:25 By focusing on increasing energy storage capacities and ancillary services,
01:51:30 we can complement this growing pipeline and improve the overall quality and reliability of electricity
01:51:36 delivered to the grid by these sources.
01:51:40 Natural gas offers a cleaner alternative to traditional fossil fuels
01:51:45 while providing a reliable baseload source of power.
01:51:49 Integrating a larger role for natural gas within the energy system
01:51:54 will act as a valuable complement to the intermittent nature of renewable energy sources.
01:52:02 It's vital to initiate long lead time work on development and implementation of advanced technologies
01:52:08 like nuclear power, hydrogen, ammonia, and digital innovations.
01:52:13 While these solutions may not be ready for immediate large scale development and deployment,
01:52:20 early planning and institution of regulatory frameworks are essential
01:52:26 to ensure they can contribute to our energy system in due time and when they are needed.
01:52:31 The transition to a cleaner energy future requires a collective effort,
01:52:36 and power generation companies alone cannot achieve this task.
01:52:40 It necessitates collaboration across the entire energy sector,
01:52:44 from generation to transmission to distribution.
01:52:48 We can navigate this path responsibly by strategically augmenting baseload capacity,
01:52:54 investing in grid modernization, and embracing new technologies.
01:53:00 The government is vital in providing a clear regulatory framework
01:53:04 that incentivizes investments in renewable energy and grid modernization.
01:53:10 The country has taken significant strides in pursuing a more sustainable energy landscape.
01:53:16 The Philippines Renewable Energy Act has been instrumental in lighting the path
01:53:21 toward a greener future by introducing provisions that promote clean energy.
01:53:27 And additionally, the feed-in tariff system has acted as a catalyst,
01:53:31 incentivizing the development of RE projects that contribute to the diversification of our energy mix.
01:53:39 Industry leaders across sectors, and not just in energy alone, can be transformative forces for good.
01:53:47 Power sector leaders can leverage their deep expertise in developing, financing,
01:53:52 and operating energy projects.
01:53:54 They are uniquely positioned to accelerate our shift.
01:53:57 This leadership can take many forms, from pioneering innovative energy technologies
01:54:03 to implementing rigorous environmental safeguards
01:54:06 and fostering a culture of sustainability within their organizations.
01:54:12 But it makes more sense to foster cross-industry collaboration
01:54:17 to ensure the energy transition happens smoothly.
01:54:21 And for example, the services sector and heavy industries, mobility and transportation,
01:54:26 social service, finance and technology,
01:54:29 this will help to transition while keeping their wheels turning.
01:54:36 The public has a role also in adopting energy-efficient practices
01:54:39 and supporting sustainable energy initiatives.
01:54:42 Responsible energy use at home and work, alongside efficient generation practices,
01:54:48 can help ensure a reliable and sustainable energy future.
01:54:52 The cheapest power plant is a plant that you don't have to build.
01:54:57 Additionally, supporting sustainable initiatives, community solar projects,
01:55:01 advocating for clean energy policies, or choosing ecosystem electricity providers
01:55:07 empowers the public to shape a better world.
01:55:11 So let us use combined resources and expertise to secure a reliable, affordable,
01:55:18 and most importantly, sustainable energy future for the Filipinos.
01:55:23 Together, we can transform the Philippine energy landscape,
01:55:26 ensuring a brighter tomorrow, powered by innovation,
01:55:30 shared responsibilities, and a vision for a cleaner tomorrow.
01:55:35 The journey will require a multipronged approach, adaptation, and dedication,
01:55:41 but rewards in the future are really worth the effort.
01:55:45 Marami salamat and good afternoon.
01:55:48 Maraming salamat, Manny, for proposing your collaborative plan.
01:55:51 May we invite you to make yourself comfortable on stage
01:55:54 as we call on the Manila Times columnist Ben Kritz again
01:55:57 to moderate our second and last fireside chat for the day.
01:56:01 We also invite Reddy to join them on stage for the hopefully very energetic discussion.
01:56:08 Okay, well, thank you both for your informative talks.
01:56:12 And I have--well, as you can see, I have quite a few questions on my little book here.
01:56:20 And some of them probably are for both of you.
01:56:27 But I want to ask you first, because this was something that was featured prominently earlier, as you heard.
01:56:37 What is the anticipated timeline for the interconnection to Mindoro?
01:56:46 The interconnection target to Mindoro is in 2027.
01:56:53 You might have heard of a 2025 target as requested by the Department of Energy.
01:57:00 That's already next year, 2025.
01:57:02 We got the approval for this project last year.
01:57:06 And we are on the pre-construction stage for this project.
01:57:10 We have identified the route.
01:57:12 We have done the submarine--the marine survey.
01:57:16 So we are in the pre-construction activity.
01:57:21 So realistically, 2025 is a very tight timeline.
01:57:26 But considering the right-of-way requirements and the permitting requirements,
01:57:34 2027 would be the more realistic timeline.
01:57:39 Just out of curiosity, is this project more challenging than other interconnection projects?
01:57:47 Because I believe you have to cross a fairly active earthquake fault with your undersea cable.
01:57:57 Is this presenting some issues that need to be worked out?
01:58:05 If we will compare it with Mindano-Bisay's interconnection, this will require a much shorter submarine cable, only about 25 kilometers,
01:58:14 while in MVIP, we have 90 kilometers of submarine cable.
01:58:18 Even the overhead lines would be much shorter.
01:58:21 The technical challenge for the Batangas-Mindoro interconnection is the crossing with the Malampaya pipeline.
01:58:28 There's a pipeline there, but there would be a technical solution for that.
01:58:33 Well, one technical solution is that in about three years' time,
01:58:38 that pipeline is not going to be of much use to anybody, so maybe you don't need to worry about it by 2027.
01:58:49 A question that I had received earlier, and obviously, your company has been in the news quite a bit lately
01:59:00 because of your big joint venture with the gas projects.
01:59:06 How do you see the impact of more LNG power on power rates for consumers?
01:59:17 I know that tends to be very volatile, but is there a trend that you're anticipating?
01:59:27 That has been a question that's been asked.
01:59:30 What really should be the long-run marginal cost of energy in the country?
01:59:37 Before all the transition concerns, the short-run marginal cost was actually coal, being the most competitive at the time.
01:59:45 But because of pressures on coal, you can't find financing already for new coal plants,
01:59:53 but still, unfortunately, coal is the cheapest in terms of fuel cost.
01:59:59 But for new capacities, especially a major one like that, LNG being considered a transition fuel,
02:00:07 is the option today for base load power.
02:00:11 It will still probably be slightly higher in terms of coal power cost,
02:00:19 but it will take us into lesser emissions and lesser carbon intensity in the next 20 years, I would assume,
02:00:28 until, of course, a new technology is available that can replace LNG that's cleaner,
02:00:35 and that probably would be nuclear for base load, maybe in 2035, 2040.
02:00:43 But I think LNG will form a very vital role in making sure that the grid remains stable,
02:00:51 especially with the entry of variable renewable energy, deeper penetration of solar and wind.
02:00:58 LNG to power facilities has the ability to cycle much faster than coal,
02:01:07 and can stabilize the grid much better than coal plants,
02:01:11 which will be needed if we are going to really push for variable renewable energy in the country.
02:01:17 Okay. Well, we're on the topic of variable sources.
02:01:26 What impact does energy storage have on the grid and have on grid stability?
02:01:38 Because it would seem that that is a lesser challenge than just coming directly from the renewable sources.
02:01:49 So would it perhaps be better if we focused more on energy storage
02:01:56 and less on direct generation from the renewable sources,
02:02:02 instead of having them go straight to the grid, have them go to the storage,
02:02:06 and then have the storage discharge at a controlled rate?
02:02:10 Is that something that's possible? Is that something that people are thinking about?
02:02:16 Yes. We are advocating for renewable energy plants,
02:02:22 and then with their own battery energy storage system.
02:02:27 And we have been recommending that in all of our system impact studies that we issued,
02:02:33 so that the battery can handle, can address the intermittency, could help the stability of the grid.
02:02:40 And so I understand the Department of Energy is looking at it that for new solar plants
02:02:47 or new variable renewable energy storage system would be required.
02:02:53 So now it's not a requirement.
02:02:57 We are proponents for battery energy storage, but installed separately from the RE plant and providing ancillary services.
02:03:07 Can I add to that, Ben? This is an issue very close to my heart.
02:03:13 Initially when the RE law came out, the initial draft of the IRR,
02:03:19 and I apologize if this sounds technical, but I'll try to narrate this in very layman's terms so that people can understand.
02:03:28 The variable renewable energy principles, the ones that we'll be investing in the initial draft, if I'm not mistaken,
02:03:35 are actually required to provide the balancing energy based on their day ahead forecast.
02:03:43 So the rule was, at least in that draft, is that you will forecast your output for the following day,
02:03:50 but if you miss your forecast, then you are responsible for buying that power in the spot market.
02:03:58 But that disappeared, which is actually the basis for these batteries behind the meter.
02:04:03 So you tandem your solar with your batteries, so solar investors can stabilize the output of their solar facilities
02:04:11 by putting a battery, and the battery would be the one cycling to make sure that the output is stable.
02:04:18 But that means you have to provide more batteries, and you have to provide more solar panels to charge the batteries.
02:04:25 And I think what's needed in the grid are not just lithium ion batteries or chemical batteries,
02:04:32 but you asked me earlier, Ben, what's our thought with regard to pumped hydro,
02:04:37 which is the biggest battery that we can probably build in the country.
02:04:41 CBK will be privatized by PESAM in October. A lot of interested parties. We are interested.
02:04:49 But it's really difficult to justify stand-alone batteries or stand-alone pumped storage,
02:04:55 because the model that you can actually justify it with, you pump in the evening and you sell energy during the day.
02:05:02 But the difference between your pumping cost and the energy price during the day is difficult.
02:05:08 Today's price is difficult to justify the investment in pumped storage.
02:05:14 So there has to be some business model that needs to be developed in order to justify building a pumped storage,
02:05:21 which actually the grid needs.
02:05:24 Would returning that stabilizing power requirement back to RE development, would that actually help?
02:05:40 Because I think there's some use for that, particularly because of the risk of instability in the grid.
02:05:53 Really, can you answer that in the context of auxiliary services?
02:05:57 Regarding the battery storage system?
02:06:00 Well, what he was saying before, RE developers were responsible for making up for any deficit,
02:06:10 and that requirement has kind of gone by the board. Should they bring it back?
02:06:14 Well, we look forward to having this as a mandatory requirement for the new VRE.
02:06:22 We understand that all the existing solar plants, it's not part of their financial model to add a battery storage system,
02:06:31 but we can do something for new variable renewable energy sources.
02:06:37 I guess a short answer, Ben, is that without batteries behind the meter,
02:06:41 it is all of us paying for that imbalance through auxiliary services charges, right?
02:06:47 The grid operator needs to provide the balancing energy, and they're buying that energy to make that frequency stable,
02:06:56 and we're the ones paying for it through auxiliary services.
02:06:59 So by putting the battery behind the meter, we're putting that responsibility to the developer,
02:07:05 whether they'll charge additional costs on their customers.
02:07:09 That one's, again, another topic.
02:07:12 Okay.
02:07:15 So, Ben, at this point, you still have about ten minutes.
02:07:17 You could also accommodate questions from the floor if you wish.
02:07:21 Yeah, let's do that.
02:07:23 Does anybody have a point they want to raise?
02:07:29 Well, while maybe they're working up the courage, you can go proceed with your follow-up question.
02:07:34 Yeah, I mean, I can certainly fill the time, but, you know, if anybody has any questions, please do not be shy.
02:07:41 We have our microphone there.
02:07:43 Put a paw in the air.
02:07:48 You talked about the need for support from the government in solving right-of-way issues, permitting and things like that.
02:08:01 I mean, this is a familiar subject.
02:08:07 Where do you see -- what are the biggest obstacles to, you know, to getting right-of-way approved, getting permits approved?
02:08:18 You know, is there something specific that you can point to that, you know, fix this and it will help,
02:08:25 or is it just -- is the system in general needing, you know, needing an overhaul?
02:08:32 Well, that's a very good question.
02:08:37 NGCP, we have the expropriation power, so we could expropriate right-of-way for our new transmission line,
02:08:45 but getting the WOP, the W-O-P, to actually start the implementation, that's something that's not controllable at our end.
02:08:57 If -- right now, I believe what would be needed is the full implementation of the E-BUS.
02:09:06 It's the law passed about energy virtual one-stop shop that would facilitate all the energy infrastructure projects,
02:09:14 not only generator projects, but should also include the transmission projects.
02:09:19 So we should be able to benefit from that law to facilitate all the requirements in implementing transmission projects.
02:09:27 Well, who's dropping the ball?
02:09:28 Because, you know, whenever we talk about the same subject with, like, ERC, for instance, you know, of course, the E-BUS is,
02:09:36 you know, the A. You know, we have this in place.
02:09:39 This should be making it easier.
02:09:42 You know, so what level is the problem?
02:09:45 Is this a local government issue, or is it -- what I've heard is that it's a time issue to where it takes so long that, you know,
02:09:56 you have -- by the time you get your writ of possession, the land that was bare, you know,
02:10:03 when you planned your transmission route has now got houses all over it, and now, you know, the problem has become much worse.
02:10:11 I mean, you know, where's the hangup?
02:10:16 What should government, you know, put their attention to to make the E-BUS law really work?
02:10:24 I would say that all the agencies involved are still in, I would say, in the preparation phase.
02:10:32 We have a regular meeting with the member agencies and also finding ways or looking at the issues being encountered.
02:10:43 I -- so certainly, we are always using this to have this whole of government approach.
02:10:51 The other agencies perhaps would -- even the inclusion in the online system.
02:10:56 Supposedly, it's an online system where you are being counted on the time duration the paper is with you,
02:11:04 and you could not escape from it, and there's a strict penalty as well.
02:11:10 But, well, while everyone's still preparing, that has not been fully enforced, I believe.
02:11:19 >> Okay. Well, let's move on a little bit because I had a question concerning your, you know,
02:11:28 your recent announcement of your tie-up over the gas plants, which has drawn some fierce criticism
02:11:36 and a bow from a couple of groups to, you know, to resist it once hearings start.
02:11:45 What is your position on their, you know, on their particular complaints that they've been airing,
02:11:53 particularly the one about generation and distribution, you know, being under the same umbrella,
02:12:01 which it's not supposed to be according to APERA?
02:12:04 >> Well, generation and distribution under APERA is actually allowed to a certain extent.
02:12:09 A generator can provide 50% of the demand of the distributor if there's a relationship between distribution and generation.
02:12:21 So that's within APERA, so that's compliant.
02:12:24 Second is that we need to accept that these plants, both Excellent Energy, Ilihan, Masindok, if I'm not mistaken,
02:12:36 and Aboitiz Powers GNPD plants offered the lowest prices in the competitive selection process conducted by Meralco
02:12:45 when they went to tender for 1,800 megawatts for new capacities and 1,200 megawatts to replace what was actually
02:12:54 TRO-ed by the Court of Appeals, which was originally also being supplied by Ilihan.
02:13:02 But I think at the end of the day, projects like this need economies of scale.
02:13:08 The country can only afford one terminal to be competitive, right?
02:13:13 Not everyone can put their own terminal and build an LNG facility.
02:13:17 When we are addressing the baseload requirements of Cebu, we went to DOE and showed them a comparison between an LNG option and a coal option, right?
02:13:28 We have an existing coal plant in Cebu, TVI-1 and 2, but the facilities are actually designed to accommodate a third unit.
02:13:37 Most of the balance of plants are already in place.
02:13:40 But because of calls for "cleaner fuel," then we said, "Okay, let's go for LNG as an option."
02:13:50 When we presented LNG as an option, it showed that LNG probably would be, at that time, at the height of the Russia-Ukraine war,
02:14:00 LNG was probably like 2 pesos 20 centavos more expensive per kilowatt-hour than coal.
02:14:06 It has gone down. It's now much closer than that, right?
02:14:09 Given that LNG has really dropped, especially spot prices.
02:14:13 But that gives you an idea of the economies of scale needed to be able to make LNG competitive.
02:14:23 In fact, for Avoid This Power, we see this as one of our best opportunities to expand our baseload aspirations,
02:14:33 outside of, of course, building new coal plants, because we cannot build a major, a big coal plant anymore.
02:14:39 No one's going to finance it, right? It's going to be difficult to insure it as well moving forward.
02:14:44 So economies of scale, I think, will ensure a competitive supply to consumers.
02:14:53 And again, given the fact that these plants actually won and offered the lowest prices in the competitive selection process.
02:15:03 Maybe we can accommodate the question from the floor.
02:15:06 Okay. Somebody have a question?
02:15:13 Good afternoon, Bo. First of all, congratulations, sir, on that wonderful speech a while ago.
02:15:21 So, sir, for Sir Rubio, sir, you said you're very committed with your 2030 sustainability target.
02:15:30 What are the potential risks you are seeing that could hinder you from accomplishing it?
02:15:36 Well, quite sure there's a lot of potential risks, but we're trying to identify them and mitigating them as we go.
02:15:45 I think the primary target that we're really aiming at for 2030 is growing a renewable portfolio
02:15:52 and adding 3,700 megawatts of new renewable energy capacity.
02:15:57 This requires land, this requires competitive financing, and of course, talents that will actually develop these projects.
02:16:06 And of course, transmission availability, given that renewable energy are actually resource-focused.
02:16:14 We can only build, especially wind, right? We can only build wind projects where there are wind resources.
02:16:22 Solar, we can build, of course, as long as there's flat land or land that's suitable for solar, we'll build it.
02:16:27 But the problem is, if we're going to build solar on flat land, the chances are those lands are probably going to be converted from agricultural use to industrial use.
02:16:39 So this thing about food issues and balancing energy and food production,
02:16:46 I think will come into the discussion table maybe three years, four years from now.
02:16:52 Already, we are the largest rice importer, and yet we have been converting huge amounts of land for industrial use,
02:17:00 and most of them being converted for solar farms.
02:17:03 What we did in Pangasinan is that I think we're the only ones building solar plants on hillsides and mountain tops, right?
02:17:13 Because there's nothing there. In fact, we're saying it's the first farmer-friendly solar facilities because we did not convert anything.
02:17:22 It's not of use. It's a forest land.
02:17:27 If we can actually find areas like that again, it's not easy.
02:17:34 But if we can have the opportunity to develop such areas, we will continue.
02:17:39 But the challenge really is that land availability and resource availability to achieve the 3,700 megawatts.
02:17:47 But we are well on our way. We have land banked about close to 800 hectares of land.
02:17:54 That would be around 767, 970 megawatts of equivalent solar capacity.
02:18:00 And we are looking at some wind resource areas, particularly in Camarines Sur.
02:18:06 And of course, the CBK project, we've said that we're interested in participating in the bid, and that's 795 megawatts of pump storage.
02:18:18 Sir, since you are starting or you are commencing several renewable energy projects,
02:18:27 so sir, what's driving the optimism in Betting Big on these clean energy projects?
02:18:35 I guess the optimism is based on, it's not really optimism, no.
02:18:39 It's what's driving the impetus to actually build renewable projects because we have to.
02:18:44 Only two things I'm sure of. Climate change is real and we need to transition to cleaner fuels.
02:18:49 And there really is a need to consider cleaner technologies in the future.
02:18:54 The problem is solar variable renewable energy is not the only solution.
02:19:00 It has to be balanced with a balancing energy plant, like a gas plant, for example.
02:19:05 So we also believe that our thermal assets will play a vital role in the next 20 years as we actually transition to a cleaner future.
02:19:15 So if that's my basis of optimism, then OK, that's the basis of my optimism.
02:19:21 But I think there really is a need to actually develop renewable energy for a cleaner future.
02:19:29 Yes, sir. Actually, there's a need, sir. So actually you've allocated 73 billion for capital expenditures this year.
02:19:37 So, sir, how much of this capital spending will be allocated for clean energy?
02:19:41 If I'm not mistaken, most of it, close to 60 billion.
02:19:45 60 billion per clean energy.
02:19:47 Yeah. Close to 60 billion.
02:19:49 I wanted to ask you about how is the expansion of the Cebu plant progressing?
02:20:00 And on your side, are you ready to hook them up and get it online when it gets put together?
02:20:14 I think I can answer that also for NGCP.
02:20:17 They are ready. The Magdugo to Cebu line has been completed and energized and transmitting capacities coming from Negros to going to Cebu and then going to the core demand area of Cebu City.
02:20:30 At the moment, we're getting all the necessary permits.
02:20:32 We've gotten endorsements already from the provincial government, from the local government of Toledo.
02:20:39 It has already existing ECC. That's why it was actually outside of the moratorium.
02:20:45 But nevertheless, we were able to get certification from DOE to build that 150, even if it was outside of the moratorium.
02:20:54 We have endorsements also from the Chambers of Commerce.
02:20:58 I think the realization is being an archipelagic country, we really need to secure sources within the islands and not really rely on exports.
02:21:11 So we really need to export to balance and optimize the capacities across the islands.
02:21:15 But the province of Cebu, especially Governor Garcia, see the need to be self-sufficient given the recent issue that we had in Panay.
02:21:29 Along those lines, the MVIP is up to full power now.
02:21:35 It's a 450 megawatt capacity, correct?
02:21:41 As I understand it, there is a potential of something like, correct me if I'm wrong, but I heard it was around 1400 megawatts of potential excess capacity in Mindanao that could be spread around.
02:22:01 You have a 450 megawatt line, so you still have potentially a thousand megawatts that is stranded.
02:22:11 Is there any plans to expand that or add an additional one going in another direction?
02:22:21 Is that even economically or technically feasible to do?
02:22:30 Yes, for the Mindanao-Visayas Interconnection Project, we designed it for a 900 megawatt capacity.
02:22:37 So we have provision, we don't need to build another submarine cable transmission line, we just need a converter station to double the capacity.
02:22:45 But before that, our next project is the upgrade of the Luzon to Visayas Link.
02:22:53 Presently we are at 440 megawatts, we are upgrading it to a bipolar operation, it's an HVDC technology that will double the capacity.
02:23:03 It will become 880 megawatts.
02:23:06 Then, next stage would be upgrading of the Mindanao-Visayas.
02:23:12 You mentioned about potential excess capacity in Mindanao, looking at the proposals, there are so many proposed generations, not only in Mindanao but also in Visayas and also in Luzon.
02:23:25 We have yet to see in the market how the actual generation would happen.
02:23:35 Kind of the investment pledges sort of thing, I guess.
02:23:42 Our estimate is that the excess is around 450 megawatts.
02:23:47 We are operating a basal plant in Mindanao and a number of hydros.
02:23:52 So that 450 can be taken up to the line going to Visayas.
02:23:57 In fact, we see a need for new capacities by around 2028-2029.
02:24:02 Mindanao requires 120 megawatts on the average year on year.
02:24:06 Yeah, that was part of it too.
02:24:11 They are doing well now but it needs to continue.
02:24:15 Ben, maybe a wrap up question?
02:24:18 Okay, yeah, one wrap up question.
02:24:22 How do you see, are you both on track for this year?
02:24:31 We are in a little bit of a trying time with just coming out of some economic hardships.
02:24:40 There is potential of some lingering after effects of El Nino.
02:24:45 There is a little bit of political instability.
02:24:48 Are things on track by the end of this year?
02:24:52 Are you going to be at your target or close to it?
02:24:56 What, if anything, keeps you up at night that might go wrong?
02:25:07 Well, we just reported our 2023 financials last week to the analysts.
02:25:14 And we said we are quite bullish also with what is going to happen for 2024.
02:25:19 I think government is doing a lot of good things to encourage investments.
02:25:23 We are seeing strong demand across the board.
02:25:29 And for us, we are looking at around 6-7% growth in demand for power.
02:25:35 We are very much in line with our growth pipeline.
02:25:38 And we are quite excited with this venture that we have entered into with Miralco Generation and San Miguel.
02:25:46 Which hopefully, after the approval by ERC and PCC,
02:25:50 ILEAN will start delivering the contracted capacity maybe in 4-6 months time, depending on the approvals.
02:25:58 So for Void Power, we are bullish about the future.
02:26:02 We are preparing for our influx of demand and the connections that NGCP built from Negros to Visayas, from Mindanao to Visayas.
02:26:16 I think we will see Visayas to have a more competitive rate for power,
02:26:23 especially when we also add the new capacity in our TVI Toledo facility.
02:26:32 Well, for us, NGCP will continue our ongoing major transmission projects.
02:26:39 We fully recognize our very important role in expanding the grid and being the system operator.
02:26:46 And we are also looking forward that this year we will be having the final determination,
02:26:52 the approval of the ERC for the regulatory reset process of NGCP.
02:26:59 Okay, well, I think we'll leave it at that.
02:27:03 I'd like to thank you both again for sharing with us today.
02:27:08 And DeVorte?
02:27:09 Yeah, let's give them a round of applause, ladies and gentlemen.
02:27:11 Thank you very much for your bullish pronouncements this afternoon.
02:27:15 Thank you.
02:27:16 Thank you.
02:27:17 Thank you.
02:27:19 Thank you.
02:27:21 Thank you.
02:27:23 Thank you.
02:27:25 Thank you.
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