Top 10 proposals to have blackout-free Philippines

Top 10 proposals to have blackout-free Philippines

The new year started badly in Panay Island — which is subdivided into four provinces (Iloilo, Capiz, Aklan, and Antique) with an estimated population in 2023 of 5.5 million people — when on Jan. 2 there was a huge power blackout which lasted many hours. Then it affected the island-province of Guimaras and the rest of the Visayas grid.

See these reports about it last week in BusinessWorld: “Panay power plant outages raise yellow alert in Visayas” (Jan. 2), “‘Improved planning’ needed after Panay outages — NGCP” (Jan. 3), “ERC: Committee looking into Panay Island power outage” (Jan. 4), and, “DoE plan must elevate energy security to top priority item, think tank says” (Jan. 7).

This piece will briefly discuss 10 proposals to avoid a similar event and the annual yellow-red alerts in the country. Three are related to power generation, three to transmission, two to distribution, and two to pricing and taxation. Here we go.

1. Overall power generation must expand. Generation must expand by 7-8 terawatt-hours (TWH) per year until 2026, then 8-9 TWH/year until 2030, from an average of 5-6 TWH/year in 2021-2022. Medium-term GDP growth targets and projections for the Philippines are 6-7.5% yearly until 2028, and this will require a huge increase in available power.

We should have an agnostic policy on power sources, with no favoritism for intermittent and variable renewables, and a focus on higher gigawatt hour (GWh) generation and not GW installed capacity. This is because intermittent sources have high GW capacity but low GWh output due to their low energy density and low capacity.

2. Aim for the generation of 2,000 kilowatt hour/person (kWh/person) by 2030 from only 1,025 kWh/person in 2022. Our ASEAN neighbors already had higher kWh/person generation than the Philippines in 2022: Indonesia had 1,213, Thailand had 2,574, Vietnam had 2,614, and Malaysia had 5,600. In the accompanying table I list the countries with the biggest populations (50 million people or more) plus their electricity generation (TWH), their electricity generation in kWh per capita, and their GDP per capita. I did not include Tanzania (61.5 million) and Kenya (50.6 million) because I cannot find available data on their electricity generation as of deadline.

3. Hasten the entry of nuclear energy that will greatly expand our power generation capacity.

Related to the generation issue, see the following BusinessWorld reports this month: “Market for AS power enters pilot operations” (Jan. 3), “Where’s the Philippine Energy Plan?” (Jan. 3), “Philippine energy companies bullish, eye 2024 demand surge” (Jan. 5), and, “3 gencos to supply Meralco’s 1,800-MW power requirement” (Jan. 8).

4. The National Grid Corp. of the Philippines (NGCP) must finish many long-delayed interconnection and transmission expansion projects (Mindanao-Visayas, Cebu-Negros, Iloilo-Negros, etc.). Islands with power-deficits cannot get additional supply easily from islands with power surpluses because of the unfinished or unexpanded transmission lines.

5. The NGCP must strictly comply with the Grid Code, especially when it comes to redundancy reserve requirements and getting reliable contingency reserves (CR). In the Panay Island blackout of Jan. 2, when PEDC Unit 1 (55.8 MW) tripped or conked out, the needed ancillary services (AS) and strong CR by NGCP were absent. Neither did it implement auto/manual load dropping (ALD/MLD) to reduce demand. Power demand continued at nearly 400 MW even though the supply declined from 356 MW to only 301 MW by 12:06 p.m. Two hours later, the other generating plants in the island also tripped, leading to the automatic tripping of distribution utility (DU) feeders, and entire island’s four provinces suffered from involuntary “Earth Hours.” I remember former Energy Secretary Al Cusi repeatedly pounding on the need for NGCP to finish long-delayed transmission projects, and to get reliable AS to avoid frequent yellow-red alerts.

6. The Energy Regulatory Commission (ERC) should disallow the use of battery energy storage systems (BESS) as CR. From what I read, the NGCP got BESS as its CR — this is bonkers because BESS are unreliable, small, and cannot store much energy when it is frequently cloudy and/or not windy. Only fossil fuel plants can provide reliable CR.

7. There should be more mergers and consolidations, not fragmentation, of energy providers. There are many small electric cooperatives (ECs) which do not have economies of scale and are viable only due to politics and protection by the National Electrification Administration (NEA). In my province — Negros Occidental — there are five ECs; in neighboring Negros Oriental, there are three ECs. That makes eight ECs in one island, with ERC having to monitor eight separate entities. No economies of scale mean a lack of capacity to strengthen the infrastructure against strong storms and earthquakes — even against falling trees! — leading to the occasional blackout. Existing strong distribution utilities (DUs) must remain consolidated and not divided.

8. Expand the Retail Competition and Open Access (RCOA) at a lower consumption threshold, with more retail electricity suppliers (RES) to provide more customized services to more clients, especially in areas covered by inefficient ECs. More generation plants will come in to serve more RES and more contestable customers.

9. End price controls via a primary-secondary price cap at the Wholesale Electricity Spot Market (WESM). The most expensive electricity is no electricity — in other words, blackouts. Quantify the damage done to manufacturing production, to offices and home appliances; the damage resulting from using candles (more fires) or gensets (more noise and air pollution); the damage caused by dark streets (more crimes and road accidents). A jump in the WESM price from P5/kWh to, say, P30 for a few hours is still better than “cheap but not available” power — blackouts. More peaking plants must come in and provide additional supply when needed and they should be undeterred by price controls.

10. End taxation discrimination in favor of more intermittent wind-solar. Wind and solar power generators have many tax-free privileges, and this leads to more unstable grids that will require more AS, resulting in higher overall prices.

There should be major changes in the country’s environment and energy policies, the end of climate alarmism, and the end of ecological central planning and power rationing in favor of intermittent, unreliable, and non-dispatchable on demand energy.


Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.