Gov't Eyes Expansion of Existing Plants to Meet Power Demand; to Save on Time and Resources on Site Provision
Byline: MYRNA M. VELASCO
To save on time and resources on site provision, the Department of Energy (DoE) is eyeing expansion of existing power plants to meet power demand in the immediate term.
It was divulged that the energy department is already talking to power companies whose existing facilities have capabilities for expansion.
This will save project proponents from the usual hurdles of right-of-ways, which normally takes years to accomplish, an energy official stressed.
But even this approach is still getting lukewarm response from investors, noting that the main concern does not actually lie on site provisioning; but more on the rates which are perceived to be below market, as anchored on the approved selling rates of state-owned National Power Corporation.
The chorus of industry players and prospective investors points to the fact that the government and the industry regulator have to do something about the power rates, because for now, they noted that there is no viable investment climate to speak of to entice them to sink in fresh capital for greenfield power projects.
Even the options of contracting new power capacities is also a big problem; since the law already bars NPC or its successor-company Power Sector Assets and Liabilities Management Corporation (PSALM) from signing new power purchase contracts. The only exception to this is a crisis provision; which is seen as the alternative now being resorted to by government as in the case of Panay.
An in-house study of one of the players in the industry, First Generation Holdings Corporation, estimated that the government would need to corner $2.0 billion to $3.0 billion worth of new power projects in the next five years to avoid another round of debilitating blackouts.
Such was a thumping sum, which the government could ill-afford at this time; when it cannot even set a firm policy to address the swelling budget deficit.
Thus, the only viable alternative is for private investors to cash in on these new projects.
Based on said study, the demand and supply gap will be closing as early as 2007; which is one or two years ahead of the 2008 to 2009 projection of the DOE.
At least, that would be in the case of Luzon which still has overcapacity. Some areas in Visayas are already suffering from supply shortages; and even Mindanaos supply is seen reaching critical levels starting next year.
The projections were hinged on a more conservative growth in the gross domestic product at 5.0-percent and at elasticity ratio of 1.5-percent.
It also roped in other factors in power capacity planning; such as: a) seasonality of hydro plants; b) transmission line schedule and some allowance for slippage; c) de-rating factor on plant capacities; d) duration of annual scheduled maintenance outages adjusted depending on the type of the plant; and e) reserve requirements made more adequate as compared to what was provided under the Philippine Energy Plan. …