Phl awash with hydropower potential but needs 13B in investments

MANILA, Philippines - Hydropower opportunities in the Philippines are overflowing with potential, but so far have failed to wash away the country’s energy woes.

The Philippine hydropower industry presents abundant opportunities as untapped resources to date are estimated to require about $13 billion investment from the private sector, data provided by energy officials to The STAR showed.

As of June 2014, estimated potential or untapped hydro capacity in the country stood at 5,161 megawatts (MW), 1,670 MW more than its current installed hydro capacity of 3,491 MW.

Of the unexploited hydro resources for power generation, bulk is located in Luzon at 3,584 MW, followed by Mindanao with 860.4 MW and Visayas with 716.9 MW.

Hydropower currently accounts for 13.7 percent of the country’s power generation mix, a big portion of which is used in Mindanao.

The Philippines as of 2011 already has the sixth largest hydropower installed capacity in the whole Southeast Asia and Pacific behind Australia, Vietnam, New Zealand, Indonesia and Thailand, an official from the Department of Energy’s Renewable Energy Management Bureau told The STAR.

In terms of private developers issued with contracts by the DOE, SN Aboitiz Power, a joint venture between SN Power of Norway and AboitizPower, so far holds the biggest hydro portfolio in the country with a total capacity of 590.8 MW.

But despite having a mature and established technology which has been proven in the country for decades, the DOE said several factors are still stopping hydropower projects from making big waves in the local energy sector.

Data from the DOE showed that despite the 5,161 MW of untapped hydro capacity in the country, only a fraction or about 383.3 MW of hydro projects are expected to be online until 2020.

DOE’s Renewable Energy Management Bureau assistant director Marissa Cerezo told The STAR that hydropower’s capital-intensive nature, long gestation period and accompanying issues of social acceptability of large hydropower projects remain the sector’s biggest challenges.

Cerezo also said resistance on the development of large hydropower projects due to the potential for upstream flooding, destruction of agricultural areas and animal habitat and disruption of communities in affected areas have affected the attractiveness of large hydropower projects in the country.

“On the other hand, micro-hydro development for off-grid electrification is hindered by high upfront costs and the need for government intervention and subsidy,” she said.

According to the DOE, the average investment cost needed for a hydro plant is currently at $2.5 million per MW.

The average period of development of a hydro plant in the Philippines, meanwhile, takes about seven years, in which three to five of those years will be allocated for the construction of the power plant.

“Hydro plants have low plant/capacity factor compared to other resources, resulting in longer return on investment. Further, hydro plant specifically run-of-river scheme has an intermittent nature, thus, hydropower developers will encounter difficulty in competing in the market,” the energy department’s renewable energy division reported.    

On a positive aspect, however, hydro power facilities plants are seen to help improve watershed management and are relatively cheaper than other renewable types of energy.

Under the feed-in-tariff (FIT) scheme, price of power from hydro is set at P5.90 per kilowatt-hour (kwh) while that of biomass, wind and solar is at P6.63 per kwh, P8.53 per kwh, and P9.68 per kwh, respectively.

The DOE stressed that impounding and storage types of hydropower plants can even compete with the lower price of power produced from coal and geothermal which is currently at P4 to P5 per kwh and P4.85 to P5 per kwh, respectively.

Energy Secretary Carlos Jericho Petilla said his agency will continue to promote the development of hydropower as an energy source together with other renewable energy sources to boost the country’s power supply requirements.

“We continue to actually promote it. We are not stopping anyone from developing more hydro, even in Mindanao.  It’s just that you have to complement it with baseload or an intermittent fossil based source,” the energy chief told The STAR.