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Business

A power insecure country

BIZLINKS - Rey Gamboa - The Philippine Star

In a recent briefing by Energy Secretary Raphael Lotilla, he spoke of the country having just enough power reserves for the next six months, but only if there are no major breakdowns of power plants. He also expressed concern about the coming summer months when electricity demand traditionally peaks.

Lotilla’s statements are not surprising, having inherited the problem of a power insecure country from past administrations, which could be traced back to the mismanagement of the state-owned National Power Corp. (Napocor) back in the 1970s during the extended term of the current President’s father.

The problems created at that time had become too complex that the reforms intended with the passage of the Electric Power Industry Reform Act (EPIRA) in 2001 could only incrementally bring about small changes, which until now after more than two decades have not brought about the desired transformation.

Definitely, Lotilla is the man of the hour if we consider his mandate of securing the energy needs of a growing economy and population in the coming years, which means not only having adequate and secure power generation capacity, but also at more competitive pricing.

If Lotilla is to deliver on these mandates, which has even been expanded to consider today’s extreme environment and climate change challenges, he will have to employ additional muscle to get things done during the assumed six years of his term.

Amending EPIRA

Lotilla cites amendments of EPIRA as a priority, particularly to “allow the Energy Regulatory Commission to play a more effective role in levelling the playing field for investors and to ensure a competitive market, which is a very important role in order to attract investors.”

How Lotilla, who holds a masters in law and has served before in various government agencies including the Power Sector Assets and Liabilities Management Corp. (PSALM), will tweak the ERC, which is basically a government regulatory body, to become that aspired change agent is something to look forward to.

We all know of the slow pace in introducing amendments to existing laws, even with a Congress that is partial to the President and his executive offices. Then too, tweaking the regulatory powers of the ERC will not necessarily bring about the desired results, or at least, immediately.

Notwithstanding his aspirations for the ERC, many meaningful changes can be initiated within the four walls of the DOE alone, not only in bringing in new investors, but also to provide for a more stable environment that ensures reliable and stable delivery of electricity at lower prices to more parts of the country.

Push for renewables

Lotilla has often mentioned the importance of promoting renewable energy for the country, which understandably is being pushed to the fore once again because of how the prices of oil, natural gas, and coal have become too volatile in recent months to the detriment of our economy.

A dependence on imported fuels is now seen as a weakness, even by more mature economies in Europe like Germany, which had recently announced bold plans to wean its dependence on imported fuels, including natural gas from Russia, and to urgently build a more sustainable energy platform in the near future.

Pushing for a bigger share of renewable energy in our power portfolio had been a hot topic during the previous decade, which led to a commitment in our national energy plan to source 35 percent of our power requirements from non-fossil fuels by 2040.

Over the last two decades, to keep up with the demands of our growing economy, one that was heating up faster than any of its peers in Asia except for China before the pandemic, the government had allowed for the construction of new coal-fired power plants despite criticisms from environment groups.

Even if the DOE during the last administration declared a moratorium on new coal power plants, the share of renewable energy in the total mix had already dwindled to less than 20 percent because of the slow take-up by investors and the bureaucratic steps involved in getting projects off the ground.

The DOE needs to give more attention to polishing the processes involved in strengthening a renewable energy industry in order to meet its revised accelerated goal of increasing non-fossil fuel use in the power energy mix to 35 percent by 2030, and to 50 percent by 2040.

The timing could not be more conducive as new advances in wind and solar technologies are breaking barriers that make renewable energy more price-competitive than fossil fuels. Most of all, they allow economies of countries like the Philippines, with limited indigenous oil and gas reserves, to be more shock-proof to the vagaries of imported oil, gas, and coal pricing.

Solving transmission problems

In the short-term while paving the way for a stronger renewable energy sector, the efficiency of our transmission system must be brought to tiptop shape such that electricity produced from new power plants can be brought to users, including those in remote areas.

Total electrification of rural areas has been a decades-old aspiration, which until today has fallen short of target because of the absence of a wider network of electricity highways and roads. Even those who are connected still suffer from unstable power supply and high prices.

This has got to stop. This is a tall order for the new Energy Secretary, and he must be seen as fit and fired with enthusiasm to surmount the challenges that will allow Filipinos to stop worrying about brownouts and high power rates.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

EPIRA

NAPOCOR

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