DOE prepares new 10-year energy plan

The Department of Energy (DOE) will release next month a new Philippine Energy Plan (PEP) covering the years 2003-2012.

Energy Undersecretary Jose Emmanuel De Dios said based on the plan, the country will need additional 7,150 megawatts (MW) installed generating capacity. He said the PEP’s prime objective is to present a clearer view of how the government foresees the energy and power sector in the 10-year-old period.

He said this will enable the potential investors of the industry to have an insight on government’s policies and directions with regards to energy.

"It is important to note that we need to have is a (generation) mix that is reliable. That is why we want to encourage investors to pursue renewable sources of energy development projects in the medium and long-term," he said.

Based on the plan, he said the investors will know that the government is committed to pursuing energy development projects and programs. "We can assist them in identifying what kind of renewable energy projects they can look at, particularly in the mini-hydro projects," he said.

Under the plan, the investment requirement of the government to pursue energy development for the period will amount to some P388 billion. Of this amount, some P336.2 billion will be needed for indicative projects and about P51.8 billion will be the so-called committed indicative projects.

The projected demand for electricity in the country will increase by 7.6 percent annually as economy is expected to grow by 5.4 percent.

The electricity demand forecast is the primary basis for approximating the power sector’s required capacity additions and investment requirements.

Bulk of the projected additional demand for electricity of 7,150 MW in the 10-year period will be required in the Luzon grid (5,190 MW) while the balance will be split between Visayas (990 MW) and Mindanao (970 MW).

Out of the total required capacity, the PEP identified six committed projects in different stages of development with total installed capacity of 1,000 MW.

In Luzon, a total of 415-MW will be added by 2004. These are the 25-MW Northwind Power and 40-MW PNOC-Energy Development Corp. wind power projects in Ilocos Norte and the 350-MW Kalayaan hydroelectric power plant in Laguna. In 2005, 345-MW San Roque hydro power plant in Pangasinan is expected to commence commercial operation.

Other committed projects are the 40-MW Northern Negros geothermal power plant in Negros Occidental and a 200-MW coal-fired plant in Northern Mindanao. These projects are designed to increase the available capacity for Cebu-Negros-Panay and Mindanao grids, respectively.

While there is an excess capacity of 1,253 MW as of end-September 2001, demand growth and plant retirements will likely lead to capacity shortages in 2008 for the Luzon grid, and 2005 for the Visayas and Mindanao grids.

In determining demand projections for the next 10 years, the PEP adopted the National Economic and Development Authority (NEDA)’s gross domestic product (GDP) forecasts. GDP refers to the total goods and services produced in the country within a certain period of time minus the remittance from overseas contract workers.

NEDA’s base case GDP growth projection shows that the economy is expected to grow at an average annual growth rate of 5.4 percent from 2003 to 2012. This translates to an average annual growth rate of 7.6 percent in electricity demand and a GDP elasticity ratio of 1.14 in Luzon, 1.43 in the Visayas and 1.37 in Mindanao.

The electricity sales in Luzon will increase from 39.6 percent terawatt hour (TWh) in 2003 to 53.7 TWh in 2007 and 76.5 TWh in 2012. TWh is equivalent to 1,000 gigawatthour. One gigawatt is equal 1,000 MW.

For Visayas, energy sales are expected to reach 10.3 TWh by 2012, from 5.3 TWh in 2003 and 7.3 TWh in 2007.

For Mindanao grid, energy sales are expected to increase from a 2003 level of 6.3 TWh in 2007 and 11.9 TWh by 2012.