SMC warns of rotating blackouts, water crisis

Blames ‘regulatory inertia’ for project delays

MANILA, Philippines — Diversified conglomerate San Miguel Corp., the country’s biggest power producer, has warned of regular rotating blackouts in Luzon due to the “regulatory inertia” that has prevented the construction of new power plants.

In a recent briefing, SMC president and COO Ramon Ang said the construction of a number of power plants has been held back since 2016 because of delays in the issuance of environmental compliance certificates or ECCs, among other regulatory requirements.

SMC alone has pending projects in the pipeline totalling to at least 1,500 megawatts (MW) which have been delayed because of regulatory lags. 

“There is already a looming shortage that is why prices in the spot market are high. This is our immediate major concerns,” Ang said.

He said if these are not resolved, the country will suffer from a power crunch in the next three years.

“We are going to face rotating blackouts in 2020, 2021 and 2022,” Ang said.

SMC, through SMC Global Power Corp., is touted as the biggest power company in the country in terms of capacity with at least 4,200 MW of capacity.

In April, rotating blackouts struck Luzon, including Metro Manila, as the Luzon grid was placed on a 13-hour red alert status following the shutdown of several power plants.

At the time, Department of Energy (DOE) said the Luzon grid lost a total of 2,489 MW  because of planned maintenance, unplanned outage and de-rated capacity of several power plants. 

Plants under unplanned outage are the 150-MW Unit 2 of San Miguel Consolidated Power Corp. , the 647-MW Sual Unit 1 of Team Energy and San Miguel, the 150-MW Unit 2 of Southwest Luzon Power Generation Corp. of DMCI, the 420-MW Pagbilao Unit 3 of Team Energy and Aboitiz Power, and the 135-MW Unit 1 of South Luzon Thermal Energy Corp. of the Ayala Group.

The situation has been precarious since then with red alerts plaguing the Luzon grid on and off the past days.

Ang said SMC is looking to build peaking power plants with up to 1,200 MW in capacity to help avert any possible power shortage in the next four years.

He said the company is interested to put up additional capacity through subsidiary SMC  Global Power Holdings Corp. in light of the power shortage expected in the next four years.

Ang has directed SMC Global Power general manager Elenita Go to pursue the investment of a two-unit gas turbine plant beside the Ilijan gas-fired power plant in Batangas.

“We bought the land adjacent to the Ilijan plant so we can build a plant beside it,”Ang said.

Go said gas turbine plants can also run on diesel to run on peaking capacity during the summer months. Peaking power plants are those plants that can run during peak hours.

For this year alone, the Luzon grid has been placed on yellow alert for 27 times and on red alert for 11 times as several power plants tripped due to various reasons.

A yellow alert means there were not enough reserves – equivalent to the biggest online power plant unit of 647 MW – to cover the largest running generating unit at the time but does not necessarily lead to power outages. 

On the other hand, a red alert status means there is severe power deficiency in the power grid.

Aside from water, Ang also noted the need to boost water supply for Metro Manila. 

Toward this end, he has already submitted to the Metropolitan Waterworks and Sewerage System an unsolicited proposal to utilize water from existing water sources such as the Kaliwa Dam and Laiban Dam, among others. 

Ang believes this will provide 3,800 million liters of water per day. 

The so-called spill way can be completed in three to five years, Ang said. – With Danessa Rivera