LNG to solve power crisis

The country’s precarious power supply situation just received a major shot in the arm after San Miguel Global Power’s 1,200-megawatt Ilijan power plant took delivery of the country first shipment of liquified natural gas (LNG).

San Miguel Corp. president Ramon Ang said they are moving closer to reintegrating the plant, which earlier suffered from lack of natural gas supply after the Malampaya contract lapsed, into the grid.

Ang pointed out that with this, they can augment the country’s power supply through the summer months and beyond. Together with SMC’s nationwide battery energy storage system (BESS), he said this latest development is also crucial to supporting the transition to renewable power sources while ensuring sufficient, reliable supply for consumers and the growing economy.

Just recently, SMC inaugurated its 50-megawatt BESS in Limay, Bataan, which together with another 40-MW nearby, form part of the 1,000-MW BESS network it is putting up all over the country.

The project, the first of its kind in the country and one of the largest in the world, will be completed by the end of the year and is seen as the solution to help achieve energy security for the country, providing access to reliable and affordable energy for many Filipinos and accelerating the transition to renewable energy.

Last February, Fitch Solutions warned that Philippine self-sufficiency in natural gas is expected to come to an end as the Malampaya gas field, the country’s only indigenous commercial source of natural gas, will soon be unable to supply easy-to-extract gas.

The Malampaya gas field, which began commercial operations in 2002, supplies natural gas to power plants in Batangas that account for 20 percent of Luzon’s total electricity requirements, according to the Department of Energy, and depletion is expected by 2027.

To date, the DOE has approved seven LNG receiving terminal projects, including the one of Lopez-owned First Gen Corp.

Earlier, Energy Secretary Raphael Lotilla said the fuel supply from the Malampaya gas field could be supplemented by LNG to ensure that there would be no local power shortage in the medium term.

About 1,200 MW acting as baseload was lost after the gas supply and purchase agreement between the Malampaya consortium and National Power Corp. expired last year. Lotilla was referring to the Ilijan plant of SMC Global Power, which had been sourcing its supply of indigenous natural gas from the Malampaya gas field until the GSPA lapsed in June 2022.

LNG, being a cleaner source of energy compared to coal, is seen as critical during the global transition to a low-carbon future.

The Department of Energy (DOE) itself is expecting a difficult power situation due to the thin power supply for most of 2023. Energy officials have warned that if at least one power plant were to suddenly bog down, a red alert might be declared in the Luzon grid

The DOE has, however, painted a better supply scenario in the Visayas and Mindanao. It ruled out the possibility of red alerts but hints at the likelihood of five yellow alerts occurring in the evening toward the second semester of 2023. Only Mindanao is assured of sufficient power reserves for the entire year.

It expects demand to increase from 2022 levels, possibly reaching a high of 13,125 MW. In addition, available capacity in the grid during the summer months from March to May is estimated to be at 14,730 to 15,800 MW, which leaves around 1,802 to 3,019 MW as operating reserves during the summer months.

Around 58 percent of the country’s electricity comes from power plants running on coal, 22 percent from renewable energy, 17 percent from natural gas, and one percent from oil.

While many of us dream of sourcing our power needs purely from renewable energy and of doing away with coal, this unfortunately will remain as a pipe dream.

In a report in The Economist, it was explained that many common types of renewable generators only produce power intermittently when the sun shines or when the wind blows. Wind turbines, for example, spin only about a third of the time. That means countries which have a lot of renewable generation must still pay to maintain traditional kinds of power stations ready to fire up when demand peaks.

Another report from the Columbia Climate School meanwhile noted that the reality is that wind and solar are only cheap during the early stages of transition.

It explained that until now, renewables have been viable because of the massive base of fossil fuel generation that supplies most of our electricity needs and also stands in for intermittent wind and solar. But this changes as renewable penetration increases. Relying on more and more fossil fuels to shore up a growing share of intermittent renewables becomes increasingly costly and risky, as Europe is finding out. Then, moving to the next stage of the energy transition requires massive spending to get past using fossil fuels for baseload and balancing electricity.

It warned that continuing to push the false narrative of abundant and affordable clean energy is a huge political risk that will backfire when the public has to pony up for a bill they weren’t expecting.

The report emphasized that getting past fossil fuels means finding ways of storing the excess electricity that’s generated when there’s too much wind and sun and releasing it later when there’s not enough.

But even if we are able to solve renewable energy’s problem of intermittent supply, are we ready to pay for its higher cost? Consumers had been subsidizing the cost of producing renewable energy via guaranteed above-market prices paid to producers via the feed in tariff (FIT) scheme which forms part our electricity bill.

The reality is that renewable energy is cleaner but more expensive. Those demonizing coal and LNG should be telling the real story.

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