The fastest-growing major economies in the world – those in the top 50 largest GDP size – are mostly Asians. For instance, the average GDP growth from 2015-2023 were as follows: Vietnam, six percent; China and India, 5.8 percent; Turkey, five percent; Philippines, 4.7 percent; Egypt, 4.6 percent; Indonesia, 4.1 percent; Malaysia, 3.9 percent and Poland, 3.7 percent.
One thing I notice about these countries is that they are mostly small users of natural gas. Their gas/total generation ratio in 2023 were as follows: Vietnam, 9.5 percent; China, 3.1 percent; India, 2.7 percent; Indonesia, 17.4 percent; Philippines, 14.4 percent; Turkey, 21.2 percent and Poland, 9.8 percent. They are high coal users.
Compare that with these countries which have high gas/total generation ratio and low average growth over the same period. The respective numbers are as follows: Mexico, 57.7 percent and 1.4 percent; Argentina, 51.8 percent and 0.3 percent; Italy, 44.3 percent and 1.2 percent; Russia, 44.8 percent and 1.2 percent; US, 43.1 percent and 2.5 percent; Netherlands, 37.5 percent and 2.2 percent; UK, 34.3 percent and 1.5 percent and Japan, 31.7 percent and 0.6 percent.
Some Asians have a balanced energy mix and modest growth. The gas/total generation ratio and average GDP growth respectively over the same period are as follows: Taiwan, 39.6 percent and three percent; Malaysia, 37 percent and 3.9 percent, and South Korea, 27 percent and 2.6 percent.
Middle East countries with big gas reserves naturally have high gas/total generation ratio, like Iran with 84.5 percent, United Arab Emirates with 72 percent and Saudi Arabia with 62.7 percent.
So it seems that natural gas is not cheap enough to power high growth. There are many factors for a country’s fast or slow growth and energy input is one of them but it is among the major contributors.
The Philippines has a coal/total generation ratio of 62 percent in 2023. The moratorium on new or “greenfield” coal projects declared in 2020 paved the way for more gas plants and recently, entertaining nuclear energy in the power generation mix.
Two good developments in Philippines gas power sub-sector. One is the approval by the Philippine Competition Commission last December for the liquified natural gas (LNG) partnership of three big power companies – San Miguel Global Power (SMGP), Aboitiz Power (AP) and Meralco Power Gen Corp. (MGen) sealed in March 2024. They will jointly own two LNG plants, the Ilijan plant of South Premier Power Corp. (SPPC) and Excellent Energy Resources Inc. (EERI) with combined capacity of nearly 2,000 MW, and an LNG import and re-gasification terminal, all in Batangas.
Two, expansion of MGen’s subsidiary in Singapore, the Pacific Light Power (PLP) in Jurong Island. Currently PLP operates an 830-MW LNG plant since 2014, plus a 100-MW fast-start LNG peaking plant under construction and be operational in second quarter of 2025. Singapore’s Energy Market Authority (EMA) this week awarded PLP the right to build, own and operate a hydrogen-ready 600-MW combined cycle gas turbine (CCGT), to be operational by 2029.
I say this is good development for the Philippines because MGen will generate more lessons and experience in running big LNG plants that can supplement its knowledge running SPPC and EERI, along with its partners AP and SMGP.
If the Philippines will sustain an average GDP growth of six to 6.5 percent yearly, we will need about 7,000 to 8,000 gigawatt-hours (GWH) yearly increase in power generation until 2026, then 9,000 to 10,000 GWH yearly by 2028 onwards. Currently the average increase is only 5,000 to 6,000 GWH yearly, that largely explains why we still have frequent yellow-red alerts until middle of 2024.
A 1,000-MW LNG plant with average capacity factor of 85 percent should be able to generate about 7,446 GWH/year of electricity. Thus, we should have at least one big gas plant with 1,000 MW capacity or higher, commissioned single year non-stop.
With the moratorium in “greenfield” coal projects plus unavailable legal framework for nuclear development, we have little choice in the short-term but entertain more big LNG plants. Plus push for committed coal projects approved prior to the moratorium order, like the planned 1,200-MW Atimonan coal plant in Quezon province.