DOE: Privatize small power grids

CEBU, Philippines - The Department of Energy is eyeing the privatization of small power utilities grid (SPUG) areas in small islands that are not economically viable to put up coal-fired power plants.

This was announced Tuesday by Energy Secretary Jose Rene Almendras during the Energy Forum held at the Parklane Hotel in Cebu City attended by energy stakeholders in the entire Visayas area as part of the Energy Sector Information and Education Campaign.

“Some private sector operators are so good and so efficient that they can generate electricity using diesel and bunker fuel at less than P10 per kilowatt.

The reliability of power supply in the Camotes group of islands was raised in the forum when Almendras presented that the island is experiencing very expensive power rate.

Early this year, the Province of Cebu stepped in to address the power shortage in Camotes after the National Power Corporation asked the local government unit to intervene and help solve the problems being caused by the budget cut in its department.

Almendras explained that the government did not cut the subsidy but it was the Energy Regulatory Commission that disapproved the application of NPC for additional universal charge for SPUG.

“There are small islands that are not economically viable to put up coal-fired power plants so we are constrained to run this small island using diesel and bunker fuel,” he said.

Almendras, however, said that the law allows them to sell generation cost at a lower rate.

In Camotes for example, the generation cost is P14 per kilowatt hour but NPC is selling power at P6.40 pesos, so the loss of P7.60 which, according to the law, be distributed to all the consumers from Luzon, Visayas and Mindanao through a universal charge.

Almendras said that when NPC applied for an increase, ERC turned down and disapproved it so NPC ran out of money.

He reported that this year, the Aquino administration agreed to gave P3.6 billion as direct subsidy to NPC to make sure that SPUG will have fuel, though he said it is just a “band-aid solution” and what the government wants is the long-term solution through privatization.

Meanwhile, the Philippine Solar Power Alliance, a multi-sectoral advocacy group supporting solar power development, is appealing for DOE to retain its 269-megawatt installation target for the country’s solar power sector.

The group president, Dennis Ibarra, said there was no reason to lower the installation targets to 50MW.

“We have already submitted to the DOE over 400MW of project applications from at least 40 local and international developers to show there is much interest for the solar project,” Ibarra said.

The 269 MW solar power installation target was announced during the launch of the National Renewable Energy Program in June. However, the target was lowered to 50 MW when it was submitted by the DOE to ERC.

In saying that the process of permitting, construction, commissioning and connection for solar power generation is the fastest among all energy technologies, Ibarra said, “A 10 MW solar power plant can be operated in less than 6 months because of the absence of fuel or environmental concerns.”

“Many developers have tendered, financially closed, and committed to construct within one year the first 10 MW phase of the solar power facilities as opposed to the two year development cycle allowed by DOE regulation and the multi-year construction phases of fossil fuel, large RE hydro and geothermal, and the other emerging RE technologies.”

Ibarra said 269 MW of solar farms would translate to P33.6 billion worth of investments into the country’s energy infrastructure and will contribute a substantial amount of taxes on income, property and on the importation of equipment.

“For power consumers, 269 MW of solar power facilities would mean cheaper sources of energy as it will reduce electricity prices in the near future,” Ibarra said. — (FREEMAN)