Ripe for growth, isolated Mindanao seeks power investments

MINDANAO says it is ready for energy investments since it will require more electricity over the next decade and a half to support economic activities.

According to the Mindanao Power Monitoring Committee (MPMC), the Mindanao grid needs at least 500 megawatts (MW) of new power capacity by 2016, another 500 MW by 2020, and 1,600 MW by 2030.

The power sector in Mindanao, where supply is lower than demand, has a very different structure than the rest of the Philippines. The majority of the power is distributed by electricity cooperatives instead of private distribution utilities. Its power highway is also separated from the interconnected Luzon and Visayas grids.

It is thus mainly a sellers market, which has been the case since 2010. This serves as a come on to several investors amid the peace and order situation in some parts of Mindanao, according to Mindanao Development Authority (MinDA) director Romeo Montenegro. MinDA co-chairs the MPMC together with the Department of Energy.

Under the current situation, power deficit persists, although supply is expected to improve later this year as new capacities are expected to go online.

At the rate committed projects are being approved, it would seem Mindanao will still have more than enough power from 2016 onwards, data showed.

A total of 580MW of power capacity for Mindanao was completed in 2015. Another 720 MW will be completed in 2016, while 550.6 MW will break ground in 2017.

Committed projects for 2016 include the 40-MW Green Power biomass project, the 25-MW Lake Mainit hydroelectric power project, the 135-MW FDC coal-fired power (unit 1), 150-MW SMC Davao coal power plant (unit 1), 100-MW Sarangani coal-fired (unit 2), and FDC coal-fired power (unit 3).

However, energy authorities said it was hard to tell when and how demand would surge. If there is much “pent-up demand,” then electricity consumption could surge and outpace supply soon after it becomes available.

“Now is the time to invest in Mindanao, especially in the power sector,” Montenegro said. “As the economy of Mindanao grows, so does the need for electricity.”

MinDA is tasked to monitor investment inflows and power plant development in Mindanao to determine how to balance supply and demand in the region, which has been experiencing power outages since 2010.

Montenegro said he hoped committed power projects would be completed on time since there was a lot of pent up demand in the region and a longer period of power deficit would hold back economic development.

Montenegro said affordable and stable power would be better achieved by encouraging power plant development, especially for renewable energy, which is expected to provide stable electricity prices in the long term.