Gov’t urged to set fuel mix policy for $30-B power investments

The country needs $20 billion to $30 billion in investments in power plants over 15 years to sustain economic growth and meet electricity demand.

Manuel V. Pangilinan, chair of Metro Pacific Investments Corp. and Meralco, said this, stressing that there must be a clear policy direction on the kind of fuel which would support those facilities.

Energy investors will go where the government says it needs the investment: whether it is coal, gas or renewable, Pangilinan said.

“We do know we have to build at least 10,000 MW in capacity.  At $2 million per MW, your are talking of $20 billion to $30 billion in investments needed in the next 15 years or so. The question is, what is your fuel mix?”

At present, the power industry has about 16,000 megawatts (MW) in installed capacity.  The current demand for power is about 12,000 MW and it is growing.

On paper, it seems like the country has sufficient reserves but as indicated by a number of days of yellow alert (a grid condition where there is thin energy reserves and any big unplanned power plant shutdown could result in massive brownouts), there seems to be a lack of actual power output, he said.

The consensus view in business is that power demand could grow to as much as 20,000 MW to 24000 MW by 2030 from the current 12,000MW. Clearly the country needs more capacities to be built in the next 15 years, Pangilinan said.

“The argument for renewable is that the sun shines everywhere, wind is everywhere, biofuels are everywhere. The seduction for renewables is there. But can you build enough renewable to fill up the needed 10,000 MW to 12,000 MW in additional capacity. More importantly, how much would it cost? You have to address that, it’s not cheap, it’s not going to be cheaper than coal or gas,” Pangilinan said.

Even as he cautioned that ruling out coal and going all-R.E. for new capacities would likely cost more for investors and the consumers, he said.

He said investors would simply follow what the government would say.

“Once that’s decided, businesses will build the plants,” he said.

Pangilinan also said the government, in setting a fuel mix policy, must communicate its pros and cons to power consumers.” You have to tell the people the cost and that it  is accepted, then fine, business will follow that direction.”