PH seen likely to resort to nuclear power as energy demand increases

The Philippines may eventually open up to nuclear power to meet increasing demand for energy, possibly displacing coal-fired power generation plants over the long haul, think tank Fitch Solutions said.

“Nuclear power will offer an effective solution to meet the country’s rising power demand over the coming decade, particularly as coal-fired power—which Philippines has largely turned to—comes under increasing environmental oppositions,” Fitch Solutions said in a research note dated Sept. 4.

But the research note titled “Nuclear on the Cards in Philippines” projected that no nuclear capacity would likely come online over the coming decade due to high capital costs, safety considerations and long lead times.

Fitch Solutions expects the Philippine power mix to remain dominated by coal over the coming decade, with the share of coal-fired power increasing from an estimated 54.6 percent of total generation in 2019 to 60.2 percent by 2029.

“However, should nuclear power be reintroduced, coal will likely be the first generation type to face cuts, due to the increasing structural risks and ongoing public oppositions,” the research said.

During the Marcos regime, Bataan Nuclear Plant was built at great cost to the government but this was mothballed due to safety concerns.

Fitch Solutions forecasts power consumption growth to pick up pace to an annual average of 4.6 percent between 2020 and 2029, despite the near-term headwinds arising from the coronavirus pandemic.

“We expect a surge in the Philippines’ power demand over the coming years, driven by strong macroeconomic and demographic growth, and government’s goals to achieve a 100 percent electrification rate by 2022 under the Total Electrification Program,” it said.

The think tank noted an increasing traction toward nuclear energy of late, citing President Duterte’s executive order to formally study its feasibility. The Department of Energy has been working closely with the International Atomic Energy Agency on the country’s nuclear power infrastructure development, which has made promising inroads, it added.

“Should nuclear be successfully introduced in the power mix, coal-fired power will face the highest risk of being displaced,” Fitch Solutions said.

It acknowledged that the government, however, remained highly committed to coal power generation, despite increasing opposition on the ground.

“The domestic financial sector has also shown no signs of moving away from coal. We stress that coal remains the cheaper and more reliable option to meet with the country’s power demand surge, particularly as resources in the Malampaya gas field deplete with limited scope for exploration success and infrastructural headwinds to LNG import capa­city. Renewables have also faced many headwinds in development, and we do not expect a substantial ramp up in this regard,” it said.

The research cited that the Rosatom State Atomic Energy Corp. allegedly inspected the existing Bataan facility in 2017, with the conclusion that the plant could become operational but would require repairs costing between $3 billion and $4 billion.

“It would hence require strong long-term government subsidies to prevent the cost being passed to consumers. Added to that, the Philippines is prone to natural disasters such as typhoons, posing considerable safety risk. As such, developing the nuclear sector has been subjected to controversies, within both the public and the government in both camps of the debate,” Fitch Solutions said.

“Furthermore, we stress that nuclear projects often face long lead times and a high risk of substantial delays (10-15 years). As such, even if a decision were to go through, we remain cautious on factoring in its entry into commercial operations within our forecast period to 2029.”

Previous attempts to revive the nuclear sector had been unsuccessful. INQ