As economic engines rev up, tighter power supply looms | Inquirer Business

As economic engines rev up, tighter power supply looms

/ 05:24 AM January 29, 2024

Emmanuel Rubio


The threat of a prolonged dry spell has long been hounding the Philippine power sector, with the state weather bureau projecting as early as June last year that the El Niño weather phenomenon would persist until the second quarter of this year.

For one, the overall availability of hydroelectric power plants across the country is expected to dip by nearly 80 percent to 725.5 megawatts (MW) from 3,472 MW due to the anticipated lower water inflows.


Power generators and distributors, however, are placing their bets on solar power this year to offset a potential supply shortage.


Aboitiz Power Corp., for example, is set to commercially operate 684 MW of renewable energy projects within the year alone.

Solar power plants will take a big chunk of the total upcoming capacity at 461 MW, while 206 MW will come from its Northern Samar wind farm. Its geothermal power plant in Tiwi, Albay province will supply the remaining 17 MW.

“One of our priorities is to maintain the availability and efficiency of our power plants [at all-time high], as well as to deliver fresh capacities, to help ensure the Philippines’ energy system is secure and is able to reliably support aggregate demand, as we did in 2023,” Emmanuel Rubio, president and CEO of AboitizPower, says in an email to the Inquirer.

Energy Secretary Raphael Lotilla himself previously played down the lower availability of hydroelectric power plants, pinning his hopes on around 1,000 MW of solar power plants set to begin commercial operations within this year.

These, he says, can help meet power demand in a country still mostly reliant on fossil fuels for electricity.

Rising demand

Industry players have estimated that demand would grow by 6.6 percent from last year’s 17,000 MW.


“For its part, AboitizPower will aim to sustain the availability and optimal efficiency of its diverse portfolio of power plants, while adding more capacities to this portfolio,” Rubio says.

On the distribution side, tycoon Manuel Pangilinan-led Manila Electric Co. (Meralco), the country’s largest private power distributor, expressed the same optimism amid supply uncertainty.

Ferdinand Geluz, senior vice president and chief revenue officer of Meralco, has projected the company’s sales to grow by 4.5 percent this year due to a possible improvement in the industrial sector.

“We expect a rebound in the industrial [sector], but of course with El Niño, we expect a slight spike in residential [sales],” Geluz says.

Commercial sales, on the other hand, may grow by 5 or 6 percent, he adds.

Meralco has yet to release its 2023 sales results, but Geluz notes that they expect an overall sales growth of at least 4.4 percent.

In 2022, Meralco’s energy sales volume improved by 6 percent to 48,916 gigawatt-hours as “businesses and public confidence recovered from the pandemic.”

The company posted a 21-percent increase in net income that year to end with P28.4 billion in earnings.

Meanwhile, end-user consumption management remained Meralco’s top solution to a possible supply shortage even as demand is still expected to climb.

Boosting supply

Although expecting “some tightness in supply,” both AboitizPower and Meralco clarify that they could not speculate on electricity rates this year. The Philippines has long been identified as one of the countries with the most expensive power rates in Southeast Asia.

On the part of Meralco, Joe Zaldarriaga, vice president and head of corporate communications, explains that they will continue to implement the company’s Power Supply Procurement Plan, which includes the bidding for its 1,800-MW supply requirement.

Meralco also recently launched separate competitive selection processes for 1,200-MW baseload requirement for 15 years, and for 660 MW of interim power supply beginning this year.

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“These biddings are geared toward securing additional power supply at the least possible cost to augment our capacity and ensure the continuous delivery of reliable and stable electricity service to our customers,” Zaldarriaga says.

TAGS: economic outlook, power supply

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