Napocor considers RE facilities for off-grid areas

MANILA, Philippines—State-run National Power Corp. is set to sign an agreement with PNOC Renewables Corp. to explore opportunities in constructing renewable energy facilities in remote and off-grid areas and reduce the cost of subsidies for rural electrification.

In an interview with reporters, Napocor president Froilan A. Tampinco said that the renewable energy arm of Philippine National Oil Co. would look at the 14 areas included in the so-called “first wave areas to be opened to private sector participation” to find where it could put up power-generation facilities, possibly in partnership with the private sector.

These areas include Occidental Mindoro, Oriental Mindoro, Marinduque, mainland Palawan, Catanduanes, Bantayan, Masbate, Tablas, Romblon, Camotes, Siquijor, Tawi-Tawi, Basilan and Sulu. Most, if not all, of the power facilities in these islands are being managed by Napocor’s small power utilities group (SPUG).

Of these areas, only Bantayan Island and Masbate may be considered to be true “success stories,” Tampinco said.

This means that private power generation firms have successfully put up power facilities in the areas. In Mindoro and Palawan, a lot of initiatives are currently under way with the entry of the private firms.

“The big challenge of course would be the areas down south [in Mindanao]. In the Visayas and Luzon, we have to look at the Romblon group of islands, Catanduanes and Siquijor,” Tampinco said.

Despite the agreement with PNOC-RC, Napocor is still looking to bid out next year 12 of the 14 first-wave areas where the SPUG currently operates. By bidding out these areas, private-sector investors will be allowed to build, own and operate generation facilities to supply the far-flung areas.

The privatization of SPUG areas is meant to bring down power rates for customers serviced by the main grids, which shoulder part of the cost of the subsidy program via the universal charge for missionary electrification (UCME) component in their power bills.

According to Tampinco, they are still awaiting orders from the Department of Energy before it can start the bidding process.

The order, in the form of a circular, will give Napocor a more active participation in the process.

Under the current system, Napocor-SPUG operates the diesel facilities in these off-grid areas. When the private sector wants to build a power plant, the electric cooperatives will conduct the bidding and contract the electricity to be generated from the new power facility, while Napocor oversees the process.

With the proposed circular, Napocor will be able to conduct the bidding itself and can also serve as the off-taker of the electricity. It should be noted that the Electric Power Industry Reform Act (Epira) prohibits Napocor from being involved in electricity generation and management of major grids.