Power Experts: No new capacity needed to solve Mindanao Power Crisis

Jun 9, 2013


CAGAYAN DE ORO CITY – There’s no need for new plants to solve the power crisis in Mindanao. In fact, if two power experts had their way, a simple change in the dispatch protocol in the Mindanao Grid would instantly do away with the rotating brownouts which have plagued much of the island since 2010.


TMI 1 Power Barge moored in Nasipit, Agusan del Norte.


Engr. Cerael C. Donggay, former Vice President of the National Power Corporation-Mindanao who functioned as the System Operations Manager responsible for managing the Mindanao Power Grid, presented last April 30, 2013 to chambers of commerce in Davao City an alternative dispatch protocol which he says would instantly resolve the current power shortage and end rotating brownouts.


Engr. Cerael C. Donggay (center) in a spirited discussion with Cepalco's Cecilio Sumaoy and Lim Solar's Winston L. Mendoza.


In an interview with Business World, Mr. Donggay said in the present power situation in Mindanao with supply lower than demand, the “Hybrid Economic Dispatch” where all available grid connected diesel plants must run 24/7 would enable the hydropower plants to save water during daytime and release these during the evening peak hours.


“When we release the Lake Lanao and Pulangi waters we saved during the daytime off-peak hours during the evening peak hours, we can generate a greater volume of cheaper energy which would eliminate the need for rotating brownouts or power curtailment.”


Assuming a grid cost of PhP 4.00 per kilowatt hour (kWh) for hydro and geothermal plants which account for 70 percent of the power mix and P8.48 per kWh for diesel plants (30 percent), would only entail a PhP 1.34 per kWh increment over the present grid rate of PhP4.00, a small price to pay for no rotating brownouts, he added.


Using a formula used by the University of Asia and the Pacific (UAP) where he earned his Master in Economics degree, Mr. Donggay said economic losses to the Mindanao economy at a power deficiency of 100 MW is estimated at PhP 63-billion.


Mr. Donggay said the Hybrid Economic Dispatch would have the island’s diesel plants dispatched first and 24/7, instead of last and only during peak hours under the present protocol.

Provided its price remains competitive at PhP 8.48/kWh or below, solar energy plants would instead act as the “peaking plants” during daytime to help the hydropower plants save even more water for the evening peak hours.


However, to make it work, the scheme calls for a change in the commercial deals of the two 100 MW power barges of Therma Marine Inc. (TMI). “Instead of dealing with many customers, it should deal with only one, preferably NPC/PSALM, who would buy and sell it at cost.”


Engr. Robert F. Mallillin during an ERC hearing in San Fernando, Pampanga in 2009.


Another energy executive shares Mr. Donggay’s optimism. Engr. Robert F. Mallillin, co-chairman of the Philippine Chamber of Commerce and Industry (PCCI), notes how the Mindanao grid under the current dispatch protocol last April 19, 2013 was only able to supply 1,079MW (coal 207MW, geothermal 76MW, diesel 135MW, diesel 135MW, hydro 661MW) to meet a peak demand of 1,222MW hence the rotating brownouts in many areas.


This, despite an estimated grid generating capacity of 1,884 MW (hydro 924.1 MW, diesel 651.9 MW, and others including coal, generating and other RE 308 MW).


“We have brownouts in Mindanao because of this mis-allocation of our available capacity,” Mr. Mallillin noted. “This is absurd! We use hydros as base load plants and thermal plants for peaking! Only in the Philippines!”


He noted further how the NPC diesels are under-utilized due to the lack of funds for fuel to operate them for longer hours while the IPP diesel plants are tied to bilateral agreements and not utilized, with load factors less than 60 percent.


Foremost among these are the 100 MW Western Mindanao Power Corp in Zamboanga City, 55 MW Southern Phils. Power Corp. in General Santos City of the Alcantara Energy Development Corp. The 98-MW Mapalad Power Corp. Iligan Diesel Power Plant (IDPP) was recently re-acquired by the same company and is now undergoing rehabilitation and only producing 30 MW so far.


Instead, Mr. Mallillin proposes to firm up day-ahead hydro generation capability, dispatch coal-fired and geothermal plans as “must-run” baseload plants, account for all available diesel plants as contracted, and accept bids from un-contracted diesel plants through the Interim Mindanao Electricity Market (IMEM).


“Assuming coal fired plants priced @PhP5/kWh, geothermal @PhP2/kWh, diesel @PhP 12/kWh and hydro @PhP1.50/kwh, we now have a rate of PhP 4.45/kWh average price with brownouts using the current dispatch protocol,” he noted. “With an incremental cost of only PhP1.25/kWh, we shall have no brownouts at a grid rate of PhP 5.70/kWh.”


However, for the revised dispatch protocol to work, the following system procedural requirements have to be met: pre-determined   day ahead hydro-generation plan; Interim Mindanao Electricity Market (iMEM) implementation advanced from September 2013, NPC supplemental budget allocated to finance “must-run” units and IPP diesel power for bidding.


“As of April 2013: ERC approved a PEMC budget for IMEM but PEMC says it is not yet ready and wants to defer it to September 2013. Thus, many urban centers in Mindanao currently experience 4-5 hours of rotating brownouts.”


Meantime, NPC has to petition ERC for a rate increase to make sure all its diesel IPPS are run 24/7 and NGCP to contract all unused capacity of existing diesel gensets for must-run protocol and bill all customers for ancillary charges, Mr. Mallillin said.


However, another energy executive disagrees.


“I am sorry to say that the proposals of Robert Mallillin and the PCCI won’t fly,” said Engr. David A. Tauli, engineering consultant to the Office of Bukidnon 2nd District Rep. Florencio T. Flores, Jr. and spokesman for the Mindanao Coalition of Power Consumers (MCPC).


“The use of pure diesel plants will cost PhP 10/kWh or more for the EC’s, DU’s and Industrial consumers who will go this way,” he noted in an email. “Moreover, the PSALM-owned and controlled diesel plants in Mindanao are already operating at full capacity, as are the TMI power barges.”


Instead, Mr. Tauli advocates the use of embedded solar power plants which can provide power at only PhP 8.00/kWh or less, and could provide back-up capacity for electric coops after the period of power shortage (which would end when the rains enable the Agus-Pulangi hydro plants to be operated at higher capacity). 


“The only problem here is if the suppliers of solar hybrid PP’s have enough capacity to sell to the EC’s. We will need 50 MW in 2014 and another 30 MW in 2015 if all of the EC’s chose solar hybrid over pure diesel power plants,” he noted.


Two solar energy providers, Enfinity Philippines Renewable Resources Inc., the local arm of Belgian renewable energy developer Enfinity, and Lim Solar Philippines, the Filipino affiliate of US-based Mendoza Solar LLC, confirmed they are both individually capable of providing at least 80 MW of solar power to the Mindanao grid at a price range of PhP 7.47-7.90 per kWh.


“I totally agree on RE as a long-term solution because fossil fuel costs (Oil, Coal, Natural Gas) are always volatile,” Mr. Donggay   said. “If renewables are insufficient to meet the economy-driven burgeoning demand for power, we need even to look into nuclear power.  Most countries in the world with cheap electricity have nuclear power.”


As a former Vice President of the Napocor -Mindanao and chairman of the IPP Contract Restructuring Committee, Mr. Donggay realized corporate savings of PhP 6.07-billion for Napocor. He is currently project director of the Bulanog-Batang and Pulangi V Hydro Power projects and president/CEO of GREENERGY Development Corp.




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