The Federation of Philippine Industries (FPI) has recently called on the Department of Energy (DOE), as well as all other industry players and stakeholders, to fast-track the next round of biddings for the much-needed greenfield baseload capacity.
The group believes that the successful power supply agreements two months ago, signed to supply Meralco 1,200 megawatts and 500 MW of capacity effective December 26, 2019, should be followed as soon as possible by another round of competitive selection process (CSP) bidding immediately, so as to start the construction of new power plants. FPI also requested DOE and the Energy Regulatory Commission (ERC) to urgently approve the current PSAs, to prepare their implementation and effectivity.
FPI Chairman Jesus L. Arranza praised the signing of the additional contract capacity but questioned the long time line for the PSA approval process, saying “FPI welcomes the news of this much-needed additional power, to meet the growing demand of our country. We just wish the government and regulator would act swifter on the PSA approvals. Also, hopefully, both the public and private sector can already speed up their processes and start with the next round of CSP bidding, so as to fast-track the building of much needed power plants, to meet the growing power demand of the country.”
‘New plants crucial to system reliability’
FPI brought up the latest statistics on the Luzon Grid experiencing yellow alerts, even in the cooler months of October and November, bringing the total number of yellow alerts to almost 50 for the year 2019, already more than the total since the start of the current administration.
There were also 14 days of red alerts this year with rotational brownouts, more than the total in the last five years. The group believes it has never been more obvious that the Philippines’s growing demand for power requires additional capacity to the grid.
The group stressed the need for new power plants, putting emphasis that “the next round of biddings should be solely for new power plants, as these will best ensure reliable supply at lowest cost possible.
The new power plants, the group added, should not be made to compete with the older plants because right now the priority is securing an oversupply in power generation, to address the constant yellow and red alerts plaguing the nation.
“New plants are crucial to system reliability. Given the 20-year term of PSAs, brownfield plants that have been in operation for several years are less likely to remain reliable and ensure delivery for the entire term, which will gravely affect consumers. Greenfield plants, on the other hand, are the country’s best option to help ensure long-term, reliable power supply to the grid, at best cost, which will directly benefit customers,” the group said.
Resume the bidding process
Arranza said “we welcome the entry of any and all generation companies interested in contributing to the grid, in order to create a more secure power supply situation for all industries and, ultimately, all consumers. I believe there are many parties interested in entering the power generation industry, so there really is no reason for distribution utilities [DU] to not resume once again with the bidding process.”
The group did express support for a DOE circular requiring DU to procure power through CSP and spoke of their excitement for the next rounds of biddings, pointing out how additional capacity to the grid will mean more reliable power supply at least possible cost, which will directly benefit all consumers.
Arranza added, “With the next rounds of CSP bidding, the most important thing is that the consumers will greatly benefit from the results. Industries can only hope that the remaining power distributors will follow suit, and conduct more biddings already, as the CSP promises to deliver very positive benefits to the Filipino consumer. This is only the first step, but FPI’s vision for CSP is for more and more generation companies to join the process and participate in the bids.”
“FPI will gladly support the power industry as it remains committed to signing partnerships that can deliver competitive electricity for all industries and customers. Our group supports and encourages the development of more greenfield power plants to address future demand and avert a power supply shortage. FPI is looking forward to continuing its collaboration with the energy industry, government and other stakeholders to serve the country’s energy needs and bring the much-needed additional supply to address the thinning power situation,” Arranza said.