Coal is seen to remain dominant in local energy mix

(Special Feature)
MANILA, Philippines — The frenzied move to “green energy future” is a mesmerizing prospect to many.

We all know for sure that the country’s energy demand will grow at a rate that it will require alternatives in the mix going forward – and that will entail plunge in renewables, albeit not exclusively.

But let us not kid ourselves into believing that the transition will be seamless. As a matter of fact, it could be a painful shift – both from the viewpoints of cost and supply reliability (the second being a trickier experiment if we push our luck with less proven technologies). Take this as parallelism: A kite with no wind to keep it aloft isn’t going anywhere but the ground. The “clean tag” after all, may just be the “icing on the cake.”

Alright, for the sake of argument, let us say that coal is the solution from the other side of the fence. By any measure, it is an option that could not – and will never – be categorized in the “zero-carbon zone.”

So, is coal considered the “frenemy” (friend or enemy) of renewables? Energy experts don’t think so. Comparing the two or pitting these technologies against each other won’t be a fair metric, they point out. They must complement each other in the mix, they said, because one is a sure-fire solution to reliability. For renewables, they can be set as ally to carbon footprints reduction. Well, yes, it must also be noted that coal could very well pass ‘the clean energy standard’ with the deployment of more advanced and efficient technologies, especially in the upcoming fleets of generation facilities.

It is certainly not an easy choice. However, with the electricity supply crunch that the country has been experiencing, isn’t coal the ‘necessary evil’ that we all need to prevent our electricity sector from tumbling into a new round of crisis?

Stark realities

There are stark realities that must be factored into the equation: With power supply lack, the Philippine economy could hurriedly flat-line while the rest of Asia grows. Textbook economics may also readily explain that even a sheer case of supply tightening can send price signals to soar – and that only means one thing, heavier burden in the consumers’ pockets.

This is the bigger question: Do we really have any immediate and feasible option? The operative words here are: Realistic solution. On the whole, the facility must be one that can meet the electricity system’s requirement for baseload generation; at the same time, it can ensure supply reliability (with adequate and stable fuel source); and something that can also be set on scale (in terms of size and dependable capacity) so that the resulting price will be relatively affordable to consumers.

The answers would matter a great deal. If policymakers would dither, then the country would better prepare itself for the worst – a crisis.

Despite the flurry of criticisms, Energy Secretary Rene D. Almendras appeared ready taking on the tough decisions, especially when he frankly laid down that the country needs coal plants to bridge the immediate gap in power supply and position the electricity sector into the longer term agenda of energy security.

Some sectors are adamant. But the energy chief is forthright in his pronouncements that policy choices must be prioritized. When supply stabilizes with the initial entry of the coal plants, he notes that the alternatives – ranging from gas to renewables (the mature and un-proven technologies alike) can already be lumped into the mix with less drawbacks.

Across grids, the line-up of greenfield projects listed by the energy department which are coming on stream in the next 3 to 5 years to meet the country’s short- to medium term supply are mostly coal-powered fleets. Visayas grid already came ahead with the grid synchronization of the Toledo and Kepco-Salcon plants. Luzon will come next with the much-anticipated commercial operation of the 600-MW facility of GN Power by 2013; while the newly-decided 600-MW Subic coal project of the Meralco PowerGen-Aboitiz-Taiwan Cogeneration group will be on-line by 2014 to 2015. The power supply solution for Mindanao are similarly anchored on coal plants – with final investment decisions already rendered for the proposed 300-MW Davao facility; and the project of Conal Holdings of the Alcantara group for 200-MW capacity.

With all these projects coming into fruition, Mr. Almendras is finally feeling relief that he can thwart the crisis that has been threatening the power industry when he came. The next focus, he says, will be the longer term policy agenda to satiate the country’s energy demand up to the 2030 planning horizon.

The energy secretary has the growing economy to give a sharp focus on. Currently, the energy demand is seen growing at 3.0-3.5%; but this is seen climbing to 4.5-4.7% in the next 3 to 5 years if the economic and population growths penciled in by government planners would materialize.

Winning the NIMBY mindset

The Aboitiz conglomerate, despite its diversified portfolio of power generation facilities, is very much into the forefront of developing the next batch of coal plants. Being a pro in the business has not spared the company from going through the tedious process of winning social acceptance for its coal projects — from its proposed P25 billion power plant in Davao to the ‘siting predicament’ it is now confronted with for its proposed Subic facility.

The ‘not-in-my-backyard’ or NIMBY mindset is a routine hurdle that coal project developers must fend off – a high point in ensuring project siting, if done.

In an interview, Mr. Luis Miguel Aboitiz, senior vice president of Aboitiz Power Corporation, points out that the whole process entails presenting a clear case to your prospective host community – what are the pluses that the project would bring to them that can outweigh their pessimistic views on the project. “It’s not a matter of winning, it is a matter of achieving consensus that the project does deserve to be built. I don’t view it as a win-loss situation,” he emphasizes.

The company says it opens its doors to discussions, even to the most unyielding of its oppositionists. Aboitiz Power first vice president Ray Cunningham explains that the conglomerate would normally approach the concern of social acceptance “with great sensitivity and a lot of compassion.” By that, he means “respecting the views raised and we respond to concerns … we deal with all sectors, including oppositionists who have no willingness to consider accepting that kind of generation,” noting further that “a project like this should be able to take the worst criticisms from anybody.”

The cases for Davao and Subic coal plants

In the course of the interview, the Aboitiz conglomerate executives emphatically discussed both the technical and economic merits of their proposed coal project in Mindanao – and why the company has tugged its way into having Davao as its host community.

Mr. Cunningham explains that by constructing the power plant in Davao, the consumers in the area would be able to generate savings of P.100 per kilowatt hour (kWh) for what could have been a more expensive transmission charge if the facility is sited outside Davao. “So it is a way of offering people in Davao City that, it would not only be the tax benefits, but also cheaper electricity for them.”

The choice for coal, Mr. Aboitiz qualifies, has also been rooted on the fact that Mindanao’s power supply-demand dynamics “have not been realistically calculated,” particularly under the assumption of having droughts – a scenario that afflicts the grid every 7 to 9 years when extreme weather condition of the El Niño scale menaces its supply source because of its very high dependence on hydro capacities. This, in tandem with the need to plug supply gap, has been the same arguments that Conal Holdings will be pitching for its coal plant project in Saranggani province.

“The criteria for dependable capacity depends on the region or the grid being served … I think the more important thing is, if there’s a drought, that extra power will be needed,” Mr. Aboitiz says.

He similarly echoes the view that coal technology will still form a great part in the country’s quest for long-term energy security. Thus far, Mr. Aboitiz opines that it is not just a technology in transition, but something that will satiate the country’s and the world’s energy demand – even for the next 25 to 50 years. “Some people say it’s a bridge, but I can sense that it would be a pretty long bridge … you are not going to build a plant and operate it in three years and then you shut it down and wonder what else could be coming along, you’ll never know for sure. So (coal technology) is something that will be there for 25 years or longer,” he adds.

Moving on to the newly-firmed up $1.28 billion Subic coal plant investment, Meralco Power Gen which is now the majority shareholder in the venture, declares that its entry into the project is based on the need to immediately “augment generation capacity in the Luzon grid.”

Meralco senior executive vice president and COO Oscar S. Reyes is thrilled at prospects that the Subic facility (which shall be implemented under Redondo Peninsula Energy as corporate vehicle) “will play a strategic role in helping meet 8% of the entire Luzon grid’s power needs.” The utility firm is gearing up to sign a power supply agreement (PSA) for the project’s capacity so it can fully meet its customers’ growing demand.

Calculating carbon footprints: From cradle to grave

As environmental footprints of energy sources are pushed deeper into the human psyche, the debates as to which technology is “clean” or “dirty” seem endless.

But scientists have another way of calculating carbon footprints – that they are not only reckoned from the actual generation of electricity at the plants; but how the full-product life cycle “from cradle to grave” had at some point in the chain, caused distress in the environment. They note that this similarly applies to manufacturing processes even for renewable energy technologies (like the production processes involved for infrastructures in solar, wind or biomass) up until their deployment for power generation. Taking that as a gauge, some experts argue that there is really nothing that can totally measure up as “clean energy” – there is only the presence or evolution of technologies that can pull electricity generation on a cleaner slate.

In coal’s case, project sponsors contend that “present clean coal technology (the likes of circulating fluidized bed or CFB) is so much safer, healthier and environmentally protective.”

Mr. Manuel Orig, Aboitiz Power Mindanao first vice president, notes that “the coal-powered plants that people usually think of are the ones from the 1950s and 1960s,” but since then, he qualifies that “clean coal technology has been developed to ensure that coal-powered plants have minimal impact on the environment and for them to be safer to operate and will also protect the health of the surrounding communities.”

And upon the wishes of the environmentalists, stricter standards have also been prescribed (by the Philippine Clean Air Act and international entities like the World Bank), chiefly to contain and bring to bare minimum the emissions from coal plants. –MYRNA M. VELASCO, Manila Bulletin