Gov’t needs P330 B to buy out coal plants in Mindanao

by Myrna M. Velasco, Manila Bulletin, 31 Oct 2021

The Philippine government will need to shell out more than P330 billion if it will concretize its plan to ‘buy out’ coal plants in Mindanao grid as part of the country’s commitment for carbon emissions reduction at the 26th Conference of the Parties (COP 26) of the United Nations Climate Change Summit.

That had been based on the calculation of sources at the Department of Energy (DOE) based on the number of coal-fired power plants that are currently operating and providing electricity to consumers in the Mindanao grid.

As culled from DOE data, the coal plants in Mindanao include the 600-megawatt Malita coal plant of SMC Global Power Holdings of the San Miguel group in Davao; 552MW Kauswagan coal plant of GNPower in Lanao del Norte; 405MW FDC Utilities Inc. plant of the Filinvest group in Misamis Oriental; 300MW Therma South facility of the Aboitiz group in Davao; 210MW coal plant of Alsons Power Group in Sarangani; and the 210MW STEAG coal plant in Misamis Oriental.

For the Alcantara group, it has also been advancing the implementation of its greenfield 105MW San Ramon coal plant in Zamboanga City, so it can help ease the rotational blackout predicaments of consumers in that area.

The rule-of-thumb cost in installing a coal plant is pegged at US$3.0 million per megawatt. And of all the coal-fed power fleets in Mindanao, it’s only the STEAG plant that is considered an ‘old plant’ having started its commercial operation in November 2006.

Most of the coal-fired generating facilities in Mindanao have just reached commercial operations in 2015 to 2017; and they are also the main sources of electricity supply in the grid, as the generation capacity of the Agus-Pulangui hydropower complex in the region had been substantially de-rated (reduced).

The retirement or phaseout of coal plants in Mindanao was put forward by Finance Secretary Carlos G. Dominguez III, being the leading figure of the Philippine delegation to the COP26 climate change diplomacy summit this November.

But the DOE, which is the main planning agency for the country’s energy needs, is not in concurrence to that plan, with Energy Secretary Alfonso G. Cusi stating that his department “is not looking at phaseout of coal-fired plants in Mindanao despite the moratorium on coal.”

The energy department indicated that Mindanao grid has the highest growth in electricity demand – escalating at 7.9-percent annually vis-a-vis 7.3-percent in Visayas grid; while Luzon has a leaner power demand growth of 6.2-percent.

Meanwhile, Senate Committee on Energy Chairman Sherwin T. Gatchalian bewailed the fact that the energy plan and the nationally determined contribution (NDC) of the country to carbon emissions reduction are not aligned.

“It’s unfortunate because the PEP (Philippine Energy Plan) is a roadmap for energy. And the NDC is our commitment to reduce GHG (greenhouse gas emissions) and it’s not harmonized,” he stressed.

The senator thus pointed out that “we’re actually flagging both the CCC (Climate Change Commission) and the DOE to put that harmonization together so that the resources and the energy mix and the generation mix that we’ll be planning in the future is linked to how we will reduce our GHG through our commitments to the Paris agreement.”

The lawmaker further noted “we have a commitment and we have to fulfill that commitment through our PEP,” with him referencing to the long-term energy planning being cast by the energy department.