Thursday, September 16, 2010

Weighing Mindanao’s power problems and options (First of 2 Parts)

by BenCyrus G. Ellorin

CAGAYAN DE ORO CITY (MindaNews/14 September) — Monday’s 9-hour brownout in southern Mindanao and parts of northern Mindanao was part of the power problem of Mindanao, the incompatibility of the transmission system between these two regions of the island.

More than 10 years ago, we have argued that to solve the immediate power problem in the island, a power plant needs to be put up in southern Mindanao and the upgrade of the Mindanao grid transmission system should be done in earnest.
Solid economic growth in southern Mindanao anchored on the two growth areas in Davao City and the Socksargen area (South Cotabato, Koronadal, Saranggani, General Santos) has made it a net importer of power from northern Mindanao, which hosts the powerhouse of the island, the Agus hydroelectric complex cutting across Lanao del Sur and Lanao del Norte and the Pulangi IV hydroelectric plant in Bukidnon.

The context of our argument at that time is the timeliness and location of the 200-mw Mindanao coal-fired power plant in Villanueva, Misamis Oriental which was proposed then.

For starters, bringing in power to southern Mindanao from the Mindanao grid hub in Lanao del Norte is very costly as it needs the use of expensive transformers, not to mention the high power dissipation rate caused by reducing power from the 230-kilovolt transmission lines in northern Mindanao to the 130-kv transmission lines in the southern part of the island.

It is like transferring water from a 12-inch pipe to an eight-inch pipe.
But upgrading Mindanao grid’s power transmission lines is just one of the issues of the Mindanao power problem. The bigger problem is what to put in those transmission lines from generating plants.

About 10 years ago, we argued that Mindanao does not need the 200-mw Mindanao coal-fired power plant in Villanueva, and even pointed out that the plant, one of the controversial contracts signed with Independent Power Producers (IPP) at the close of the Ramos administration, is not necessary.

In 2003, we come up with a study arguing that the Philippine Energy Plan of the Dept. of Energy (DOE-PEP) covering 1995-2004 was faulty and that the projected power shortage in the island was not coming in the next six to 10 years.

Moreover, with global warming and upward volatility of fossil fuel prices in the world market (i.e. crude, coal, diesel), there is still enough time to build renewable energy sources like hydro electric power plant, work on the expansion of the Mt. Apo Geothermal Complex and the Leyte-Mindanao inter-connection which would primarily tap the surplus energy generation capacity of the Leyte Geothermal complex.

The study commissioned by the World Wildlife Fund’s (WWF) Powerswitch campaign done by economist Maitet Diokno agreed with our critique of the DOE-PEP energy demand forecasting method which was based on the elasticity of aggregate economic indicators.

They computed the medium-term demand based on projected Gross Domestic Production (GDP). For its 1995-2004 medium-term energy planning, the DOE used the 9-percent projected GDP growth + 1 (elasticity) to come up with the projected increase in energy consumption.

This formula is very defective on at least two counts: 1) the 9% average GDP growth for the planning period is “overbullish;” and 2) an increase in GDP does not necessarily result in increased power consumption.

Even Ramos’ NEDA director general Dr. Cielito Habito agreed with us when we had a “Power Forum” to present our critique of the faulty DOE energy planning methodology, at Xavier University in 2004. He admitted that they tended to do “over bullish economic growth forecasting” in order to create the impression on the international community that the country has sound economic fundamentals.
And if you look at the actual economic growth rate in the 1995-2004 period, the GDP was actually just between four and six percent.

Measuring consumption patterns based on aggregate economic indicators like GDP has been very tricky. We were taught by the books and in economics classes that economic growth, as measured by GDP and GNP for example directly influences per capita consumption which in turn results in increased use of energy.

But this is not the case for export-oriented, import dependent economies like the Philippines. In fact, one economist noted that a percentage point increase in GDP actually redounds to an eight- to nine-percent increase in real poverty rate. (Gonzales, Ernesto, 2005)

In our research on actual installed generation capacity in Mindanao from 1990 to 2001, we found out that it was only in the later part of 1993 to the early part of 1994 that there was an actual shortage of power in Mindanao. This was used by President Ramos in declaring a power crisis and signing expensive IPP contracts.
Although the 200-mw Mindanao coal-fired power plant of the Steag only went on full operation in Nov. 15, 2006, the power plant was originally planned to fill in power gaps in the 1995-2004 period.

Having said this, in the last 15 years or so, no significant power generation plant entered the Mindanao Grid except the Mindanao coal-fired power plant. (Next, The need for renewable energy generation plants) MindaViews is the opinion section of MindaNews. Comments can be sent to]

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