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Exec: Mindanao will need new power plants in 5 years

Mindanao may be enjoying a glut of power of about 1,000 megawatts at present, but with the demand growth of nearly 10% annually, new power plants are definitely needed in the next five years, a top government official said.

“At the rate that Mindanao is growing, and at the rate of 7-8% annual demand for power in Mindanao, we’re looking at that excess, actually, but that excess will not last long” said Assistant Secretary Romeo M. Montenegro, Mindanao Development Authority (MinDA) deputy executive director and technical head of the Mindanao Power Monitoring Council.

Montenegro said that new power plants, which can be built in three years, need to be planned as soon as possible to prevent the repeat of the 2010 situation when the island had a huge power scarcity.
“As early as now, companies should start considering building new power plants to address the impending need,” he said.

A decade ago, Mindanao experienced a huge shortage of power as a result of its dependence on the two government-run power complexes, the Agus complex in the Lanao area and the Pulangi complex in Bukidnon.

Companies were hesitant to invest in new power plants then because of fear that they could not recover their investments even with the implementation of the Electricity Power Industry Reform Act of 2001, which was intended to loosen the grip of government on the industry.

It was only about five years later when the first new power plant, that 300-megawatt power project of Therma South Inc., a subsidiary of the Aboitiz Power Corp., started operating and signaled the entry of new plants.

Some of these new plants were built to accommodate possible expansion with the TSI plant eyed to be expanded to double output, but the plan was postponed as other plants started operating, resulting in a daily average reserve of about 1,000 based on the data from the National Grid Corp. of the Philippines (NGCP)
Another project that will help Mindanao access additional power is the transmission interconnection project of the NGCP which would interconnect the Mindanao grid with those of Luzon and the Visayas which was started in 2018. Although it was first scheduled to be completed this year, there has yet been no exact date of completion.

Another issue that is being watched closely is the implementation of the wholesale electricity spot market after the market operator, the Independent Market Operator of the Philippines (IMOP) announced last year that after so many postponement, the market will be launched on January 26.

Montenegro said the date of launching of the market has continued to be “a moving target” as the Energy Regulatory Commission has yet to finally announce the market rate cap which will become the signal of its operations.

Despite the challenges that both the market and its participants are expected to face, Montenegro said its operations will definitely benefit Mindanao because those that need more power will get it from the market and that pricing will be dependent of supply, allowing consumers to pay lower rates, depending on the status of their distribution utilities.

Some power distributors, particularly electric cooperatives, have signed contracts that would provide them more capacity than their needs and, Montenegro explained, the market will be their ally for them to sell their excess.

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