CAGAYAN DE ORO CITY (MindaNews)—Energy experts believe that Mindanao’s energy mix can transition back to at least 50% renewable energy dependence in the short term and expect cheaper electricity prices if the government gets back essential regulation functions of the power industry.
Speaking before the weekly Meet the Press forum at the SM Downtown Premiere, Engr. Cerael Donggay, a former senior vice president of the National Power Corp. (NPC), said that the government should rethink the deregulation of the power industry as prices have gone up since the Energy and Power Industry Reform Act (EPIRA) or RA 9136 took effect in 2001.
Foreign investments go to our neighbors like Malaysia and Vietnam because our power rates are three times higher. “The power industry in those countries are heavily subsidized by the government,” said Donggay.
Climate change realities and economics point to the urgency of shifting to renewable energy as planet Earth is going fever-hot because of too much accumulation of carbon in the Earth’s atmosphere.
The Climate Change Summit in Paris in 2015 warned of irreversible environmental damage if the global mean temperature increase exceeds 1.5 degrees Celsius compared to the pre-industrial revolution period, roughly the last 120 years.
Donggay, whose company Greenergy Solar is now one of the largest supplier of rooftop solar and solar-powered irrigation systems in Mindanao, said businesses should take advantage of the incentives for renewable energy investments provided for in the Renewable Energy Act of 2008 or RA 9513.
Meanwhile, the energy expert said that an accurate narrative of Mindanao’s power situation would reveal that the island’s power mix should still be renewable energy from the Agus and Pulangi Hydroelectric Plants (APHC) in the Lanao provinces and Bukidnon, respectively.
“But because of deregulation, the NPC’s two power barges with 220MW combined capacities were sold to the private sector in 2009. The decision to sell these power barges was ill-timed. At the time, Mindanao lacked 170 megawatts,” Donggay said.
This resulted in the over-exploitation of the APHC as they were operated even with water levels, primarily from Lake Lanao which powers six hydropower plants in the Agus River, critically approaching the rule curve elevation minimum of 698.15 meters above sea level (MASL). The lake suffers serious ecological damage if the water level goes down below the rule curve. It also affects the communities that depend on the lake for water use, livelihood, and transportation.
Operated as baseload power plants, the Nasipit and Maco power barges were operated by Therma Marine, Inc. a subsidiary of Aboitiz Power, as ancillary power plant. Ancillary power plants sell power at higher cost than baseload power plants. Ancillary services can only be used by the NGCP, the current private concessionaire of the country’s power transmission lines when “necessary to maintain the reliability and quality of power services, stabilizing electricity supply and prevent a system-wide blackout.”
In the guise of claiming that hydropower is no longer reliable, especially with more frequent El Niño droughts driven by climate change, the private sector built many coal-fired power plants in Mindanao. As a result, Mindanao has an overcapacity of around 1,000MW.
Donggay said that the dependence of the Mindanao grid on dirty and expensive coal happened in the last 10 years. According to data from the Department of Energy, as of December 2022, coal accounts for 49.9% of Mindanao’s power mix. Added with power plants running on diesel and crude oil, the Mindanao grid is 62% fossil fuel dependent. From around 60%, hydropower in the island’s power mix has been reduced to 27.7%.
Advocates are pushing for at least 50% renewable energy in the Mindanao power mix by 2030. This is 10 years ahead of the national target. The Mindanao Renewable Energy Acceleration and Coordination Hub (Minreach) is at the forefront of this campaign. Minreach is a project implemented by the Mindanao Development Authority (Minda), Peace and Equity Foundation and the Mindanao Renewable Energy Center at the Ateneo de Davao University.
Clean technology: Hybrid economic dispatch
The existing hydropower plants, particularly the Agus complex—which comprises Agus 1 and 2, and 4-7—can still provide a substantial part of Mindanao’s energy needs.
However, the paradigm of managing and exploiting hydropower has to change. Water fires up turbines which converts mechanical energy to electricity. Lake Lanao, with its elevation of over 700 MASL and area of around 350 square kilometers, holds vast potential energy or serves as energy storage just like batteries.
Because of its elevation, the lake can dispense around a billion cubic meters of renewable fuel. At their prime, the Agus hydropower plants can support the generation of around 1,200 MW of clean and very affordable power. The aging power plants built in 1970 had a reduced installed capacity of around 750 MW and a dependable capacity of around 500 MW.
The former NPC executive is promoting his idea as the cure for Mindanao’s power needs and expensive electricity. He has patented “Hybrid Economic Dispatch Involving Solar, Hydro and Fossil As Last Resort.”
In gist, his idea is to operate the Agus hydropower complex as energy storage. It will be partnered with distributed solar energy (DSE) or strategically built solar farms that function as chargers and daytime power generators.
When the power barges were still with NPC, these served as “chargers” of Lake Lanao. These were fired up to prevent the massive depletion of Lake Lanao’s water elevation.
Donggay now proposes the establishment of distributed solar energy (DSE) plants around Mindanao so that when the sun is shining high, and energy is high like during office and school hours, power from the sun is harnessed so the hydro plants rest and recover its water elevation.
Once the Agus-Pulangi plants are fully harnessed, Solar Ocean Pump Storage (SOPS) will be constructed and operated with DSE.
“Solar energy in each load center supplies daytime energy directly, reducing losses and avoiding transmission charges. When solar power is insufficient due to foggy conditions, inclement weather, or nighttime, the ESP and SOPS release stored hydro energy to maintain grid stability,” explained Donggay. A pioneer in the country’s renewable industry, he is one of the founders of NorthWind, which operated the country’s first wind farm in Bangui, Ilocos Norte.
Rehabilitate now
The Agus hydropower plants need to be rehabilitated to uprate their dependable capacity by at least 200 MW. Rehabilitation should have started in 2022 and is set to be finished by 2025. The NPC has proposed a budget of P12.5 billion for this rehabilitation project.
The EPIRA mandates the government to sell all its generation power plants to the private sector because of supposed mismanagement by the NPC. This resulted in huge losses, resulting in debt, which consumers paid as the stranded cost of power.
Mindanao power consumers, however, opposed the privatization of the APHC. One of the reasons is that these plants are giving billions of revenues to the government and privatizing them could result in even higher power rates. The generation cost of these hydro plants is below one peso per kilowatt-hour as these are already fully amortized.
The rehabilitation of the APHC is also urgent because of the incoming decommissioning of the 232 MW Steag Mindanao Coal-fired Power Plant in Villanueva, Misamis Oriental. The power plant is the last built by the government and operated by Steag under a 25-year build-operate-transfer (BOT) scheme. The BOT will expire in 2031. As part of the government’s coal exit strategy, it is proposed to be decommissioned as early as 2028. The Asian Development Bank (ADB) has considered supporting the power plant’s decommissioning under its Energy Transition Mechanism (ETM).
Alternative mode of ownership
Groups like the Power Alternative Agenda (PALAG) have been at the forefront of opposing the privatization of the APHC. While other power generation assets of the NPC were privatized, the government initially ordered a 10-year moratorium on the privatization of the Agus-Pulangi complex.
Opposition to privatization was sustained that the government did not push through with the privatization in 2011 when the moratorium was supposed to end. More than 10 years after the expiry of the moratorium, APHC remained in the hands of the government through the PSALM (Power Sector Assets and Liabilities Management).
While the opposition has been sustained and has gained strength, there are practical questions like what will happen to the power plants’ ownership after 2026, when the corporate life of PSALM, a government-owned and controlled corporation, ends. Bills pending in Congress to extend the corporate life of PSALM have not moved past the committee levels.
In the Mindanao Power Summit last May 30-31 in Iligan City, Mindanao power consumers reiterated their opposition to the privatization of the APHC. This time, however, an alternative mode of ownership is being pushed.
While there is still adamant opposition to privatization, there are realities that energy stakeholders have to consider: Since the power plants are aging, if rehabilitation is further delayed because of ownership issues, then these plants are being operated to death.
And thus, Donggay is proposing social innovation in ownership.
“The Energy Storage Project (ESP) introduces innovative ownership models as alternatives to the conventional privately-owned energy services that have dominated in recent decades. These models are characterized by their various project components, such as the ownership of hydropower plants and distributed solar power installations essential for operating grid-scale batteries. Despite their differences, they share a common theme of cooperative-combination ownership,” said Donggay.
The author of the ESP concept, however, admits that the proposal can make changes depending on consultations with local government and communities.
“For distributed solar plants, one scenario involves assisting municipalities in forming cooperatives of their residents, where individuals contribute as little as P100 each to pool capital for the cooperative and receive ownership shares,” he added.
A copy of the resolution of the Mindanao Power Summit, with over a thousand signatures, was sent to President Bongbong Marcos.
“Sustainable management and innovative leadership are crucial to ensuring affordable, reliable, and clean energy for Mindanao. We need policies that prioritize resourcefulness, innovation, and the well-being of our people over short-term financial gains,” the petitioners said.
Should the Mindanao power consumers get the support of the Marcos Jr. administration, it would be game-changing. Historic in fact, as the power industry is taken off the hands of the power oligarchs who have monopolized the power industry of the country.
[MindaViews is the opinion section of MindaNews. BenCyrus G. Ellorin is an independent climate and renewable energy campaigner. He advises the local government of Cagayan de Oro City on renewable energy, flood reduction, and climate change. He is a consultant of the Mindanao Renewable Energy Acceleration Coordination Hub (Minreach).]
