THE next political leadership will face a tightness in power supply in the next three to five years, officials of Ayala-led energy companies said, as they enumerated their wishes such as clarity in policy and enforcing “actionable” near-term solutions.
“The next leadership will be faced with a challenging situation given the ongoing energy crisis globally and given the impact of COVID on the post-COVID world,” Eric T. Francia, president and chief executive officer of AC Energy Corp. (ACEN), told reporters when asked to share his wish list for the next administration.
He said the pandemic had caused delays in the energy projects, including the competitive bidding for power supply, resulting in uncertainty.
“My concern always back then was it’s the typical whipsaw effect na (in which) there’s a big event, significant event that makes people step back and slow down the buildup,” Mr. Francia said in a briefing on Tuesday.
He said ACEN was one of few companies that continued building or investing in energy projects at the height of the pandemic in the Philippines and around the region.
“But that is not the norm. That is more of an exception. And because of that, I think we could face really a tightness in supply in the next three to five years,” Mr. Francia said.
He also cited the “trajectory” of the Malampaya natural gas, which is said to be nearing depletion, and “how that decline curve would look like. So that’s also a risk.”
Apart from these challenges, he said the next government leaders would be faced with elevated coal, gas and oil prices globally, and the ensuing uncertainty that these would evolve into over time.
“I think the next leadership will have its hands full in terms of this challenging energy situation,” Mr. Francia said.
However, he cited potential short to medium-term solutions, which he described as “low-hanging or addressable.”
Mr. Francia said Laguna de Bay could offer a partial solution, which is both actionable and of significant scale. The government has recently offered the lake as a possible site for a floating solar farm.
“The lake could add capacity in the next three to four years and that’s relatively quick. So, imagine that would be additional capacity by 2025, which people are concerned about what’s gonna happen 2024, 2025, maybe even 2026. So, we need actionable projects ideally on the clean energy or renewable energy side,” he said.
Mr. Francia cited another solution — clarity on policy regulation. He said the government could look into tapping transmission lines that were built for redundancy, and allowing power plants to temporarily connect, thus encouraging the development of new energy capacity.
He said the government should also look into incomplete initiatives such as the reserve market and the renewable energy market.
“I think that will encourage a lot of investments both in renewable energy and battery storage that can be done in a relatively rapid time line, rapid period,” he said.
He said the company is prepared to invest in more battery storage facilities to alleviate potential power supply shortages, but the economics would not work if it would end up selling its output to the energy market as opposed to selling it to the reserve market.
“If there is a renewable energy market, we will be even more aggressive in terms of building more renewable energy plants. But where are those two markets we’ve been talking about [in] the past five, 10 years,” he said.
For ACE Enexor, Inc. President Rolando J. Paulino, Jr., the development of the West Philippine Sea is on top of his wish list.
“It’s the clarity on the government policy vis-à-vis the geopolitical issue that we have with our big neighbor and also the encouragement that they want to have or they want to give to foreign investors on exploring that area,” he said.
He said it is important to develop the country’s offshore resources. The Philippines relies solely on the Malampaya production field, which is said to supply up to 40% of Luzon’s electricity needs.
“I think we need to now start using the Malampaya fund to something really productive in terms of the exploration,” he said, referring to the government’s share of the revenues from the offshore gas-to-power project.
Part of the fund was used to bring down the cost of electricity.
“It’s about time now that the government looks into… whatever is remaining of that fund to start really helping some of our local explorers to actually get some funding coming from Malampaya to develop the West Philippine Sea,” Mr. Paulino said.
He cited the need for petroleum exploration given global energy security issues.
ACE Enexor is the oil and gas exploration unit of ACEN. It holds a 75% interest in Palawan55 Exploration & Production Corp., an upstream oil and gas company that holds a participating interest in Service Contract 55. Palawan55 is in the planning stage for the drilling of an obligatory well.
ACEN aspires to become the largest listed renewable energy platform in Southeast Asia. — VVS