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Energy reserves and security

energy reserves and security 816x663 - Energy reserves and security

During the media briefing by the Independent Electricity Market Operator Philippines (IEMOP) last week, Aug. 11, data on electricity supply, demand, reserves and prices for the Luzon-Visayas grids from March to early August this year were shown, covering the various  COVID-19 lockdown periods (ECQ, MECQ, GCQ).

I compared the year-on-year (yoy) data and the good news is: One, while average demand in April-June declined by -14.7% (which correlates with the -16.5% GDP in the second quarter), the decline in July was only -3.5%. Two, average prices at the Wholesale Electricity Spot Market (WESM) in April-June declined by -70.8% and continued with a July decline of -58%.

The bad news, however, is that electricity demand in July (10,135 MW) was lower than June (10,174 MW), meaning the month-on-month (mom) economic activities are still flat or negative. The -58% decline in the July price was due to increased power supply compared to both July 2019 and June 2020.

And that is why we should have an ever-rising power supply, to stabilize if not reduce electricity prices, and ensure more power stability and predictability. Not restricting or killing some power supply to promote energy cronyism.

I refer to the endless lobbying to promote the intermittent, unstable, unreliable renewables especially wind and solar. The lobbyists promote more use of batteries to solve intermittency problems — fine, but this will lead to higher prices because those huge batteries are not cheap.

A persistent narrative why countries should go for quick energy transition from fossil fuels and nuclear is the fear of “imported fuel supply insecurity” and hence, the need to rely on domestic, indigenous renewables. For the Philippines in particular, the scare mongering centers on “supply insecurity of imported coal” as we have indigenous natural gas (but this will soon be depleted).

Is imported coal supply insecure and dangerous?

If one uses emotion and climate alarmism, the answer is “yes.” But if one uses reason and hard facts, the answer is “no.”

I checked the proven reserves worldwide for coal, gas and oil, and the computed Reserves-to-Production (R/P) ratio. This ratio shows the number of years that those remaining reserves would last if yearly production were to continue flat. The proven reserves of coal is nearly three times the reserves for gas and oil, and two countries with huge coal reserves are not far from the Philippines — Indonesia and Australia (see the table).

Table Oplas - Energy reserves and security
Other major producers are: a.) Natural gas: Qatar with 12.4% share, R/P 139 years; and Turkmenistan, 9.8% share, R/P 308 years; b.) Oil: Iraq with 8.4% share, R/P 83 years; Kuwait, 5.9% share, R/P 93 years. Countries in the table with 500+ R/P ratio means they have very small production and consumption relative to their reserves.

The Philippines in 2019 has a total installed power capacity of 25.5 gigawatts (GW), of which 41% comes from coal, 17% is oil-based, 15% hydro, 13.5% natural gas, 7% geothermal, and 7% variable renewable energy (VREs, solar+wind+biomass).

But in actual electricity generation, out of 106.0 terawatt hours (TWH) in 2019, 55% came from coal, 21% from natural gas, 10% geothermal, 11% from hydro and oil-based, and only 3% from VREs (source: DoE Power Statistics 2019).

So while the pro-VREs and anti-coal lobbyists want to kill coal as soon as possible, they enjoy 24/7 electricity mainly from coal power plants because their beloved wind-solar can contribute only about 2% of total power generation.

The VREs lobby also silently promotes natural gas. They are silent about the fact that global gas reserves and security are much lower than coal reserves as shown in the table above. And while they are loud in opposing carbon emission of coal plants, they are silent about methane emission of gas plants. Both CO2 and CH4 (methane) are greenhouse gases (GHGs) but the latter has a bigger, about 28 times, potential as GHG.

California currently has continuing power instability with actual blackouts. It has the US’s biggest concentration of solar-wind farms, which explains why it has the US’ highest incidence of blackouts. In 2008-2017, California had 4,297, Texas 1,603, New York 1,528, Michigan 1,369…

The Philippines should never follow the example of California. The Philippines should have market- and customers-based power generation mix, not environmentalists- and politics-based power development.


Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers

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