Higher power demand and a more stable political and social climate in the Luzon and Visayas regions have largely driven electricity development in the Philippines in recent decades, with these areas easily outpacing the more isolated island of Mindanao in terms of the expansion of power generation and distribution capabilities. In terms of economic growth and industrial power usage, Mindanao has historically lagged behind the more powerful economic engines to the north – a situation that has been further exasperated by the political unrest in the region in recent years.
As a result, existing power supply – much of it derived from government-owned hydropower plants – fell into disrepair as routine maintenance was put off and reservoirs filled with sediment, decreasing the output of these facilities. In addition, the dependence of hydroelectricity production on weather conditions means that sustained periods of drought, such as those brought about by El Niño, can lead directly to rolling blackouts in the province.
However, this sluggish trend is set for an unprecedented turnaround in the coming years, as a wave of new power plants being built in Mindanao is expected to provide more than enough electricity for the grid in the coming years. Installed capacity is on pace to nearly double in the next four years, with more than 1000 MW of additional coal-fired capacity set to be established in the area by producers such as Alsons Power, San Miguel Consolidated Power Corporation (SMCPC), FDC Misamis and AboitizPower. Progress is moving at such a pace in Mindanao that reserves are expected to reach 90-100% within just a few years. In September 2015 AboitizPower inaugurated the first unit of its 300-MW Therma South circulating fluidised bed, coal-fired plant in Davao, providing 132 MW (net) of much-needed baseload power to the area. A second 132-MW (net) unit was later completed in February 2016. The remaining 36 MW of nameplate generation capacity is consumed in-house. Therma South will be further expanded beyond its original 300-MW designed capacity in the coming years, with AboitizPower planning to add two more units to the site in 2017 and 2018, bringing the total baseload at the site to 645 MW.
Another aggressive player in the power market, SMCP, was also nearing commercial operations for the first 150-MW (gross) unit of its 300-MW coal-fired power plant in Malita, Davao del Sur. The company is working on a 2x150-MW circulating fluidised bed, coal-fired power plant at the site, which is also planned for future expansion to at least 600 MW by 2019.
Similarly, Alsons Power Group initiated construction of no less than three new power projects in 2016: the second 105-MW unit of the 210-MW Sarangani Energy Corporation (SEC) baseload coal-fired power plant in Maasim, Sarangani; the 15-MW Siguil River run-of-river hydroelectric plant, also in Maasim; and the 105-MW San Ramon Power coal-fired power plant in Talisayan, Zamboanga City. The company began producing power from the first unit of the SEC plant in April 2016.
The Ayala Corporation has also been active in the region through its subsidiary AC Energy, which is part of GNP ower Kauswagan, a limited partnership with the Philippine Investment Alliance for Infrastructure fund and Power Partners. The partnership broke ground on a four-unit, 552-MW (net), coal-fired power plant in Kauswagan, Lanao del Norte in early 2015, with the first unit expected to be operational by the end of 2017.
The cumulative result of this boom cycle should more than compensate for diminished demand in previous lean years, and is expected to provide ample capacity for development and growth. However, until a connection can be established to the Luzon and Visayas grids, the localised oversupply in Mindanao could leave power plant operators with a surplus for the next three or four years at least, with little recourse to export power or sell it on the wholesale electricity spot market.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.