A drive to reduce electricity shortages in the Philippines will see the country set out to become the largest geothermal energy producer in the world in line with efforts to increase its focus on renewable energy sources.
The need for the Philippines to develop its energy sector was highlighted recently by the World Bank, which raised its 2013 forecast for the country on the back of prudent economic policies and political stability, but also pointed to key issues requiring action. Electricity distribution stands at 70.18% of households but access in rural areas is particularly low.
Well aware of the deficiencies in the power system, the government is preparing to introduce a wide-ranging initiative aimed at improving energy security that has at its core a focus on renewable sources. The Energy Plan 2012-13, which will be rolled out by the Department of Energy (DOE), is set to expand the use and production of renewable energy, while also driving forward hydrocarbons exploration and overhauling the electrical network. Other targets include promoting investment in the energy sector, together with the implementation of new low-carbon and energy efficiency policies.
In line with its plans to increase the part played by renewable energies in the power supply, the government has set a goal of spearheading geothermal energy production globally. This involves increasing its installed capacity from the current 1.902 megawatts (MW) to 3.307 MW by 2030. “Our plan is to be the largest producer of geothermal energy,” Ariel D Fronda, chief of the DOE’s geothermal energy management division, has said. “To do so, we will need around 1.405 MW of additional capacity by 2030.”
The Philippines is the world’s second-largest geothermal producer, ranked below the US and above Indonesia, Mexico and Italy.
The DOE is optimistic that the Philippines will manage to secure the $3bn-$5bn investment needed to reach its goal, citing the considerable potential for developing geothermal energy resources. High among its priorities will be attracting funding for research and development in the segment, while ensuring existing power plants are fully optimised. “Right now, we have committed projects through 2015 and we have lots of pending contracts that we are evaluating,” Fronda told local press. He added that the DOE expected to award pending contracts before the end of the year.
Several private sector players have already stepped up their involvement in the geothermal energy segment, including Philippines-based Basic Energy Corporation, which plans to invest $1bn in geothermal projects once a partnership with a Chinese corporation is secured.
Basic Energy has also allocated $1bn for oil and gas exploration projects, in a move that reflects the government’s efforts to build the renewable segment while maintaining hydrocarbons as the leading energy source.
However, industry players point out that for the oil and gas sector to move forward, the Philippines will need to address the growing problem of oil smuggling. Highlighting the issue to the local press, Roberto Kanapi, vice-president of communications for Shell in the Philippines, said figures indicated that oil smuggling could be depriving the government of up to $750,000 annually in revenues. Hot spots include Subic Bay Freeport, a tax and duty free zone, and the Phividec Industrial Estate in Misamis Oriental.
Companies are waiting for the recently appointed energy secretary, Jericho Petilla, to indicate how he plans to address the problem, while in a separate move, the Department of Finance announced an anti-smuggling pilot programme that will see kerosene and diesel shipments arriving at the ports of Subic, Clark, Batangas and Bataan marked.
The DOE has also proposed a P500m ($12.31m) plan to better track imports using an online X-ray imaging system. The initiative is set to be rolled out first at two pilot sites, Manila Port and the Manila International Container Port.
While in the long term the government is also considering restarting its nuclear energy programme as an additional means of supplementing the electricity supply, the focus for the next few years remains firmly on developing and utilising renewable programmes to meet demand and promote economic growth.