Power Sector Action Plan

in the Philippines

March, 2017
 Philippine Power Sector Analysis (1) Supply and Demand Outlook
 Along with economic growth, power supply and demand continue to increase. In order to
meet future demand growth, it is necessary to ensure sufficient supply.
 According to DOEʼs estimate, investment in mid-merit and peaking power supply has not
increased sufficiently.
Philippine GDP Growth GDP and Electric Power Consumption Electricity Demand and Supply
10 5000
estimates 1000 40000
8 4500 900
35000
6 4000 800
4 3500 30000
700
2 3000 Eletric Power Consumption 600 25000
(kWh per Capita)
0 2500 500 20000

MW
‐2 2000 400
15000
‐4 1500 300
10000
‐6 1000 200

100 5000
‐8 500
‐10 0 0 0
0 1000 2000 3000 4000 5000

2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019

GNI per Capita （USD)
Gross domestic product per capita, current prices (U.S. Capacity Addition Comitted
dollars, RHS) (Source)
Source) World BankWorld Bank
Gross domestic product, constant prices （percent  Existing System Peak Demand

change, LHS) (Source) IMF (Source)DOE

 Suggestion: Promote introduction of power generation equipment with high load following
capability such as LNG power generation and pumped storage power plants for mid-merit
power and to supply peaking.
1
Philippine Power Sector Analysis (2) Electricity Tariff
 In recent years, the electricity tariff in the Philippines has decreased with resource
prices, but it is still the highest price in Asia.
 Also, the addition of FIT allowance introduced in 2015 is a factor for the future rise.

Difference in power generation efficiency between coal-

fired power plants in Japan and the Philippines 2015 Index (Electricity Tariff / GDP per Capita)
1.2

0.8

0.6

0.4

0.2

Jakarta
Bangkok

Dhaka
Beijing
Shanghai

Kuala Lumpur

Da Nang

Vientiane

Karachi
Seoul

Guangzhou

Batam Island

Cebu
Hanoi

Yokohama
Ho Chi Minh

Colombo
Yangon

New Delhi

Mumbai
Singapore

Manila
(Source) METI (Source) Prepared by EY based on JETRO data

 Suggestion: Improve power generation efficiency by rehabilitation of power generating facilities

which have decreased in efficiency, thereby reducing power generation costs.
 Suggestion: Improve power generation efficiency through human resource development for the
purpose of improving operation technology and operation management, thereby reducing
power generation costs.
2
Philippine Power Sector Analysis (3) Electrification Rate
 Electrification rate per administrative district (barangay) is almost 100%. However, on a
customer base, there are areas with low electrification rates. The electrification rate of
Mindanao is especially low at 71%.
Electrification level by region, as of 2014
Barangays Connections
Energized/ Energized/
Region
Potential Completed % Potential Completed %
To date To date
Ⅰ 3,027 3,027 100% 976,400 925,231 95%
Ⅱ 2,369 2,369 100% 770,500 711,072 92%
・Manila CAR 1,112 1,112 100% 379,500 332,086 88%
Ⅲ 2,236 2,236 100% 1,367,300 1,316,469 96%
Ⅳ-A 1,946 1,945 99% 737,900 703,457 95%
Ⅳ-B 1,416 1,416 100% 622,700 511,974 82%
Ⅴ 3,410 3,408 99% 1,055,200 939,946 89%
Total Luzon 15,516 15,513 99% 5,909,500 5,440,235 92%
Ⅵ 3,209 3,208 99% 799,200 739,353 93%
Ⅶ 2,156 2,156 100% 748,100 718,246 96%
Negros Island Region 1,219 1,219 100% 821,000 732,108 89%
Ⅷ 4,372 4,372 100% 874,100 749,693 86%
Total Visayas 10,956 10,955 99% 3,242,400 2,939,400 91%
Ⅸ 1,865 1,865 100% 654,000 463,960 71%
Ⅹ 1,843 1,843 100% 750,700 625,762 83%
XI 896 896 100% 555,600 425,380 77%
XII 1,230 1,230 100% 892,000 558,142 63%
ARMM 2,447 2,441 99% 483,600 171,904 36%
・Davao CARAGA 1,310 1,310 100% 593,600 549,297 93%
Total Mindanao 9,591 9,585 99% 3,929,500 2,794,445 71%
(Source) SEC Total Philippines 36,063 36,053 99% 13,081,400 11,174,080 85%

 Suggestion: Strengthen power distribution network for areas with low electrification
rates.
 Suggestion: Introduce renewable energy (i.e. geothermal, wind power) in regions rich
with energy resources. 3
Philippine Power Sector Analysis (4) Balance of Power sources
 Balance between base load, mid-merit, and peaking power is required for stabilizing
electricity supply and demand.
 Moreover, improvement of self-sufficiency rate is necessary to enhance energy security.

Additional power supply capacity required by 2030

Power generating capacity by energy source (2014)
Unit（MW) Luzon Visayas Mindanao Total
0.25% 0.20% 0.02%
Base load 4,320 1,968 2,100 8,388
Mid-merit 4,800 1,500 1,500 7,800
11.83%
Coal
Peaking 950 150 50 1,150
Oil Total Grid 10,070 3,618 3,650 17,338
13.34% Natural Gas
Capacity
Total power  Unit（MW) Existing Committed
generating capacity 42.78%
Geothermal Power
Addition
Hydraulic Power
77,260,997MWh
Wind Power
Base load 11,277 3,091 8,388
Solar Power Mid-merit 0 876 7,800
Biomass Peaking 2,600 111 1,150
24.19%
Base load：coal, geothermal, natural gas, biomass, hydraulic
7.39%
Mid-merit：natural gas etc.
Peaking：oil, solar power, wind power
(Source) DOE
(Source) DOE “Energy Programs and Investment Opportunities”
 Suggestion: Utilize imported LNG as alternative to future depleting domestic natural
gas to improve balance currently dependent on imported coal.
 Suggestion: Utilize domestic coal to improve energy self-sufficiency rate.
4
Philippine Power Sector Analysis (5) Disaster Resiliency
 The Philippines is the third-most-vulnerable country to natural disasters in the world
(World Risk Report 2016), and reducing disaster risks for power sector is necessary.

World Risk Report 2016: Inadequate Infrastructure Pushes Up the Risk of Disaster

(Source) United Nations University

 Suggestion: Japan's efforts, such as enhancing electricity distribution network, can

be utilized to reduce natural disaster risks, as Japan also has valuable experience
dealing with continuous natural disasters. 5
Proposal for overcoming obstacles
(1) Improve power generation efficiency by renovating existing power
plants
 Improve power generation efficiency by rehabilitation of existing coal-fired power plants
which have decreased in efficiency, and by improving operation management, thereby
reducing power generation costs.

Select model plants which have decreased Package Proposal

power generation efficiency

Implementation of F / S

Plant Rehabilitation of power Improvement of

Owner Coal fired power plant X generation equipment operation management

Improve power generation efficiency, Reduce power

generation cost

Apply to similar plants to improve power generation

efficiency everywhere in the Philippines.
6
Proposal for overcoming obstacles
（2）Introduction of renewable energy etc. by utilizing abundant natural
resources
 Improve electrification rate with natural energy such as geothermal and wind power,
mainly for island areas. Improve energy self-sufficiency rate by utilizing domestic coal.

Reducing power
generation costs
through rehabilitation
of existing  hydroelectric
power plants which have
decreased in efficiency
Geothermal 
resources
Utilize preliminary 
extracted geothermal  JICA
Geothermal  Two-Step
resources wells to improve 
electrification rates Loans
in island areas
Suitable for 
wind power
Introduce wind power 
generation facilities 
Geothermal 
resources to improve 
electrification rates
in island areas

7
Proposal for overcoming obstacles
（2-1） Improve power generation efficiency by renovating existing power
plants
 Improve power generation efficiency through rehabilitation of existing hydroelectric
power plants which have decreased in efficiency, and by improving operation
management, thereby reducing power generation costs.

Select model plants which have decreased Package Proposal

power generation efficiency

Implementation of F / S

Plant
Owner Hydroelectric power plant X Rehabilitation of power Improvement of
generation equipment operation management
Improve power generation efficiency
Reduce power generation cost
Loan JICA
Two-Step
Apply to similar plants to improve power
Loans
generation efficiency everywhere in the
Philippines. 8
Proposal for overcoming obstacles
（2-2）Improve electrification rate of islands by utilizing preliminary
extracted wells
 The Philippines is one of the world's foremost geothermal resource countries and
geothermal power plants are located mainly in islands.
 To improve electrification rate of the islands, utilize the preliminary extracted wells in
existing geothermal plants

Package Proposal

Implementation of F / S

Geothermal 
resources
Geothermal
Geothermal  Power Plant
resources Owner

Loan Introduction of Improvement of

geothermal power plants management ability
Geothermal 
resources

JICA Effective use of geothermal

Two-Step resources improves electrification
Loans rate
9
Proposal for overcoming challenges
(2-3) Promoting introduction of wind power generation facilities in islands

 Improve electrification rate by introducing wind power generation for islands with stable
wind conditions and fewer typhoons

Package Proposal

Surigao●
Suitable for 
wind power Implementation of F / S
Cagayan de Oro●

●Davao
●Zamboanga

Introduction of Improvement of
wind power plants management ability

Loan JICA Effective use of natural energy to

Two-Step Improve electrification rate
Loans
Business owner 10
 Proposal for overcoming challenges
(3) Improve electrification rate and reduction of natural disaster risk
through enhancement of electricity distribution network
 Strengthen power distribution network development capacity in areas with low
electrification rate, mainly in Mindanao.

 Also, enhance disaster resiliency of power distribution network and reduce natural-
disaster related risk.
Package Proposal

Quality control of equipment,
Implementation of F / S Human Resource Development 
for Disaster resiliency
Electric
Cooperatives (EC)

The National Electrification

Administration（NEA）
Grant of maintenance  equipment  Grant of equipment 
for distribution networks for utility pole construction
Grant Aid
from Japan*
*JICA Two-Step Loan is Improvement of electrification rate
The Government of the Philippines another possible option reduces natural disaster risks 11
Proposal for overcoming obstacles
(4) Improvement of energy balance through introduction of LNG terminal

 Malampaya gas field is responsible for 1/3 of power supply in Luzon Island, but
production volume is expected to decline from around 2024.
 Introduce LNG base and utilize imported LNG to improve energy balance.

Luzon Island Manila Package Proposal

Gas-fired
power plant
Providing operation 
Implementation of F / S management technology, 
Support for demand development
Government organizations 
of the Philippines
Private Companies
Malampaya
gas field

Financial Introduction of LNG base Introduction of satellite base

Submarine gas pipeline support
by Japan
Improvement of energy balance,
(Source) Malampaya HP 12
Improvement of electrification rate
Power Sector Action plan in Mindanao
Improve power generation efficiency of
main power supply which occupies 20 %
of total power demand in Mindanao
Agus Hydroelectric Power Plants
· Operated by National Power Corporation (NPC). Surigao● Wind power generation
· Account for 70% of hydroelectric power
in Calaga area
generation in Mindanao. (Hydroelectric power
· Introduction of the first
generation is responsible for 30% of power
Japanese wind power
supply in Mindanao.)
●Cagayan de Oro generator in the Philippines.
· Power generation efficiency will be improved by
· Expected to be the first
rehabilitation of the oldest power plant, No. 6.
wind power generation
project in Mindanao.
Improvement of · There are no power plants
electrification rate for ●Zamboanga ●Davao in Caraga area including
areas with extremely Butuan City, and electricity
is supplied from Irrigan City,
low electrification which is far away. High costs
rate (36%) due to long distance
Enhancement of electricity distribution network transmission and power
transmission loss are
project in Bangsamoro area (Grant aid)
problems.
· Providing maintenance equipment for distribution network
(work vehicles, utility poles, distribution lines, ground wires
and pillar transformers) to Electric cooperatives (EC) in Introduction of the
Conflict-Affected Areas in Mindanao (Bangsamoro area), first wind power
stabilizing the power supply in the area. generator in Mindanao
· To be implemented from April 2017.
13
Japanʼs proposed solutions
 Some of the measures which will solve the problems are: introducing following power
plants, transmission & distribution systems and energy facilities, utilizing technology,
and capacity building etc.
 Japan is prepared to provide different forms of assistance by utilizing technology and
know-how to solve problems facing the power sector in the Philippines.

１．Improve generation efficiency and Stabilize Power supply / demand

 Rehabilitation of existing low-efficiency coal-fired power plants
 Human resource development aimed at improving operational technology and operational
management
 Introduction of LNG power plants and pumped storage power plants for mid-merit and peaking
power supply
 Improvement of disaster resiliency of power distribution network

２．Improve Energy Security and Self-sufficiency Rate

 Promoting introduction of LNG terminal
 Effectively utilizing clean coal technology with domestically produced coal
 Promote introduction of renewable energy such as geothermal and wind power

３．Improve Electrification Rate

 Enhancement of electricity distribution network in areas with low electrification rates
 Effectively utilize domestically produced coal with clean coal technology (Re-listed)
 Introduction of storage batteries to maintain the stability of transmission networks with the increase
of renewable energy 14
[Financial scheme (tentative)]

JICA Loan
JICA
Two-Step Technical
Loans Cooperation
Business owner

・ Overview of the Project

(1) Two-step loans: Preferential Terms could be applied to the Yen Loan. Funds pass through financial
institutions before the end-beneficiaries (e.g. IPP operators) receive them. Eligible subprojects are
to be discussed with JICA during Appraisal Mission.
(2) Technical Cooperation could follow.

15
 Introduction of high quality power plants to the Philippines nationwide.

Action 1 Diagnosis of selected Model Plants (Starting from April, 2017)

Experts from Japanese companies will visit power plants selected as Model Plants,
diagnose issues in power generating efficiency, and propose a plan for rehabilitation in
terms of high quality infrastructure (e.g. Life Cycle Cost), supported by METI subsidies.

Action 2 Rehabilitation of Model Plants (from 2018)

JICA could support the implementation of rehabilitation of model plants through a two step
loan scheme.

Action 3 Applying practice of ʻhigh quality infrastructureʼ to plants in addition to Model

Plants (from 2019)
JICA could support the rehabilitation of those plants, in addition to Model plants, complying
with standards of high quality infrastructure through two step loan scheme.

Action 4 Institutionalizing ʻhigh quality infrastructureʼ among all IPPs (Until 2021)
Application of ʻGuideline of high quality infrastructureʼ to all newly built and/or rehabilitated
plants by all IPPs during approval procedure by ERC (Electric Regulation Committee).

16
An Example of standards of high quality infrastructure

（Source）APEC Guideline for Quality Electric Power Infrastructure

17