Business Highlights

ECCP holds conversation on Mindanao power situation

April 08, 2022

Mindanao adviser for Aboitiz Equity Ventures (AEV) and former president of AboitizPower subsidiary Davao Light and Power Company Arturo Milan, has recommended short- to long-term solutions to help manage the potential increase in commodity costs in Mindanao in a presentation during the first Mindanao Business Summit hosted by the European Chamber of Commerce of the Philippines (ECCP) on March 31, 2022.

The webinar hosted by the ECCP brought industry professionals and agencies from the public and private sectors to discuss the growing industries in Mindanao including agriculture, ICT, and tourism. Having reliable energy is of utmost importance to adequately support the economic needs of the region.

“The expansion in one industry has a spillover effect in another, hence, the need to harmonize development initiatives. We have to capitalize on domestic strengths to push development further. We welcome our private sector partners in advancing the crucial sectors to reinforce the pillars of Mindanao’s competitiveness,” said Sec. Maria Belen S. Acosta, Mindanao Development Authority Chairperson in her opening remarks.

Milan stated in his presentation that while Mindanao has an excess power supply of around 1,000 megawatts, electricity costs are expected to increase due to the volatility of fuel costs in the global market resulting from the Russian-Ukraine war and foreign exchange rates.

He pointed out the need to look at demand-side management, particularly energy efficiency audits under the Energy Efficiency and Conservation Act or RA 11285. He encouraged residential consumers to practice energy conservation habits such as unplugging hot water dispensers and kettles when not in use, maximizing laundry machine loads, and switching to energy-efficient appliances to reduce energy wastage and increase energy productivity.

He also pushed for the implementation of the Wholesale Electricity Spot Market (WESM) in Mindanao. The WESM is a venue for trading electricity as a commodity in the Philippines. It encourages competition in the generation space which can lower electricity prices.

“For us to be able to take advantage of our excess supply and hopefully get lower rates on electricity, we need this WESM in Mindanao,” Milan said.

In the mid-term, Milan advocated for the rehabilitation of the hydro facilities in Mindanao, especially the Agus and Pulangi plants to increase their capacity which dropped due to age and usage. This will increase the stock of renewable energy generation in Mindanao, which is in line with the Department of Energy's Philippine Energy Plan.

Milan also called for the interconnection of the Mindanao and Visayas grids which will allow the export of excess power to other areas and attain efficiency in the different generating plants.

As the country transitions to clean, renewable energy, Milan emphasized the development of new RE technologies is the way forward. Apart from RE, he stated that building more high-capacity power plants that can be used to supply electricity for the whole country and contribute to lowering electricity cost due to the economies of scale these provide.

Citing data from the grid operator's demand outlook as of March 2022, Mindanao currently has an excess power supply of over 1,000 MW, given its current dependable capacity of 3,082 MW and only around 1,975 MW in demand.

“As the region opens up its economy following the drop in COVID-19 cases, the power demand is now at 1,975 MW and is expected to soon exceed pre-pandemic levels,” Milan said.