Energy Transition Power Generation BESS

No generation technology can stand on its own

May 02, 2024

No generation technology can stand on its own.

It will always be part of a larger system composed of other technologies — be it with fellow power producing or energy storage units and even ones beyond it like in transmission, distribution, and behind-the-meter systems (e.g. rooftop solar and electric vehicle batteries). As one system, its main purpose is providing sufficient and reliable electricity to those who need it. But taking into account intermittency and seasonal factors, when a part of the system slows down or, worse, stops, the other parts would ideally kick in to shoulder the load.

Earlier this year, we already foresaw the likely scenario of low water inflows amidst an El Niño and, looking at it now, it did adversely affect the generation of our hydro plants. Most recently, this has been felt. Yellow and red alerts were declared in the country’s main grids because supply margins — already thin as they were without hydro power and with higher demand due to the summer heat — became insufficient as forced outages by other power plants exacerbated the situation. We saw a vulnerable system at work, exposing the fact that many of the country’s power plants are aging and are flanked by insufficient reserves to deal with known and unknown stressors.

One of the lessons here is that we need to further grow and diversify our portfolio of generation capacities. Electricity demand is projected to increase by 6.6% annually until 2040, which in turn is expected to support a growing economy. It is necessary that supply should be able to meet demand and more. A comfortable margin, or having the right amount of reserves, ensures an uninterrupted flow of electricity despite a variety of stressors, thereby stabilizing prices and mitigating blackouts that result in high economic losses.

Within the context of the impending depletion of Malampaya and the moratorium on greenfield coal power plants, we still see the nation-wide requirement for stable electricity that also balances our need to decarbonize. This is where liquified natural gas or LNG comes in. It is a reliable source of power — generating large quantities of electricity and having a high capacity factor — but is less carbon intensive than coal. Since LNG-powered turbines are also able to ramp up output more quickly, it provides more flexibility in power production, meeting the power demand when sunlight for solar, wind for wind, and water for hydros become irregular for consistent power generation.

I reiterate: no generation technology can stand on its own.

We need LNG, particularly now when more variable renewable energy is penetrating the grid. While some may find it ironic that we are using fossil fuels to bring in more renewable energy, we need to look at it holistically. Addressing climate change is necessary but it is not the singular urgent concern facing us today. Developing countries like the Philippines need to industrialize and get their impoverished people out of poverty. It is simply not possible to do that without a diverse energy mix that prioritizes energy security, wherein generation technologies balance each other's shortcomings. No generation technology can stand on its own.

But the sheer task of building an LNG station — with terminals, storage facilities, regasification units, and pipelines — is no walk in the park for any single power producer. As such, economies of scale, or spreading the costs and risks across different players in the industry, is necessary in order to lighten the weight, so to speak, and eventually make prices more competitive as well. (Ideally, no one in the power industry should also stand on their own in a monumental undertaking such as this).

To be clear, LNG is no panacea. By no means is it the solution to everything. To be frank, no singular generation technology is. Again, no generation technology can stand on its own. It will always be part of a larger system composed of other technologies and dependent on contexts.

Energy transitions are also subject to the times they are in. Past and present generations have witnessed industrialized society’s energy transition (or should I say addition?) from biomass to thermal and now to renewable energy technologies. In that context, LNG-to-power will be a transition technology to a cleaner, more sustainable future that we all collectively hope for. The task of finding and establishing the “perfect” power mix is a constant, perpetual pursuit after all.

Chords is the monthly column of Emmanuel V. Rubio — biker, music lover, and President and CEO of AboitizPower. It references his passion for playing the guitar and how the combination of notes & the subtleties of strumming produce unique melodies when the sounds of individual strings are blended together, much like the elements of industry, corporations, and life.