Energy Shift Southeast Asia

Threat of power outages during elections persists due to PH’s reliance on coal

At least six coal plants had breached the planned and unplanned outage days allowed by regulators. Mechanisms, including penalties, have failed to ensure enough power supply ahead of the May 9, 2022 elections.

By Elyssa Lopez, Philippine Center for Investigative Journalism

Since 2010, the possibility of power outages has threatened the Filipino electorate’s right to vote. The 2022 presidential election is no exception.

In January, the Institute for Climate and Sustainable Cities (ICSC), a climate policy group, cautioned about a power interruption during the May 9 national and local elections as the country’s power supply outlook for the second quarter tightened. Less than a week before Filipinos cast their votes, the group said there was little to no action done to address this threat.

The problem stems from the country’s heavy reliance on coal-fueled baseload power. As of 2020, more than half or 57% of the country’s energy is sourced from coal power plants. This is not only costly, but also historically inefficient in supporting the country’s power needs.

“The noncompliance and unreliable operations of these baseload coal power plants could potentially result in an interruption in the two power systems that we have,” Jephraim Manansala, ICSC chief data scientist, said in a press conference in March.

“That is the electrical power system… and the political power system, wherein blackouts during election day and delays in transmitting voting data could severely affect the credibility of our next election,” he added.

Power situation ahead of May 9

The National Grid Corp. of the Philippines (NGCP) has issued a yellow alert notice for the Luzon grid three times since Jan. 10 after critical power plants suffered forced outages. One of these power plants remained unavailable or offline as of this writing.

Among the three power grids, the Luzon grid has the biggest power capacity, and takes up the majority of peak power demand. It is also considered the most critical as government and economic activities largely happen on the island.

To keep the country’s power grid stable, NGCP, whose task is to keep transmission assets in optimal condition to deliver reliable electricity, maintains various levels of energy reserves to keep up with fluctuating demand, aside from the standard energy requirement. Think of these reserves as spare tires in case one of the wheels, or in this case, the power generator, falters.

A “regulating” reserve is allocated to correct deviations caused by unpredicted demand. This must be readily available, dispatchable, and ideally, equivalent to 4% of peak energy demand. Think of it as the backup generator that is used on-demand when a building experiences a brownout. In the case of the power grid, the regulating reserve is able to fill up the unpredictable demand requirements in seconds.

Meanwhile, a contingency reserve is power allocated in case there is an emergency power plant shutdown. This is typically equivalent to what the largest plant online in the grid can generate, which, in the case of Luzon island, is 647 megawatts (MW).

A yellow alert notice is issued when the contingency reserve goes down to less than its ideal level of 647 MW.

A red alert is raised when the contingency reserve reaches zero, leading to power interruptions and outages.

Experts and consumer groups have raised the alarm as the yellow notices were issued even before the hot months, when demand hits its peak.

The NGCP had also warned of tight power supply during the hot months. Based on the Grid Operating and Maintenance Program (GOMP) for the year, total peak demand of 12,387 MW for Luzon is expected in the last week of May, an increase from last year’s 11,640 MW in the same period.

In the second week of May, or the week of the elections, demand is expected to reach 12,189 MW, which is also an increase from 11,238 MW in the same period last year. The ICSC said this power outlook was optimistic as it did not account for unplanned outages.

In response, power plants were instructed not to schedule maintenance shutdowns from April to June, as reflected in the GOMP. But this plan has not always been followed.

“It is when there are unscheduled shutdowns and derations, and extensions of maintenance duration, that grid operations may be disrupted enough to warrant the issuance of a grid alert status,” the NGCP said in a statement in January 2022.

Energy crunch near election day

Since 2010 or when automation was fully rolled out for the first time, watchdog groups have feared power interruptions before and after the election. It happened in 2009, during the Arroyo administration, when Energy Secretary Angelo Reyes said there would be a power shortage by the 2010 presidential election. In 2013, just a week before the midterm elections, rotational brownouts plagued Luzon. In late 2015, power distributor Meralco estimated tight power supply by the first half of 2016, likely affecting the presidential election for that year. And in April 2019, the NGCP issued seven yellow alerts and seven red alerts, which again threatened the midterm polls.

Fortunately, no election failures were declared during these elections. While there were instances of “isolated outages” in some areas, the votes were successfully transmitted.

Since the launch of automated elections in 2010, officials have sought reliable power supply for the smooth transmission of election results from vote-counting machines (VCMs). The Comelec had also ensured that VCMs are equipped with batteries. But there’s no assurance they will last until all votes have been transmitted.

For the May 2022 Elections, the Comelec issued specific instructions to the Electoral Board (EB) of each precinct in case of power failure. “The EB shall ensure that the VCM is connected to the battery and report the power failure to the DESO,” according to Resolution No. 10759, which outlines contingency procedures for the upcoming elections.

If after an hour of failure or non-operation of the VCM despite assistance from the Comelec Election Monitoring and Action Center-National Technical Support Center, the EB can announce to voters that they may either:

  • Proceed to cast their votes… with waiver of their right to be issued a voter’s receipt, as the EB will “batch feed” the ballots themselves, or;
  • Wait for the VCM malfunction to be resolved… for them to cast their votes and personally feed the ballot in the VCM.

When the former happens, “of course, the integrity of the vote may be questioned in this regard,” said Lito Averia, member of the national council of the National Movement for Free Elections (Namfrel).

“This is where the role of accredited watchers, like Namfrel’s volunteers or political party/candidate watchers, come in… However, the presence of accredited watchers cannot be guaranteed,” he added.

Coal plants violate ERC resolution

In 2020, the Energy Regulatory Commission (ERC) for the first time set stringent rules on allowable planned and unplanned outages of coal, gas, diesel, renewables, oil-fired thermal, and combined cycle power plants. The commission defines a planned outage as the state when a plant becomes unavailable due to “inspection, testing, preventive maintenance or overhaul.” Planned outages must be coordinated with the NGCP, and must be approved by the Department of Energy (DOE).

Under ERC Resolution No. 10, Series of 2020, when plants breach the allowable number of days for a planned outage, a report must be made to the ERC, which will consider whether the planned outage can be extended. These considerations will then be reflected in the GOMP.

But when a plant goes over the number of allowable unplanned outages, there will be sanctions, fines, and penalties, based on ERC Resolution No. 3 Series of 2009. According to Section 5 of the resolution, the first and second violations will merit a P100,000 fine; the third and fourth violations, P300,000; and the fifth and subsequent violations, P500,000, plus cancellation of license.

The resolution further states: “No compromise agreement shall be allowed in cases where the same violation was committed more than once.” The resolution took effect in 2021.

However, a PCIJ review of data obtained from the ICSC showed that of the 28 coal plants operating in 2021, six had breached the allowable planned and unplanned outage days under ERC Resolution No. 10, and did not follow the GOMP. Meanwhile, three others breached the limits mandated in ERC Resolutions No. 10, but managed to extend their shutdown as reflected in the GOMP.

The figures came from the daily market data published on the website of the Independent Electricity Market Operator of the Philippines (IEMOP), which serves as the facilitator of the Wholesale Electricity Spot Market (WESM). The latter is where buyers (power distributors like Meralco) and sellers (power generators) may trade electricity as commodities.

To identify the days the coal power generators became unavailable, the ICSC plotted the daily transactions of power generators and sellers on WESM.

ERC data showed that 16 power generation companies were penalized in 2021 for violating Resolution No. 10. Of the 16, four coal plants, which were also found in the ICSC data to have breached the allowable unavailable days, are in the critical Luzon grid. The rest of the companies on the ERC list are not in the Luzon grid. PCIJ has no additional information about the two other coal plants identified in the ICSC data.

The ERC imposed penalties, ranging between P135,400 to P4.02 million, on eight of the 16 cases. It has not promulgated a decision for the other half.

The table below shows data collated by the ICSC from the Independent Electricity Market Operator of the Philippines, which covers the number of unavailable days for the whole of 2021.

Data obtained by PCIJ from the ERC show a different and lower number of unavailable days because the regulator only considered the plants’ unavailability for the first half of 2021. According to ERC, Calaca Units 1 and 2 breached the total number of unplanned outage days allowed by 5.24 and 96.2 days, while Sual Units 1 and 2 went beyond 10.68 and 96.2 days. Meanwhile, SLPGC, which also has two units, were collectively found to have gone over the cap of 0.54 day.

Penalty, peanuts for companies

Experts said the penalties had little to no effect on erring power generators because they continued to earn huge profits.

For example, from May 31 to June 1, 2022, when four of the biggest power plants in the Luzon grid, namely: SEM-Calaca Unit 2, Sual Plant Unit 2, GNPower Mariveles Unit 2, and the Pagbilao Unit 2, went on unforced outages, all power generators that sold electricity in the WESM earned a billion pesos more than their average earnings due to increased demand, the ICSC found.

“Bulk of our power supply comes from coal… so majority of those earnings went to them,” ICSC chief data scientist Manansala said.

Gerry Arances, convenor of the Power for People Coalition, also wrote a petition to the ERC to impose higher fines and penalties on the erring power generators.

“The fines and penalties imposed cannot serve their intent to deter future protracted forced outages if the parent holding companies of these erring power plants are also benefiting from WESM transactions through their other subsidiary generation companies,” Arances said in People for Power Coalition’s petition to the ERC filed last April 8.

Who owns the coal companies in the Luzon grid?

San Miguel Global Power Corp., the power arm of one of the most influential conglomerates in the country, San Miguel Corp., owns the most coal plants in the Luzon grid, with nine. The company operates the largest plants in the grid, Sual Units 1 and 2, which have capacities of 647MW each. According to SMC Global Power’s 2021 Annual Report, the Sual power plant accounted for 21% of the company’s power capacity.

San Miguel CEO Ramon Ang is a known political donor. In 2016, the executive funded President Rodrigo Duterte’s campaign.

The second largest supplier in the Luzon grid is Aboitiz Power Corp., with seven power plants. It owns the newest entrant to the grid: GN Power Dinginin Plant Units 1 and 2. Unit 1 started commercial operations in the second half of 2021, while Unit 2 has not started commissioning.

Aboitiz Power also has plants in the Visayas and Mindanao grid. It is the power company of Aboitiz Equity Ventures, whose CEO, Erramon Aboitiz, was among the 50 richest in the Philippines declared by Forbes magazine in 2020.

Meanwhile, AC Energy Inc. (ACEN), a subsidiary of the oldest conglomerate in the country, Ayala Corp., co-owns six plants in the grid with Aboitiz Power Corp. and another with the Phinma Group. Jaime Zobel de Ayala, chairman of the Ayala Group, was the fifth richest Filipino on the Forbes 2021 list.

However, in 2020, ACEN said it would fully divest from its coal businesses by 2030. Last year the company said it would be fully invested in renewable energy by 2025.

Another conglomerate with power plants in the Luzon grid is DMCI Holdings Inc. The company also has interests in property development and mining. In 2021, the Consunji family, which owns the company, was the 13th richest on the Forbes 2021 list, with a net worth of $1.8 billion.

Isidro Consunji, DMCI’s chair and president, donated to the campaign of presidential candidate Renato de Villa in 1998 and political party Bagumbayan Volunteers for a new Philippines in 2013, campaign finance reports showed.

The other coal plant owners in the Luzon grid are Asia Pacific Energy Corp. and Anda Power Corp.

Effect on power supply 

When the ICSC released its analysis in January, it sought from authorities the full assurance of the complete availability of power plants, and the completion of committed power plant projects, especially the Aboitiz Power Corp.-owned GN Power Dinginin Plant Unit 2.
The Aboitiz plant can contribute 668 MW to the grid once fully operational, more than the NGCP’s required contingency reserve.
But the plant’s full operation will be delayed, and its sister facility, GN Power Dinginin Plant Unit 1, continues to experience unplanned outages this year. The latter was also one of the plants that went offline during the three times the NGCP issued yellow alert levels this 2022.
“What is available on the grid today is only enough to suffice for the April 2022 demand,” Manansala said.

Why is coal unreliable? 

The stability of the power grid lies in the balance of the demand and supply of power. Two factors, the load requirement of consumers and the generation output of power companies, vary at different times of the day. Round the clock, however, there is a minimum required demand for constant electricity as needed by various consumers, from hospitals to households. This is baseload power.
When demand for electricity increases, for example, during daytime when offices and schools are open, peak load power is then required for dispatchment. Intermediate load power is dispatched when demand is just above baseload requirements, and below peak demand.
How the grid operator sources the requirements of baseload, intermediate, and peak power varies per country. A policy paper commissioned by the German Federal Ministry in support of the Philippine Climate Change Commission said: “Traditionally, nuclear, lignite and hydro power plants cover the baseload every hour of the year whereas hard coal and gas-fired power plants provide intermediate load. Peak load is provided by gas and diesel plants for a few hours during the day.”
But in the Philippines, where majority of power plants run on coal, the NGCP has no choice but to use it as the source of baseload power. “And even intermediate load requirements are provided by coal power plants,” Manansala said.
This forces coal power plants to perform at the extreme ends of their capacities. “There are studies that say these ‘cycling’ operations… the ramping up and down of power outputs [based on consumer demand during the day and night] of coal power plants, introduce wear and tear in their facilities,” Manansala said. He compared power generators to glass bottles – when subjected to extreme heat and cold, the material will be compromised, and eventually crack under pressure. 

In the case of power plants, the “cycling” leads machines to falter, and at times, shut down, causing unscheduled outages. They become unreliable.

Renewable options 

The expanding availability of renewable energy supplies offers an opportunity for the country’s power grid to move away from coal-fueled baseload power. As variable renewable energy sources depend on natural factors, like sunshine and wind, they can contribute to any load class requiring supply at the time of availability of the respective resource, according to the German Federal Ministry.

The Renewable Energy Act, passed in 2008, should have helped the country reduce its dependence on coal-fired power plants. But its implementation leaves a lot to be desired, experts said.
As of 2020, the latest data available, only 21% of the country’s power supply came from renewable energy (RE) sources, with more than half from geothermal power plants. This was a downgrade from RE’s 2006 contribution, which reached as high as 46.1%.
Groups like the ICSC are pushing for the next presidency to prioritize RE. “This is to inform our future leaders to change our power paradigm to a more distributed, flexible power system… Let’s plan our system according to our geography, to our weather patterns, and the consumption patterns that we’ve known,” ICSC energy transition adviser Alberto Dalusong said.
The DOE has sought to expand renewable energy sources. In its proposed National Renewable Energy Program (NREP) covering 2020 to 2040, the DOE aims to increase RE’s contribution to the grid by up to 35% by 2030 and 50% by 2040.
In October 2020, it announced a moratorium on the establishment of new coal-fueled power plants. However, the announcement wasn’t retroactive, so plans approved before the announcement could still be set up.
Some civil society organizations and environmentalists have raised alarm about the possible wide stream adoption of natural gas — a form of fossil fuel — as a source of baseload power, instead of renewable energy sources that are more available. 

“That 35% goal [of RE contribution] by 2030… it’s lousy, and not an ambitious plan,” Arances added.

Illustration: Joseph Luigi B. Almuena
Infographics: Elyssa Lopez