SITUATION OF THE

PHILIPPINES ON THE
AREA OF ENERGY

Members:
Glaban, Mary Diane
Icaro, Joanne Bernadette
Lat, Emmanuel Rouen
Pagcaliwagan, Larra Marie
Tapia, Jerich

IE-2106
A. Data and Information
Energy has always been a vital and indispensable input in any economy. It is a basic
input in industrial production, fuel for transportation and as a power source in electricity
generation. The Philippines’ primary energy supply consists of 60% fossil fuels and 40%
renewable energy. The country’s total peak demand in 2019 was recorded at 15,581 MW. As
recorded by the System Operator, the Luzon grid contributed 11,344 MW or 72.8% of the total
demand while Visayas and Mindanao contributed a share of 14.3% (2,224 MW) and 12.9% (2,013
MW), respectively. With reference to year 2018, the peak demand of Luzon increased by 468 MW
or 4.3% while Visayas and Mindanao grew by 8.3% and 8.6%, respectively.
The Philippines’ Gross Domestic Product (GDP) posted a 5.9% full-year growth for 2019,
0.3% below the previous year’s GDP, the slowest growth rate in eight years. Historical data has
shown that when the Philippines experienced an expanding economy or a positive GDP growth
rate, that expansion was directly proportional to electricity consumption. The total electricity sales
and consumption grew by 6.3%, with an absolute level of 106,041 GWh by the end of 2019 from
99,765 GWh of the previous year. As the rate of inflation slowed down to an average of 2.5% in
2019 from a noticeably higher rate of 5.2% in 2018, the country as expected experienced a boost
in electricity consumption.

2019 Power Demand and Supply Highlights

• Coal

The Philippines is largely a coal consuming country with coal having the highest
contribution to the power generation mix at 44.5% in 2015. Based on the graph,
Philippines’s Coal Consumption was reported at 16.278 TOE mn in Dec 2018. This
records an increase from the previous number of 15.477 TOE mn for Dec 2017.
Philippines’s Coal Consumption data is updated yearly, averaging 1.191 TOE mn from
Dec 1965 to Dec 2018, with 54 observations.

• Oil

The Philippines holds 138,500,000 barrels of proven oil reserves as of 2016, ranking 64th in
the world. The total oil reserves in the Philippines are less than even a single year of oil
consumption (156,585,000 barrels as of 2016), making the Philippines highly dependent on
oil imports in order to sustain its consumption levels. Our country ranks 35th in the world for
oil consumption, accounting for about 0.4% of the world's total consumption, consuming 0.17
gallons of oil per capita every day (based on the 2016 population of 103,663,816 people).
 • Electricity

Access to electricity (% of population) in Philippines

Access to electricity (% of population) in Philippines was reported at 94.86 % in 2018,

according to the World Bank collection of development indicators, compiled from officially
recognized sources. Philippines - Access to electricity (% of population) - actual values,
historical data, forecasts and projections were sourced from the World Bank on September of
2020.

B. Challenges the Philippines are facing now and in the future

The COVID-19 pandemic has exposed serious weaknesses in the design of the Philippines’
energy market. The biggest challenge for the market has been the need to identify more flexible
strategies to address dramatic changes in demand. Here are some of the challenges that we have
identified in connection with this:

• Budgetary constraints
Insufficient funding is a major constraint to power system development in the
Philippines. Private companies mostly dominate the country’s energy system. The
Philippines, even though blessed with huge potential for geothermal energy, has been
struggling living up to that potential with geothermal development. According to Allan
V. Barcena, corporate social responsibility head of Energy Development Corporation,
the lack of funding is one of the largest obstacles to attracting investors for geothermal
energy development in the country. By providing financial support to research conducted
by local experts regarding green energy technologies, the country is establishing a strong
foundation to propel its long-term development.
Aside from this, the government was hindered by budgetary and technical
constraints from importing oil to build its strategic petroleum reserve during the collapse
in global oil prices. The quarantine that was imposed in the Philippines due to Covid-19
 has forced industries and businesses to stop operating. Even though oil firms continue to
operate, the pandemic has also limited the operations of small oil gas retailers. Based on
the oil monitoring of the Department of Energy, local oil prices have gone down by P15.07
per liter for gasoline, P15.09 per liter for diesel and P19.75 per liter for kerosene year-to-
date.
One of the companies that was greatly affected by the economic impact of this
pandemic is the Pilipinas Shell Petroleum Corporation (PSPC). The Tabangao refinery
has been shut down permanently because of a slump in demand. Shell's Philippine
operations made a loss of P 6.7B pesos January-June, after booking a profit of P3.7B a
year earlier. Because of the refinery shutdown, the Philippines is now left with only one
refinery, the 180,000 b/d Bataan plant operated by Petron.

PRICE FLUCTUATION. Gasoline Prices in Philippines increased to 1.01 USD/Liter in August from 0.75
USD/Liter in April of 2020.

• Electricity losses
The rapid population growth indicates an increase of electricity demand. There is
7% increase in the energy demand in our country. The Philippines is experiencing frequent
power outage especially during summer season. Out of a population of more than 100
million people, an estimated 16 million Filipinos have no stable and sustained access to
energy - a reality that Mindanao residents confront nearly every day as they experience
rotating brownouts last 2-3 hours on average, affecting productivity and the
competitiveness of businesses. The National Grid Corporation of the Philippines (NGCP)
called for the intervention of government agencies to address the power shortage looming
over the country. While there is enough power capacity at present, yellow and/or red alerts
may be raised depending on the volume of forced outages. With the increase in power
demand, lack of new baseload plants, power plants decommissioning and longer
unplanned maintenance shutdowns of aging plants, as well as the unpredictable weather,
NGCP is urging the authorities to focus efforts on stemming what seems to be an
impending power shortage in the country, especially during the summer season.
• Heavy reliance on coal
One of the main reasons the Philippines has the highest electricity prices in the
Association of Southeast Asian Nations (ASEAN) region is because of excessive reliance
on imported coal and diesel. The Philippines has 19 coal plants all over the country,
combusting coal to produce energy. Every year, they emit more than 32.1 million tons of
carbon dioxide, the greenhouse gas with the highest concentrations in the
atmosphere, according to the Philippine Movement for Climate Justice (PMCJ). While the
rest of the world is moving away from fossil fuels and shifting to clean renewable energy,
the Philippines is moving in the opposite direction, largely because of pro-coal government
policies that allow energy companies to keep building coal facilities despite their
documented negative impacts on the climate, the environment and communities.
One of the coal power plants is located at Calaca, Batangas. Environmentalists
are calling for the closure of Calaca coal plant, saying their operations in the past three
decades have adversely affected the people’s lives and livelihood. According to Petti
Enriquez, secretary general of provincial environment group Bukal-Batangas, Batangas
residents have suffered through the hazards of the Calaca Coal Power Plant for three
decades now since Marcos time, marked by worsening health conditions of the residents
near this pollutive power plant.

BLACK WATER. Protester shows a sample of sea water darkened by coal sediment taken from
Calaca coast

• Slow adaptation to renewable energy technology

Outdated market structures are hindering the country’s ability to innovate and
discouraging adaptation to renewable energy technologies. The Philippine government
must stop its addition to coal and radically shift to renewable energy by investing in
developing its local science and technology sector and also seeking technical advice from
nations that have successfully implemented large-scale renewable energy projects.
 Installed Generating Capacity by Source in the Philippines

However, one of the stumbling blocks is the costs that come with the shift to
renewables. Some renewable projects are expensive to finance but the trick is to identify
and leverage on your strengths. The challenge for the government is how to make
renewable energy attractive to the public so that even if it initially makes them pay
additional costs, they will support it and see its benefits in the long run.
For a nation that will continue to suffer from the consequences of climate change
over the next few decades, it needs its government to ensure its health and progress now
more than ever. Developing its renewable energy sources is perhaps the most reliable
option for strengthening climate change mitigation and adaptation measures. Luckily for
the Philippines, the solution is found right within its boundaries. All that is needed to do is
to make the obvious choice.
C. Programs or policies that have been created and/or implemented,
and the proposed programs to address the challenges.

• Financing Utilities for Sustainable Energy Development (FUSED)

The FUSED Program aims to contribute in the increase access to electricity

services through financing in order to help achieve inclusive growth and poverty reduction.
At the end of the FUSED Program by 2030, it is expected to have at least funded Php 40
Billion of the estimated investment requirement for power generation and distribution in the
Philippine Energy Plan 2012-2030. It aims to increase in electricity exported to the grid,
generate or support potential additional/existing connections, avoid carbon dioxide
emissions and lessen the use of fossil fuel.

• Mindanao-Visayas Interconnection Project (MVIP)

The Mindanao-Visayas Interconnection Project (MVIP) is the link which will

connect the Mindanao and Visayas power grids, finally linking together all three major
Philippine islands to create one grid and ensure the sharing of energy sources across the
network. After only five years of careful research and planning, we have been authorized
by the Energy Regulatory Commission in 2017 to start building the MVIP. The project is set
to be completed by December 2020.

• Upstream oil and gas roadmap 2017-2040

The Department of Energy proposed an Upstream oil and gas roadmap 2017-2040
that aim to increase the indigenous petroleum reserves to 57.12 MMB oil, 5.87 TCF gas
and 56.81 MMB condensate and produce 115.37 MMB oil, 4.04 TCF gas and 45.93 MMB
condensate to contribute to the country’s energy requirement. It will attract more investors
to participate in the upstream petroleum exploration, development and production. And also
pursue international cooperation activities to keep abreast with the development in
upstream petroleum industry.

• National Energy Conservation Policy Act of 1978

The National Energy Conservation Policy Act of 1978 was a
comprehensive energy statute composed of five separate but intertwined public laws
dealing with energy conservation (National Energy Conservation Policy Act), coal
conversion (Power Plant and Industrial Fuel Use Act), public utility rates (Public Utility
Regulatory Policy Act), natural gas pricing (Natural Gas Policy Act), and a series of taxes
(Energy Tax Act) designed to discourage energy consumption and to accelerate the
transition to alternative fuels. The main purposes of the NEA were to reduce oil imports and
promote more efficient use of energy.

• National Renewable Energy Program (NREP)

The Department of Energy (DOE) led to the formulation of National Renewable Energy
Program (NREP), it sets the strategic building blocks that will help the country achieve
the goals set forth in the Renewable Energy Act of 2008.
The NREP goal is to:
1. increase geothermal capacity by 75.0 percent;
2. Increase hydropower capacity by 160 percent;
3. Deliver additional 277 MW biomass power capacities;
4. Attain wind power grid parity with the commissioning of 2,345 MW additional
capacities;
5. Mainstream an additional 284 MW solar power capacities and work towards achieving
the aspirational target of 1,528 MW;
6. Develop the 1st ocean energy facility for the country.

This is NREP consolidated RE Roadmap, they seek to increase the RE-based

capacity of the country to an estimated 15,304 MW by the year 2030, almost triple its
2010 level.
References:
• https://www.doe.gov.ph/sites/default/files/pdf/electric_power/2019-power-situation-
report.pdf
• https://www.dbp.ph/developmental-banking/infrastructure-and-logistics/financing-utilities-
for-sustainable-energy-development-fused/
• https://businessmirror.com.ph/2020/03/08/enough-power-but-brace-for-brownouts/
• https://www.researchgate.net/publication/320377583_Energy_Flexibility_in_the_Power_
System_Challenges_and_Opportunites_in_Philippines
• https://www.worldometers.info/oil/philippines-oil/
• https://www.bulatlat.com/2016/03/17/groups-want-31-year-old-calaca-coal-plant-shut-
down/
• https://www.asiasentinel.com/p/philippines-commitment-renewable-energy
• https://theaseanpost.com/article/why-philippines-so-focused-coal
• https://tradingeconomics.com/philippines/gasoline-prices
• https://www.rappler.com/nation/elections/renewable-energy-challenges-presidential-
candidates
• https://www.dbp.ph/developmental-banking/infrastructure-and-logistics/financing-utilities-
for-sustainable-energy-development-fused/#:~:text=EPS%20Registration-
,Financing%20Utilities%20for%20Sustainable%20Energy%20Development%20(FUSED
),inclusive%20growth%20and%20poverty%20reduction.
• https://ieefa.org/wp-content/uploads/2020/06/Philippines-Power-Sector-Can-Reach-
Resilience-by-2021_June-2020.pdf
• https://tradingeconomics.com/philippines/access-to-electricity-percent-of-population-wb-
data.html
• https://www.ngcp.ph/mvip/
• https://www.ceicdata.com/en/indicator/philippines/coal-consumption
• https://www.doe.gov.ph/national-renewable-energy-program