Challenge to new energy chief: Regroup with different level of thinking

The energy chief recently made a quick announcement with regard to lowering the power rates. His approach was to assign a team during the first 100 days, to look into the existing service contracts and methods of bringing the cost down. 

A basic step before solving a problem is to focus on defining the problem not the symptoms. I’ve tried to completely define the problem which involves the inability to lower the power rates, but struggled in doing so. And that’s because the problem is multifaceted and intertwined with other problems in a complex manner. 

For such a complicated problem, we can start with Albert Einstein’s advice when he once said, “We cannot solve our problems with the same level of thinking we used when we created them.” A brilliant idea because oftentimes we’ve created problems by being careless or naive about what the consequences would be. Sometimes expediency, incompetence on the matter and corruption get the better of us.

Before doing anything else, Department of Energy Secretary Alfonso Cusi and his team should revisit the problems created during the past administrations. After a full understanding of the missteps, the team should apply a different level of thinking in forging ahead to complete the assignment. 

Whether it started during the original NPC founded in 1936 by President Manuel Quezon or the DOE created in 1992 by President Ferdinand Marcos with the NPC attached, the underlying problem has always been resource inadequacy. 

In general, resource adequacy requires committed generating capacities no less than 115% of peak demand, to ensure system reliability to serve the consumers. That means sufficient reserve margins in the event of unexpected problems or loss of generating plants, especially in the case of the seasonally-limited intermittent renewables such as hydro, solar and wind.

Planning the reserve margins depends on the energy source mix and gets complicated by the seasonal differences and regional natural resources. For instance, the hydro-dominated Mindanao requires more detailed evaluation of hydro resources. Appropriate de-rating from the nameplate or rated capacities during the dry-season and the required baseload backup power based on past experience, must be applied.

So did they understand then what the problem was? Simply put, did they honestly ask themselves the question, “Do we always have enough power supply to meet the demand?”

I think they did, but unfortunately their actions resulted in a series of self-inflicted problems that supported rather than solved the resource inadequacy. So what was the level of thinking then?

Remember, the law of supply and demand is always in play. When the supply resource is inadequate, the price of electricity will rise. Conversely an oversupply will drop the price. 

The DOE was aware of this from the beginning of their existence, and so did the attached NPC. With our long history of corruption in government that ushered the EDSA event and the subsequent political and economic turmoil, it’s more than a daunting task and unproductive to unravel all the events leading up to where we are today. 

It’s more appropriate to just look back at the self-inflicted problems they’ve created.

Self-inflicted problems

Self-inflicted problems are sometimes the most difficult to figure out because it’s either you’re in denial or the adverse effects get to you after much worse damage had muddied the water. 

At the DOE, such problems had occurred in these areas:

Understanding of the existing generating capacities. Assumption of an “all year round” available capacity despite knowing that during the dry season, large hydros in Luzon and hydros representing more than half of Mindanao’s capacity, will experience low water levels in the dams, lakes and rivers, causing many to more likely shut down. The default solution was scheduled brownouts that instantly raise the power rates.

Failure in resource planning. Previous resource adequacy planning did not properly consider the energy source mix, the true seasonal impacts of intermittent renewables in each region and the restructured electricity market.  The unreliable intermittent renewables are not compatible with adequacy planning unless their de-rated nameplate capacities for each region and the presence of baseload backup power, are considered. For example, wind should be de-rated down to around 13% of the nameplate or rated capacity and solar, down to around 38% depending on the region and the season. Hydro de-ratings should be based on the experience in each region for each season. The realities on the ground over the years have proven the failed planning.

Inconsistent baseline data. The list of installed capacities doesn’t reflect the two different seasons of the year. Each season poses different problems for intermittent renewables in each region. 

There’s only one set of power plant lists, accounting for “installed” and “dependable” capacities of each plant for an entire year. It’s understandable that the thinking then about “dependable” capacity was to show lower values for those plants with difficulties due to poor system performance or defective components. The values used for “dependable” which we can only interpret as the “net capacity” available to the consumers, were inconsistent throughout the lists.

The problem was created when they conveniently lumped the hydros into these lists, with the hidden understanding that these are seasonally-limited during half of the year. An “all year round” list doesn’t lend itself to showing de-ratings for hydros. For the hydro-dominated Mindanao, it’s clearly problematic to have a large built-in moving target for resource adequacy planning for an entire year.

Absence of performance monitoring of plants. Periodic online performance tests provide results to enable timely de-rating of ailing and aging plants to avoid their failure to deliver when called upon based on their posted “dependable” capacities. We had surprises and several inefficient plants continue to generate at much higher costs.

Ineffective and questionable coordination of maintenance outages

Staggering the schedules for plant maintenance outages, is essential to ensure that the combined capacities of the “running” and the “reserves” can always meet the load demands. Irresponsible scheduling of outages of large units have resulted in record power shortages and higher electric bills. For some, this begs the question: Why do they keep doing this?

Unfair market competition. Not strictly implementing the EPIRA law, allowed the power oligarchs to work around exceeding regional and/or national capacity limits. Layered ownerships of corporations, conglomerates and foreign investors, have to be unmasked and ownerships must comply with EPIRA. The DOE has not pushed for amendments to ban cross-ownerships in the power generation, distribution and retail, for fair and true competition in the future. The monopoly of the power transmission must stop now. There should be a different grid operator for each region to lower transmission charges, which are included in the consumer bills.

Abuse of ‘market power’. Looking the other way while the power oligarchs exercised the abuse during the orchestrated Malampaya maintenance shutdowns, triggered the skyrocketing prices in the WESM. The courts ruled in favor of the consumers with retroactive refunds but with only a slap on the wrist for the colluding oligarchs. The punishment did not fit the crime, for the companies and executives involved.

Resource adequacy. The Philippines has basically a two-season climate, the wet and the dry. Other countries like the US has four. Having resource adequacy ensures that consumers have power available 24/7 all year round. It’s therefore the most demanding season that matters. In the U.S., it’s the summer season and likewise, the dry season for the Philippines.

Role of renewables

It’s imperative to apply a different level of thinking focusing on two seasons and the critical roles of renewables especially the large hydros, during the dry-season.

As pointed above, the existing installed generating capacity lists cover an entire year. These lists have to be replaced with two separate sets of lists: Net Dry-season Generating Capacity and Wet-season Generating Capacity. 

The general public must be appraised of the critical nature of the adequacy of the dry-season capacity to ensure 24/7 power. Adequacy planning should be based on this.

The dry-season list should take into account the projected availability of hydros. Large hydros with seasonal water storage can be made available longer by re-programming its operation and minimizing the required baseload backup power. 

Similarly, the wet-season list must reflect the operational limitations that the wind and solar power plants will encounter. Cloudy and rainy days will deprive the solar panels of the usable spectrum of solar radiation. Storms and very turbulent wind patterns will shut down the wind farms. 

Both lists require updating periodically and as needed, to reflect the current status of the de-rated and out-of-service plants as well as the mutually-agreed changes in the scheduled maintenance outages.

In summary, Secretary Alfonso Cusi needs his technically qualified team to first resolve the self-inflicted problems and then regroup to accomplish the 100-day assignment. – Rappler.com

 

Rolly Calalang holds a BSME from UP Diliman and a BSEE from FEU Manila. He has experience in the power industry.