Why is electricity in PH expensive and unreliable?


Posted at Dec 23 2021 04:32 PM | Updated as of Dec 27 2021 04:55 PM

Photo source: Unsplash
Photo source: Unsplash

Typhoon Odette (Rai) wreaked havoc on power lines and electric cooperatives in Visayas and Mindanao, leaving over three million people without electricity, and hampering communications and even the vaccination efforts days before Christmas. 

But Filipinos suffer from regular power outages even without the occurrence of typhoons and other extreme weather events. Our country is also known to have the highest electricity prices among Southeast Asian nations.

Just why is electricity in the Philippines expensive and unreliable? One reason is the power system's reliance on imported coal and diesel. In 2020, coal accounted for 57% of total power generation in the country, with coal overtaking oil as the biggest energy source. With the Philippines relying on imported coal and diesel to power up over half of the country, power rates are made vulnerable to importation costs and rising world market prices.

Secondly, rotating power outages were still experienced in parts of the country in 2021, and even over the past few years, despite an overcapacity of baseload coal-fired power plants, leading to significantly high electricity costs. These coal plants have not even met the newly-mandated allowable outages set by the Energy Regulatory Commission.

People in Luzon, Visayas, and Mindanao have grappled with varying degrees of power outages. Rising temperatures and the increase of people sheltering at home contributed to the increase in demand and shortage of supply. Department of Energy (DOE) Secretary Alfonso Cusi also attributed this to the simultaneous breakdown of four big coal-fired power plants. Supply was heavily affected by maintenance work and unscheduled outages at key power plants in Luzon and low gas pressure from the Malampaya gas field.

Photo source: Unsplash
Photo source: Unsplash

The red alert being raised under the Luzon power grid late last May has prompted a debate between the DOE and the National Grid Corporation of the Philippines (NGCP). The DOE has pinned the problem on the NGCP's refusal to procure ancillary services or backup power through firm contracts as the reason why the country experienced power outages. The latter stated electricity rates will spike even further if it follows that directive. The power grid operator has also said that this will not solve the issue, which is lack of supply, as power is still coming from the same plants.

However, even with high costs and regular power interruptions, the coal industry remains thriving in the Philippines with help from subsidies and an unlevel playing field. Former Energy Secretary Jericho Petilla once said that the lack of government subsidy and true competition in the power sector can be another reason for the high costs. He also suggested that the cross-ownership between power distribution companies and power plants can contribute to the lack of competition in the sector. 

Photo source: Unsplash
Photo source: Unsplash

Ordinary people are struggling to pay high electricity prices despite the ongoing threat of blackouts. This can prove detrimental as vaccine storage facilities rely on electricity to keep jabs in their optimal temperature. There is also the automated national elections coming up in May 2022, not to mention the consequences to working families and businesses alike.

That is why the elections must be utilized as an opportunity to address the energy woes of the county.

Experts suggest that the push for locally-generated renewable energy may be the key to cutting down local electricity rates, providing a more reliable source of power, and powering the country's development. According to a study, renewable energy can diversify the Philippine energy supply mix to meet future electricity demands and lessen the dependence on fossil fuel imports.

Compared to fossil fuels, renewable energy is also considerably healthier for people and the environment. Out of all fossil fuels, coal releases the most carbon dioxide to the environment, not to mention other emissions like sulfur dioxide and nitrogen oxides. It also leaves behind by-products such as ash and sludge. This is important as apart from causing approximately 66,000 premature deaths every year, air pollution and poor air quality has cost the country $87.6 billion or P4.5 trillion annually – that amounts to 23% of the country's GDP in 2019.

Moving forward, an energy transition must be prioritized to help reduce prices and improve energy efficiency and reliability. It is something the next administration needs to put in motion. 

Investing in renewable energy and distributed generation in the Philippines will advance energy security, lower electricity prices, and fast track the country's economic recovery.

NOTE: BrandNews articles are promotional features from our sponsors and not news articles from our editorial staff.