ADVOCACY MindaNOW: Who’s afraid of coal-fired power plant? By Jesus G. Dureza

DAVAO CITY (MindaNews/10 January) — As the  old saying goes:  Yes, Virginia, but  who’s afraid of a coal-fired  power plant in our midst?

Before you answer, I strongly propose that there must be – pronto– a prudent, careful and deliberate study by interested sectors on the merits and demerits of an Aboitiz Power proposal to build a coal-fired Plant in Davao . We all know that   power shortage in Mindanao will surely come. It’s inevitable!  Power plants take years to be built and made operational.  Thus the urgency of  the matter.   I propose a quick study because I notice some sectors are opposing without even getting yet the true facts about the project.  Even some public officials, truly politicians as they are, are tentative and are playing safe – and coy when they should stand up and lead their flock. And more tragic is that the phantom of a coal fired plant is immediately slain in the altar of lack of  information  or worse, misinformation.

But first things first.  An expected   crisis of power in Mindanao is  forthcoming  with  an accumulated shortage of about 484 megawatts from today until  2014.  A 484 MW deficit is equivalent  to today’s total power consumption of the five premier cities of Mindanao.  Put in another way , the cities of   Davao, Cagayan de Oro, Gen Santos, Butuan and Zamboanga   will all be in the dark with that shortage – if  these areas are to bear the full brunt of the shortfall.

Translated in brownout terms, the whole of Mindanao by then  will have six hour daily brownouts during summer season and three hours daily during the rainy days when crunch time begins. This  scenario will come if nothing is done to erect additional power plants in our region.

Of course, our best bet to address the power situation is to build power plants from renewable energy sources like solar, wind or biomass (use of tons and tons of garbage to generate electricity).  We join our “environmentalists” in really pushing for these alternative ways. Well and good. But alas,   generation of renewable energy  will not be adequate to address the situation, not to mention the tremendous costs of such alternative.

Expert calculations show that  today,  to build a generating plant by solar energy,  one needs to invest USD$10 million or almost half a billion pesos for one single megawatt generated ,  hydro at USD$4 million and  diesel at USD $1.3 million  and   coal at USD $1.8 million for one megawatt of power. Solar is too way up to be affordable. Wind is the cheapest at USD800,000 but wind is  not dependable everywhere – except perhaps in Ilongo territory, if you get
what I mean. ( Don’t worry, I can take a joke as an Ilongo myself Hahaha!)

This is compounded by the fact that the volume of power generated from renewable energy sources is quite limited. While coal, hydro and diesel have a capacity factor ranging from 70% to a high of 80%, solar and wind is only at 30%
Of course the cheapest power is generated by water like Agus and Pulangui hydro plants. But again Mindanao does not have any other big body of water to build more of those plants. This is  not to mention the dangers that we have already experienced when climate change, thru El Nino, inflicts its fury on us and even the mighty Pulangi river of Bukidnon  and the Agus waters of Lanao became helpless, including all of us not too long ago,  remember?

This talk about atomic power plants is another  long story.

My favorite is solar power. But   I have my own  reality check on solar power as  renewable energy source.  For  my  backyard, I bought a solar lamp for P2,500 but  it serves only as a ground marker because it emits only a flicker. I was looking at a neon-like lamp but one piece costs more than PhP100,000. And I have to buy expensive batteries from time to time to keep it going.

In some barangays in Sta Cruz, Davao del Sur,  solar power was installed in some households
along  the shoreline but it was good only to  light up one low-watt fluorescent lamp. In some areas in the Sulu archipelago, I saw solar energy in action but only to light up a few houses in a limited way and of course, re-charge cellphone batteries – the latter being the most welcome function.  What about  industrial use of solar power?

Forget it folks! There’s one solar power generating plant in Misamis Oriental, the Photovoltaic plant built many years ago but it generates only  one (1)MW. It was constructed  at the cost of  USD $5.8 million or roughly 255 million pesos .  Just for one megawatt, my friends!

Of course the ideal is to get a mix of these several power sources so Mindanao’s power cost will be kept at the lowest level possible. The geothermal plant at Mt. Apo is a key player in this. The hydropower plants too.

The imperative  task of adding more generating capacities for Mindanao must start NOW. In fact this should have been done YESTERDAY.  As early as two years ago, I was still in charge of  Mindanao for the government when I joined worried Mindanao stakeholders in raising the alarm that something must be done fast  about the deteriorating situation of Mindanao power. This was worsened by the fact that government was mandated by law  to  abandon  its function to generate power. The so-called EPIRA LAW so mandates. It commands  that    only the private sector can go into the business of power generation. But one welcome provision in the law allows Congress to make exceptions as the circumstances warrant. Thankfully, the House committee on energy just recently agreed that the disposal of the Mindanao generating units be held in abeyance and the EPIRA law on the matter be reviewed.  As it is today, even the enabling environment is not attractive to the  private sector to invest in power generation.

Take this as an example:  the government-owned National Power Corp is still generating hydro power and sells it at P3 pesos per kilowatt. It  costs  P6 pesos  if private business generates it by using  bunker or diesel  fuel . Hence, it is clear why  private investors  are hesitant to come in and compete.  We also know that building a power plant takes  about four years to be operational. And private investors usually, as part of business due diligence, prefer to have its power output contracted in big volumes in advance to assure return of investments.

That’s the reason why I welcome the plan of Aboitiz Power to  built a coal-fired plant somewhere in the boundary of Davao City and Davao del Sur. I have my reasons. It plans to generate 200 MW, hence considerably reducing the expected power deficit for Southern Mindanao. We all know that even today, Davao areas are relying heavily on power generated in Northern Mindanao, mostly from the Agus plants in  Lanao and the Pulangi plant in Bukidnon. Many may not know this but  the cost of transmission from these northern  areas to Davao already has a bearing on the cost per kilowatt hour that we are paying today in the Davao area.

Go ask the privately-owned National Grid Corporation of the Philippines  (that took over from government –owned TRANSCO). But  if  power is generated right here in our midst, I am sure the transmission cost is considerably reduced to the benefit of the consumers.  (I understand it’s a savings of about 7 centavos per KH.)

I gathered  that Aboitiz Power intends to put money  ( I estimate roughly at least Php 13 to 15 billion) into the project even without any assured contract to sell power as is usually done by power investors. We saw what happened during former President FVR’s time when he boldly and effectively addressed the power crisis – but of course, we got tied down to high power rates because the investors then insisted on advance supply contracts with predetermined rates.
In this case, Mr.   Bobby Orig, First vice president, Mindanao affairs of  Aboitiz Power said the company  is not asking for advance supply contracts with predetermined  rates  several years ahead . Aboitiz’ estimated time line to put up the plant is 40 months, excluding the expected hassle of the bureaucracy. Hence its rates will be fixed on a competitive basis when the plant is operational. That’s also an indication that   Aboitiz is taking the “power shortage” projection as
not only a “speculation” but  a reality sure to come. For sure, we will all be lining up to buy its power when  crunch time comes so why bother about advance supply contracts!

I understand  coal coming from nearby  Kalimantan, Indonesia will be fed into this proposed plant. I am sure coal-plant consumers in Visayas and Luzon  will pay more if their plants get coal from this source.   The strategic short  distance of the coal source to Davao is expected to   have favorable  effect on the cost of power generated and will also  be beneficial to the consumers. We must see to it that this is factored in later in the cost we have to pay.  However,  the biggest plus factor for Davao  or southern Mindanao with this proposed plant, considering its present power vulnerabilities,  is the power security It will enjoy when the power crisis is upon us. A foretaste of this is the presence of the Davao Light backup generators here in Davao that somehow helped ease the situation here during the previous crisis while other not- so- lucky areas bore the brunt of the debilitating power shortage.

Since I am both a resident of Davao City and also of Davao del Sur (the proposed plant is supposed to be located at the boundary) I will be very interested to know how this proposed   coal plant in our midst will affect the environment. Will inhaling Davao air bring health problems  to me, my children and my grandchildren many years hence? (I hope and will try  to be around, by the way, for a long while,  my friends!)  Of course, we are haunted  by the bad stories about coal plants owing to the  tragic incidents somewhere else in the world  in the 50s,  60s, the 70s.  That’s more than a generation  ago though. And we are told  that  there’s this innovation now that addresses these dangers.

So that those fears and apprehensions are addressed,  I recommend that a visit be made on site at the already existing coal-fired plant in Misamis Oriental. The German STEAG coal-fired plant, as it operates now, may answer all the doubts and questions of those who have reservations. We can also check on the effect on the Cagayan de Oro and Misamis air since it has been in operation in that area for several years. The proposed Aboitiz Power coal-fired plant in Davao
will use the same technology and  operate like the STEAG as a “circulating fluidized-bed coal plant’” otherwise known in layman’s lingo as “clean coal technology”.  I suggest however that the doubters must seek answers with an open mind. Never mind  though those  whose minds are closed. They will look for reasons to oppose and of course, there will always be those reasons somewhere.  But bless them because they do serve a good  purpose : their advocacies will put everyone on his  toes! They will ask the hard questions and will pry into the answers. Of course, use of coal is not as health safe  as hydro or diesel. But perhaps those doomsday scenarios of some may not be that bad. The idea is how to mitigate and control. Determining the” cost  benefit ratio” is always the way forward  –“cost” to mean not only in pesos but the other unquantifiable factors as well – like environment, health, etc.

In any case, it is a  must that we have more power in Mindanao. Coal-fired, hydro, thermal, solar, wind, biomass –  whatever.  It’s that urgent!

Let’s face it.  Aboitiz Power is there to make money of course. But we will have power we need. And yes, coal is not as environment friendly as solar or wind or hydro. Surely,   there will be “costs” to bear.  But  we must all be vigilant so  that the “costs” will not outweigh the benefits we all expect!  (Lawyer Jesus G. Dureza was government peace panel chair in the negotiations with the MILF under the Arroyo administration from 2001 to 2003 and was later named Presidential Adviser on the Peace Process (2005 to 2008). He heads Advocacy MindaNOW Foundation, Inc. and was recently named publisher of the Davao City-based Mindanao Times. This piece is from his syndicated column, Advocacy MindaNOW).