​​[OPINION] Reliable power supply will support VisMin, PH’s economic momentum

Among the medium and large economies of the world, composed roughly of 50 countries, the Philippines is the third fastest growing economy in 2023-2024, with an average GDP growth rate of 5.6%, behind India (7.8%) and Vietnam (6.1%).

In contrast, while highly populated and industrializing Asia set the pace in global growth, the old industrialized countries, such as those in the G7, have low to even negative average growth. Between 2023 and 2024, the US recorded an average GDP growth rate of 2.8%, Canada 1.5%, France 1.1%, Japan 0.8%, UK 0.7%, Italy 0.7%, and Germany -0.2%.

Since high and sustained growth requires high and sustained power and electricity, the Philippines, at its current pace, will require a much higher energy supply than in previous years.

Unfortunately, the Philippines has one of the lowest electricity generation per capita in Asia, with just 1,054 kWh per person. And this writeup shows how that figure is lower than Indonesia’s 1,264 kWh, Vietnam’s 2,756 kWh, Malaysia’s 5,674 kWh, and China’s 6,700 kWh per person.

It is also way below the 5,222 kWh per person average of upper-middle-income countries.

Furthermore, there are over two million Filipino households that have yet to have electricity, with many more experiencing power interruptions every year due to supply insufficiencies or power network disruptions. Some of these areas are in off-grid sites, depriving their people of the benefits of having more reliable and affordable electricity.

The government targets an average GDP growth of 6-8% for 2025-2028, and this will require annual baseload capacity additions of about 600-700 megawatts. According to the NGCP, power demand is expected to grow at an average annual compound growth rate (AACGR) of 5.6% between 2024 to 2050, with the Visayas projected to grow the fastest among the three grids.

In a roundtable discussion entitled “Powering Up: Generating Energy Security in the Visayas and Mindanao” held on May 18 with the European Chamber of Commerce in the Philippines (ECCP), Rappler, and AboitizPower, I brought these items to three distinguished minds in the Philippines energy sector: Energy Regulatory Commission (ERC) Chairperson Monalisa Dimalanta, UP College of Engineering Associate Dean Professor Rowaldo “Wali” Del Mundo, and Mindanao Development Authority Deputy Executive Director Romeo Montenegro.

The three speakers discussed the economic opportunities and challenges associated with the Visayas and Mindanao grids within the context of the Philippines’ own growth story from the perspective of the power sector.

I want to highlight some specific characteristics of the Visayas and Mindanao grids.

Firstly, while the Cebu and Panay sub-grids cater to more than 90% of coal capacities and zero geothermal, the Negros and Samar-Leyte sub-grids service zero coal and a high share of geothermal power.

Second, Mindanao used to rely a lot on hydro, which has since become greatly insufficient, leading to coal having to complement the supply gap.

Third, the power plants in Visayas and Mindanao account for 29% of the total power supply in the country, meaning 71% is generated in Luzon, particularly in the provinces of Batangas, Quezon, Bataan, Zambales, and Pangasinan, where the largest coal and gas plants are located.

Fourth, the Philippine economy grew by 5.7% in 2024. In Luzon, only Region 3, or Central Luzon, outpaced it at 6.5%. However, three regions in the Visayas (Negros Island, Central Visayas and Eastern Visayas) and another three in Mindanao (Northern Mindanao, Davao Region and Caraga) grew higher than the national average, with the Central Visayas recording the fastest growth among all regions at 7.3%.

This means that while there is much economic potential in Visayas and Mindanao, their power supply is limited and low compared to Luzon, signaling the urgency to expand power supply, along with transmission and distribution infrastructure, in the Visayas and Mindanao grids.

There is a fast expansion of solar in Negros island, as well as in the Bulacan-Nueva Ecija corridor through MGEN’s 3,500 megawatt Terra Solar project. But solar has a low capacity factor of only 15-18%. So does wind, with just 29-32%. These variable renewable energy sources also increase the variability of supply and, hence, require the support of energy storage systems or more flexible power generation.

LNG plus nuclear power have to be considered in both Visayas and Mindanao since there is continuing uncertainty in expanding coal power in the country.

The pursuit of sustaining economic growth must go hand in hand with the Philippines’ energy transition. We should pace it so that it suits our unique and specific needs and circumstances. Pursuing hybrid energy systems is needed to balance what is technologically feasible and economically scalable from the microgrids up to the national grid.

The bottom line is that Visayas and Mindanao are regions ripe for economic growth. Huge power expansion from conventional coal and hydro, plus new innovations in LNG and nuclear power, will help their two grids become more energy resilient, sustaining their economic momentum, along with the rest of the country’s. – Rappler.com

Ruth Yu-Owen is the Renewable Energy and Energy Efficiency Committee chairperson of the European Chamber of Commerce of the Philippines (ECCP).

References:

https://psa.gov.ph/content/highlights-economic-performance-regional-economies-2024#phil

Table 1. GDP growth average for 2023-2024, in %

Asia	2023-24	G7	2023-24
India	7.8	US	2.8
Vietnam	6.1	Canada	1.5
Philippines	5.6	France	1.1
China	5.2	Japan	0.8
Indonesia	5.0	UK	0.7
Malaysia	4.3	Italy	0.7
Taiwan	2.7	Germany	-0.2

Table 2. Power generation in GWH, 2023

Grid, sub-grid	Generation, GWH
	Total	Coal	Geoth.
Luzon	83,290	53,072	4,286
Visayas	18,162	10,472	5,739
Cebu	7,281	7,091	0
Samar-Leyte	4,296	0	4,053
Panay	3,764	3,381	0
Negros	2,696	0	1,686
Bohol	125	0	0
Mindanao	16,551	10,281	704
Philippines	118,004	73,753	10,730