THE Department of Energy (DOE) will soon come up with a coal transition policy to manage the shift toward renewable energy (RE) while prioritizing energy security and avoiding power brownouts.
‘Our transition from coal must likewise be deliberate and supported by timely replacement capacity. We must reduce emissions without compromising reliability and affordability, while ensuring that affected communities and workers are part of the transition,’ Energy Secretary Sharon Garin said during the 15th Energy Smart Forum organized by the European Chamber of Commerce of the Philippines (ECCP) last week.
When sought for more details, Energy Undersecretary Rowena Guevarra said during the panel discussion that there are coal power plants currently operating below full capacity, triggering the rollout of a coal transition policy.
She pointed out that in order to stabilize power supply, there is an urgent need to construct new facilities that are legally exempt from the current coal moratorium policy. However, their compliance is inconsistent across the industry, noting that while some companies are moving forward with construction, others are failing to build despite being permitted to do so.
The DOE ban on new greenfield coal power plants took effect in 2000, but the projects that secured certificates of non-coverage or met substantial completion milestones prior to the ban are allowed to proceed.
‘We have the coal moratorium policy. We are coming up with coal transition policy,’ said Guevarra.
‘You see, our existing coal plants are breaking down or are derated – they can’t operate at 100 percent capacity. Because of that, we need to build the plants that aren’t covered by the moratorium. They aren’t covered by the ban, yet they still are not building. That is why a coal transition policy is being rolled out. Some are obedient and are already building, but others are not,’ she said.
The potential capacity for these coal power projects that are not covered by the moratorium could reach anywhere from three to five gigawatts (GW). Gueverra said these projects were approved and endorsed to the Energy Regulatory Commission (ERC) prior to the ban, have secured permits, have reached financial closure, and some under construction.
‘It involves about three to five GW-a significant amount. But the issue is, we don’t see them actually building,’ Guevarra said.
To prevent constant brownouts, the DOE proposed a contract termination mechanism for fossil fuel power plants, similar to existing renewable energy policies. Instead of monetary fines, failing to meet the committed work plan will result in project cancellation.
‘At the end of the day, we can’t just have constant brownouts. Is there a penalty for those who haven’t built yet despite having made a commitment? That’s the difference-as I mentioned, RE has a clear work plan.
‘If they don’t comply, the contract is terminated. But for our fossil fuel power plants, there isn’t a mechanism like that. It’s not a monetary penalty; the ultimate penalty is contract termination. That’s the worst-case scenario because the project won’t push through. So, they will have a work plan too,’ Guevarra said.
The DOE will hold a series of consultations with industry players to tackle the proposed coal transition policy. ‘We have to fulfill our RE targets. But at the same time, energy security is on top of that,’ she said.