by BenCyrus G. Ellorin

CAGAYAN DE ORO CITY — Experts studying the Northern Mindanao energy landscape point to coal as the primary cause of the upward volatility of power rates in the region.

Northern Mindanao enjoyed relatively stable power rates until 2017. At this time, hydropower was low, and electricity rates were relatively stable.

Then, during the period 2018 – 2021, rates skyrocketed due to the upward volatility of coal prices caused by the pandemic and the war in Ukraine.

Prices remained high in 2022 because coal prices remained high. Prices started to ease up in the latter part of 2023 as the pandemic was on its way out.

The behavior of Mindanao power rates is similar to the trajectory of the price of Newcastle coal, which is the benchmark coal price in Southeast Asia.

Energy expert Albert Dalusong, Energy Transition Advisor of the Institute for Climate and Sustainable Cities and former National Renewable Energy Board member, said automatic fuel cost pass-through makes power costs volatile.

Dalusong’s study of the behavior of the Cagayan de Oro Electric Power and Light Company’s (Cepalco) generation rates revealed that hydro and solar generation rates remained low and stable. In contrast, generation prices of coal-fired power plants followed the upward volatility of coal prices in the world market.

He sampled Cepalco’s generation rates in July 2017 and July 2022. In 2017, the hydropower generation rate from the Agus-Pulangi hydropower plants, which is now managed by the PSALM (Power Sector Assets and Liabilities Management), was P2.98 per kilowatt-hour (kWH) in July 2017, in July 2022, it was P2.97. Solar was P4.009 in July 2017 and P3.83 in July 2022.

On the other hand, the generation rate from the Therma South coal-fired power plant skyrocketed from P7.75 in July 2017 to P15.67 in July 2022. The generation rate from Minergy Coal was P5.03 in July 2017 and P10.88 in July 2022.

As of May 2024, Mindanao has 96 power plants with a total dependable capacity of 3,978MW. Coal is the biggest source of power, with 51.31%. Combined with Diesel’s 17.81%, fossil fuels comprise 69.12% of Mindanao’s energy mix. This leaves 30.88% to renewable energy, the biggest of which is dam hydro, which contributes 15.56%; run-of-river hydro at 10.45, geothermal at 2.67%, ground-mounted solar at 1.31%, and biomass at 0.94%.

Multiple electric cooperatives and private power generator in Mindanao “experienced their all-time highest blended generations rates in 2023. The Iligan Light an Industry (ILPI), which has substantial power supply contracts with the Agus-Pulangi hydropower plants, was lower and relatively stable below according to data presented by the Institute for Climate and Sustainable Cities (ICSC) during the training on Energy Reporting held over the weekend here in the city.

Under the unbundled electricity pricing system, power generation costs are around 60% of the power bill. Generation rates in Mindanao mirrors the behavior of Newcastle coal in the world market.

Northern Mindanao ironically is the power generator of the island as the Agus-Pulangi hydro power plants are located in the region. Northern Mindanao also hosts four of the seven coal-fired power plants accounting for over two thirds of the overall power production of coal plants in the island. Misamis Oriental has three coal-fired power plants: two in Villanueva town — the 232MW of Steag and 405MW of FDC, and Minergy coal-fired power plant with installed capacity of 165MW  in Balingasag town. The island’s biggest coal-fire power plant is the 600MW power plant of GNPower in Kauswagan, Lanao del Norte.

“Relying on a single energy source has been shown to be detrimental. Pricing and reliability issues plague traditional sources like coal,” said Jephraim Manansala, Chief Data Scientist of ICSC said.

Environmentalists and climate campaigners are calling for a shift from fossil fuel dependence to renewable energy. Reducing reliance on carbon intensive coal would help the Philippine government comply with greenhouse gas emission targets. The country’s Nationally Determined Contribution to the 2015 Climate Summit in Paris is to reduce GHG emission by 75% in 2030. A big chunk of this GHG emission comes from the energy sector.

The National Renewable Energy Programs targets at least 35% share of renewable energy in the country’s energy mix in 2030; and 50% in 2040. The Mindanao Development Authority (MINDA) however has advanced the 50:50 target in the Mindanao Development Framework by 10 years, to 2030

Mindanao’s energy situations need to re-transition to renewable energy. The shift to fossil dependence happened in the last 10 years, when massive construction of coal-fired power plants happened.