Legal Framework regarding Energy Supplies

Republic act no. 9513

Known as renewable energy act of 2008 - An act promoting the development,
utilization and commercialization of renewable energy resources and for other
purposes.
Two types of Energy Sources
Renewable Energy Sources
-Energy sources that do not have an upper limit on the total quantity to be used.
Such resources are renewable on a regular basis and the renewable rate is rapid
enough to consider availability over an indefinite time.
Non-renewable energy sources
-Energy sources that do not renew itself at a sufficient rate for sustainable economic
extraction in meaningful human timeframes. Such resources that will run out or will
not be replenished in our lifetimes. Coal, oil, Natural Gas, Nuclear
Main Sources of Energy
Fossil
Fossil energy sources, including oil, coal and natural gas, are non-renewable
resources that formed when prehistoric plants and animals died and were gradually
buried by layers of rock.
Nuclear
Nuclear power is the use of sustained nuclear fission to generate heat and electricity.

Renewable Energy
1. Solar Energy
Solar power harvests the energy of the sun through using collector panels to create
conditions that can then be turned into a kind of power. Large solar panel fields are
often used in desert to gather enough power to charge small substations, and many
homes use solar systems to provide for hot water, cooling and supplement their
electricity. The issue with solar is that while there is plentiful amounts of sun
available, only certain geographical ranges of the world get enough of the direct
power of the sun for long enough to generate usable power from this source.
2. Wind Energy
Wind power is becoming more and more common. The new innovations that are
allowing wind farms to appear are making them a more common sight. By using
large turbines to take available wind as the power to turn, the turbine can then turn
a generator to produce electricity. While this seemed like an ideal solution to many,
the reality of the wind farms is starting to reveal an unforeseen ecological impact
that may not make it an ideal choice.

3. Geothermal Energy
Geothermal energy is the energy that is produced from beneath the earth. It is
clean, sustainable and environment friendly. High temperatures are produced
continuously inside the earths crust by the slow delay of radioactive particles. Hot
rocks present below the earth heats up the water that produces steam. The steam is
then captured that helps to move turbines. The rotating turbines then power the
generators.
Geothermal energy can be used by a residential unit or on a large scale by an
industrial application. It was used during ancient times for bathing and space
heating. The biggest disadvantage with geothermal energy is that it can only be
produced at selected sites throughout the world. The largest group of geothermal
power plants in the world is located at The Geysers, a geothermal field in California,
United States.
4. Hydrogen Energy
Hydrogen is available with water (H2O) and is most common element available on
earth. Water contains two-thirds of hydrogen and can be found in combination with
other elements. Once it is separated, it can be used as a fuel for generating
electricity. Hydrogen is a tremendous source of energy and can be used as a source
of fuel to power ships, vehicles, homes, industries and rockets. It is completely
renewable, can be produced on demand and does not leave any toxic emissions in
the atmosphere.
5. Tidal Energy
Tidal energy uses rise and fall of tides to convert kinetic energy of incoming and
outgoing tides into electrical energy. The generation of energy through tidal power
is mostly prevalent in coastal areas. Huge investment and limited availability of
sites are few of the drawbacks of tidal energy. When there is increased height of
water levels in the ocean, tides are produced which rush back and forth in the
ocean. Tidal energy is one of the renewable source of energy and produce large
energy even when the tides are at low speed.
6. Wave Energy
Wave energy is produced from the waves that are produced in the oceans. Wave
energy is renewable, environment friendly and causes no harm to atmosphere. It
can be harnessed along coastal regions of many countries and can help a country to
reduce its dependance on foreign countries for fuel. Producing wave energy can
damage marine ecosystem and can also be a source of disturbance to private and
commercial vessels. It is highly dependent on wavelength and can also be a source
of visual and noise pollution.
7. Hydroelectric Energy
What many people are not aware of is that most of the cities and towns in the world
rely on hydropower, and have for the past century. Every time you see a major
damn, it is providing hydropower to an electrical station somewhere. The power of

the water is used to turn generators to produce the electricity that is then used. The
problems faced with hydropower right now have to do with the aging of the dams.
Many of them need major restoration work to remain functional and safe, and that
costs enormous sums of money. The drain on the worlds drinkable water supply is
also causing issues as townships may wind up needing to consume the water that
provides them power too.
8. Biomass Energy
Biomass energy is produced from organic material and is commonly used
throughout the world. Chlorophyll present in plants captures the suns energy by
converting carbon dioxide from the air and water from the ground into
carbohydrates through the process of photosynthesis. When the plants are burned,
the water and carbon dioxide is again released back into the atmosphere. Biomass
generally include crops, plants, trees, yard clippings, wood chips and animal wastes.
Biomass energy is used for heating and cooking in homes and as a fuel in industrial
production. This type of energy produces large amount of carbon dioxide into the
atmosphere.

Power is one of the main drivers of sustainable economic growth, available power supply determines the level of
production which a country is capable of supporting.
PROJECTED SUPPLY AND DEMAND
Historically, demand has outpaced supply. There is currently a tight demand-supply balance. The Philippines is
subdivided into the Luzon, Visayas and Mindanao power grids, each with distinct power supply to support the
regional demand. The Luzon and the Visayas grids are interconnected; any excess in one grid can be exported to
cover for any power deficiency in the other. The Mindanao grid however, remains isolated and stands alone.
Power supply should be able to cover for (i) peak demand and (ii) reserve requirements. Peak demand represents
the highest power requirement registered during the peak hours in between 11 a.m. and 2 p.m. and typically at the
highest during the summer months. Reserve requirements are stand-by power in the event of unexpected forced
shutdown of key power plant facilities.
Total peak demand for the Philippines was registered at 11,800 Megawatts (MW) as of end 2014 and is projected to
reach 18,600MW by 2025. However, the peak demand profile and reserve requirement substantially varies per grid.
The Luzon Grid historically comprises over 70% of the Philippines peak demand and in 2014, Luzon Grid peak
demand reached 8,700MW and is projected to grow to 13,200MW by 2025, with power reserve requirement of
1,800MW. As of 2014, the Luzon Grid has adequate capacity at 11,600MW and is projected to reach 17,000MW by
2025.
However, when considering the reduction in energy to be sourced from hydropower plants, especially during the
summer as well as from wind and solar power, which are considered as intermittent sources of energy, available
power from the Luzon Grid may be sufficient to cover peak demand but will not be able to account for reserve power.

The Visayas Grid shows almost the same profile, with a peak demand of 1,600MW in 2014, and is projected to reach
2,700MW by 2025, with reserve power requirement of 400MW. Total available power for the Visayas Grid reached
2,100MW as of 2014 and is forecasted to grow to 3,300MW by 2025, ideally sufficient to cover peak demand and
reserve requirements. However, reduced capacity from wind, solar and hydro (during summer months) might be able
to cover peak demand, but with very tight reserve power.
The Mindanao Grid is projected to remainstable until 2025, with projected peak demand of 2,700MW and reserves of
400MW to be supported by 3,500MW of supply. Even with reduced capacities from intermittent power sources,
available power is expected to be more than adequate to cover the energy requirements, with significant coal projects
in the pipeline supporting the energy supply.
POWER RESOURCES
At present, coal power plants comprised over 35% or 5,200MW of total availablecapacity in the Philippines.Growth in
coal is driven by relatively lower electricity price and stable electricity supply generated by coal, being a baseload
power plant. Renewable energy resources, such as wind and solar in general carry higher break-even prices due to
the power plant utilization in relation to the resource but is expected to grow with government support such as the
Feed-in-Tariff systems (FIT) which allow renewable energy developers to be paid at premium from market electricity
rates, for energy generated by power sources such as wind, solar, run-of-river hydro and biomass plants.
Coal is expected to continue driving the growth in total installed capacity in the Philippines and is followed by
renewable energy, Gas plants and oil.
COST COMPETITIVENESS
In terms of costing, diesel plants have highest cost with coal the lowest. Among the REs, wind and solar are highest
with hydro and geothermal the lowest. Capex for solar is expected to decrease substantially in the future.
BANKERS PERSPECTIVE
Demand-supply outlooks are vital as generally, one of the main concerns of investors and banks, financing power
projects is the market risk that there will be an abundant supply of electricity such that a power plant will not be able
to get guaranteed buyers of electricity produced whereby the power plant might have to resort to sell at the open
market at a price below break-even.
More power plants are needed. Banking sector support to finance power projects is critical to ensure that overall
power requirements are addressed. Banks, however, should be mindful to proceed with caution as any slowdown in
market demand could lead to an oversupply. Power plants to be financed need to provide an acceptable Business
plan on addressing market risks. Power costs remain to be one of highest in Asia. If power cost can be further
reduced, we can expect the Philippines to be even more attractive for business.

Read more at http://www.mb.com.ph/philippine-power-industry-outlook/#JU0JYdwRZcxkfHRS.99