By Joseph Somsel
The Philippines is a tropical country of 113 million, with beautiful beaches, dense rainforests, 11,000 islands, and a smiling, industrious, educated population. English is an official language, unifying its multitude of native languages and dialects, allowing its “overseas foreign workers” to return billions in remittances and savings annually to the country’s economy. What it doesn’t have is ample indigenous energy resources; high electricity prices have hurt it competitively against its Southeast Asian neighbors.
What they also have is a roaring democracy – the Filipinos put the “party” back into “political parties.” With elections coming up on May 9th, high electricity prices and unreliable service have become a campaign issue. The outgoing Dutarte Administration has been criticized by major presidential candidates for not doing enough about these high prices (presidents serve but a single 6 year term.). While President Dutarte is most famous internationally for his “extra-judicial treatment” of shabu (methamphetamine) dealers to restore civil order and for his delicate geopolitical balancing act between China and America, his administration has been active behind the scenes preparing for an eventual adaptation of nuclear power into the generation mix. This has included a detailed cost study by the Koreans of restoring and bringing into service the Bataan Nuclear Power Plant (BNPP), placed in caretaker mode in 1986 having never gone critical. The International Atomic Energy Agency (IAEA) also was invited to lay out a governmental action plan that has already been partially enacted. The government has further tentatively identified 10 sites for possible new reactors. The capstone was when Dutarte formally issued Executive Order No. 164 in late February that flatly stated “The National Government commits to the introduction of nuclear power technology into the State’s energy mix for power generation.”
There are two major causes of the long-term rise in electricity prices. One is the rapid depletion of the country’s major offshore natural gas field, currently fueling 20% of generation. Further investment in expanded exploration and development in the South China Sea is hampered by the aggressive attitude of the Communist Chinese toward resources ownership in the area, be it fisheries, coral reefs, or oil/gas. The second was the signing by the prior administration of Benigno “Noynoy” Acquino of the Paris Accords in April 2016. He pledged that the Philippines would forego permitting of new coal plants not already in the regulatory pipeline. In exchange, the Philippines was promised developmental financing of alternatives; the moneys have not been forthcoming to date. Coal currently provides almost 60% of the kWh sold and is mostly fueled by Indonesian bituminous at a fuel cost of about $3 USD per million BTU.
The Dutarte’s Department of Energy’s future energy plan, released in January 2022, expected that path forward (sans nuclear) would be a huge shift to imported liquefied natural gas (LNG) and a massive expansion in photovoltaics (PV). Spot market LNG deliveries in Tokyo Bay have been running at $8 USD a million BTUs (long-term contracts might be a bit lower) before the Ukrainian War caused massive disruptions in demand and prices. Some expansion in hydropower was forecast but recent calls for more projects failed to get expected bidders even at attractive “feed-in-tariffs.”
How will the candidates seeking to succeed Dutarte hope to lower electricity prices when the present options under the Paris Accords are replacing $3 coal and $2 natural gas with $8+ LNG and Chinese-made PV? An aggressive nuclear power program might not immediately reduce current bills but will at least provide some stability of price and supply while still reducing CO2 emissions. The Germans and the Filipinos might today be sharing the same regrets about their prior decisions to shutter nuclear.
Joseph Somsel is a nuclear engineer (with an MBA) and long-time public analyst of energy policy. Further elaboration of the Philippines energy situation can be found in the April 2022 issue of Nuclear Engineering International Magazine.