Energy Secretary Raphael Lotilla on Thursday vowed to upgrade and modernize the country’s transmission and distribution lines to support an efficient transition to cleaner energy.
“The government will also resolve to address transmission congestion, whether by adding transmission lines or avoiding subsidies that cause the build-up of excess capacity,” Lotilla said during the World Bank Philippine Economic Update Forum.
He said the government does not want a repeat of the transmission constraints experienced in the Visayas.
“The tragedy of Negros Island where you have 80 MW of stranded power is one that we do not wish to be replicated in the rest of the country and it has been in that state for 5 to 10 years now,” he said.
Lotilla also said that “once the government has fiscal space, the government will revisit and re-evaluate financing investment in transmission.”
“Financing investment will be separated from the regulatory structure of transmission tariffs, and investment in transmission expansion offers enormous potential benefits for efficiency by increasing access to low-cost generation, improving reliability, and mitigating counterbalancing market power,” the energy chief said.
He said there are ongoing talks with the World Bank and the Asian Development Bank to help develop the needed transmission capabilities.
Lotilla said infrastructure developments would require transmission investments.
“We can lower actually the infrastructure costs by building up in parallel the transmission lines as well as the tollways that are going to be built,” he said.
“We also look forward to the upgrading completion with adequate funding from our development partners of the backbone in the major islands,” he said.
National Grid Corp. of the Philippines said Lotilla’s pronouncements “appear to contradict his declarations of cooperation and support to us at a high-level meeting held at the DOE offices last June 2.”
“We were of the impression that we were on the same path to finding long-term solutions to the country’s energy problems, beginning with an industry-wide audit of all sectors of the energy supply chain—generation, distribution and transmission—as well as a performance audit and assessment of government agencies in charge of planning and regulation,” NGCP said.
NGCP said the company had infused investments into the transmission grid since 2009 of about P300 billion in expansion, upgrading and improvement projects “over and above what we have given the government by way of concession fees.”
“This means that we have outspent government 5:1 in terms of improving the transmission grid. We’ve added 26,470MVA in substation capacity, more than 400x the average annual investment of the government in this area. We’ve also built 3,729 km of lines, doubling the lines built by government under TransCo. Our achievements must not be overlooked,” NGCP said.