Understanding External Risks to PH Energy Sector Part 2 

In my last article, I talked about the two external risks facing the local power sector, namely global prices, and foreign exchange rates. 

In this post, I will talk about the third risk: natural disasters.  

The “Philippines Country Climate Development Report” released by the World Bank stressed that the Philippines is “uniquely vulnerable” to climate change. 

World Bank Country Director for the Philippines Ndiame Diop said that “In 2022, the Philippines ranked number one among the countries most affected by extreme weather events…climate change is often called a silent crisis, but in the Philippines, it is not silent. It’s an imposing problem and a real threat,” 

Indeed, climate change is a real threat. Just recently our country suffered from the wrath of Tropical Storm Paeng, which affected millions of Filipino families. As of this writing, damage to agriculture alone stands at 4.7 billion pesos. 

Over four million Filipinos, too, experienced power interruptions due to Paeng. The Department of Energy (DOE) also said that at least three power generation plants were shut down because of the tropical storm. 

Tropical Storm Paeng affected millions of Filipinos. Photo c/o CNN Philippines/Bandera News TV

The effects of Paeng, however, on the local sector are “mild” when compared to other natural disasters or storms.  

Late last year, Typhoon Odette (international name: Rai) devastated large parts of Visayas and Mindanao. Odette left many Filipino families in the dark even months after it struck. 

The recent Philippines Country Climate Development Report noted that the Philippines typically experience around 20 tropical cyclones yearly but the country has been experiencing stronger typhoons in recent years. 

“Temperatures in the Philippines will continue to rise by the end of the 21st century. Rainfall patterns will change and intensify, and extreme weather will become more frequent. Without action, climate change will impose substantial economic and human costs, affecting the poorest households the most,” Mr. Diop said. 

What we should aim for in the local energy sector is resilience. However, this is difficult to achieve. 

Just consider what happens every time a natural disaster strike. With poles and transmission lines down, we end up sending teams to restore power. This is risky and, in most cases, has caused the death of our linemen. 

We should have learned from these natural disasters from long ago that centralized power distribution no longer works for us. It is an outdated power distribution model. We should be looking at microgrids to make our power systems a lot more resilient to disasters. 

Aside from moving away from centralized power systems, we should empower our local government units (LGUs) by letting them lead the redesign of their power distribution infrastructure. LGUs, after all, are the first responders after a disaster 

We must consider giving LGUs their own power distribution franchises. This way, they can have more flexibility in designing and getting private concessionaires to build their microgrids.  

In previous posts, I have discussed that barangays should be mandated to provide power locally from distributed energy resources (DERs) like solar and battery systems, especially for disaster-prone areas. 

Microgrids, and empowering LGUs at the barangay level go a long way in making our electrical systems more resilient. I am aware that the government through the Energy Regulatory Commission (ERC) is coming up with rules on how to implement this.  I am wary about such rules as they tend to protect the incumbent utilities thereby robbing consumers of their unfettered access to renewable energy and microgrids in general. 

It is highly unlikely that natural disasters, particularly weather disturbances, will be fewer in the next few years. They will inevitably strike us repeatedly and with more ferocity. 

Rather than rely on the Filipinos’ resilience to endure hardships, what we must do is make our power systems more resilient. We can do this by veering away from the traditional power systems and instead start building DERs and empowering communities. 

The best time to do this was years ago. The next best time is now. 

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