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. 

Energy Security Series Part 3: Infrastructure Issue

Recently, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) released a grim global report on climate change. The report, dubbed by the United Nations as “code red for humanity” revealed that the extreme weather is now being felt around the world and average global temperature increases that could have devastating effects will likely come sooner than expected.

The report said that human-caused climate change is already affecting every region across the world. Extreme weather has become more intense and frequent. And climate change’s effects will get worse over time. The report found that humans have increased the chances of extreme compound weather events like frequency of concurrent fire weather, droughts, and flooding.

Climate change has also brought big changes in the Philippines’ climate patterns. We are seeing massive flooding in recent years.

This December, we experienced the wrath of Typhoon Odette, which left hundreds dead and billions of iin damaged infrastructure. Some three million families are affected by power outages as the typhoon toppled electrical poles, and damaged transmission lines. Of course, it would take a while before power is fully restored in affected areas as the transmission company and electric cooperatives need to wait for floods to subside and to ensure that local conditions are safe enough for linemen and engineers.

Typhoon Odette toppled power lines and damaged transmission facilities. Photo c/o Rappler

The Philippines also experienced deadly and destructive weather disturbances last 2020.

In May of last year, the country had to deal with Typhoon Ambo. It was the first typhoon to hit the Philippines in 2020 and caused Php 2 billion damage to agriculture and infrastructure. It also left around 92,000 families homeless. Power restoration in the affected areas took weeks, months even. Sadly, some electric cooperatives lost their men to power restoration efforts.

There was also Typhoon Ulysses that unleashed torrential rain and powerful winds. This typhoon destroyed thousands of homes, killed dozens of people, and left swathes of Luzon heavily flooded. It was the deadliest tropical cyclone to hit the country in 2020.

Aside from Ulysses, the Philippines was also hit by Typhoons Quinta and Rolly in the last quarter of 2020. The National Electrification Administration (NEA) said that these three typhoons caused some Php500 million worth of damage to the utility system.

Plus, of course, there’s the COVID-19 pandemic that has restricted the movements of everyone. In the early months of the pandemic, there was a big issue about electric bills people received as many consumers received bills that were significantly higher than what they had consumed. Distribution utilities, after all, could not send their employees to read meters during the hard lockdown.

All these point to the fact that the Philippines needs to make its power infrastructure more resilient against natural disasters. We thus need to revisit our energy systems and start investing heavily in smart grids and distributed energy systems.

The global trend is to move away from the traditional central power production model and replace them with distributed energy production. As a country that is more prone to natural disasters, we should join the fray and move to decentralized power systems.

Decentralized power systems will make our infrastructure more resilient to disasters. Centralised power systems, after all, are characterized by power lines spanning long distances and are highly vulnerable to natural disasters. Damage to a single line due to natural disasters will leave thousands of homes without electricity. We only need to remember that it takes power distribution utility companies weeks even months to restore full power in areas affected by storms.

Electric cooperatives, power distributors, and the transmission company have to thoroughly assess the damage to the power line before the linemen can restore power physically. Power restoration after a calamity is a high-risk undertaking. Sadly, many have lost their lives in the physical restoration of electricity.

Centralized power systems, given their massive size, multiply the risk of disruption. A single felled tree can deprive plenty of homes of electricity. In contrast, decentralized systems create redundancies in the power system. Microgrids can easily disconnect from the main grid experiencing outages so they can run without any disruptions until the main grid is up and running again.

Centralized grid systems are also unable to differentiate end users. This means residential users are getting the same quality and amount of power as other establishments like hospitals and government centers. This means that during disasters, the system makes it challenging to provide electricity to the most crucial users or infrastructure.

Centralized grids typically can only be turned on or off, or simply put, either on one or everyone gets power. This inability to differentiate and direct power to the most crucial areas or infrastructure makes emergency and recovery efforts more difficult during calamities. Decentralizing electricity allows for the prioritization of essential infrastructure, cutting down hindrances to quick disaster recovery.

Now more than ever, we should be seeing the role of decentralized energy resources. Cities or towns that have been struck with a natural disaster can function better if essential infrastructure has continuous electricity. Hospitals that are now in full capacity, for example, have one less thing to worry about as they can continue their operations normally despite a disaster.

Aside from disaster resilience, distributed energy systems also offer more cost savings. It is also easily scalable. One study by Vibrant Clean Energy in the United States showed that investing in renewable energy, storage, and distributed energy technologies can save the US around $473 billion in electricity bills from now to 2050.

Plus, distributed energy and other related technologies offer massive employment opportunities. The study of Vibrant Clean Energy showed that distributed energy resources can provide two million jobs if 25 percent of US homes invest in DERs and related technologies.

Consumers also enjoy plenty of benefits in distributed energy systems as they can either receive compensation for allowing the use of their storage systems in stabilizing the grid or by selling back electricity to the main grid.

Distributed energy systems also help in breaking down monopolies in power distribution. As I have discussed in a separate post, power distribution is not monopolistic by nature as monopolies only become a monopoly due to regulation. Distribution energy systems offer better transparency on pricing like energy management systems, advanced metering, dynamic-based pricing, and more options for power consumers.

There are also other tools relying on renewable energy that can be used during disasters. For example, we currently have a technology that can convert any river, lake, contaminated borehole or even flood water into clean drinking water by state-of-the art desalination units running purely on solar power. The desalination units that can be connected to the grid or a combination of solar and grid generator so the units can run 24/7. At a minimum these desalination units can provide potable drinking water for 500 to 700 individuals. The units can be fitted with a 5-kilowatt hour (kWh) Solar Panel system so it can operate round the clock.

The Philippines is always dealing with natural disasters. Year after year we will be facing the same threats, which according to the United Nations are about to get worse over time. The technology we need to make our power infrastructure more resilient is now available. The Philippines only need to realize their value and make the most of what they have to offer.