The declaration of yellow and red alerts in the Luzon and Visayas grids last week speaks to the importance of the need to expand natural gas plants in the Philippine power mix to act as a reliable source of power and a viable transition technology.

Yellow alerts are indicative of insufficient operating margins to meet contingency requirements. It is raised to a red alert when there is not enough power supply to meet consumer demand.

Moving forward, peak electricity demand is projected to increase annually by 6.6 percent from 2020 to 2040, according to the Department of Energy. If things are not done differently, the situation may deteriorate.

Future power supply is already constrained by the moratorium on greenfield coal power plants, the impending depletion of the Malampaya gas field by 2027, and the aging of the country’s power plant fleet.

Liquified natural gas (LNG)-to-power generation will bring in more reliable capacity to service growing electricity demand and support the entry of more variable renewable energy sources. LNG-powered turbines can cycle more quickly than other baseload counterparts, thereby providing more flexibility in addressing the inherent intermittencies of renewable energy technologies.

Under the Clean Energy Scenario of the Philippine Energy Plan, it was forecasted that while 50 percent of gross generation will come from renewable energy sources by 2040, 26 percent will be from LNG. Since the latter has around half the greenhouse gas intensity of coal, the overall power mix will become less carbon-intensive.

It was reported that Meralco PowerGen Corporation and Aboitiz Power Corporation will jointly invest in two of San Miguel Global Power Holdings Corporation’s gas-fired power plants under a deal valued at US$3.3 billion. This includes a new 1,320 MW combined cycle power facility, and the existing 1,278 MW Ilijan power plant, which historically accounts for 10 to 12 percent of Luzon’s net dependable power.

At more than 2,500 MW, the project is said to be the Philippines’ largest integrated LNG facility. This project and others like it will be critical to meet the energy security needs of the Philippines in the near- and long-term.

Furthermore, in a showing of the importance of economies of scale, the parties will also invest in almost 100 percent of the LNG import and regasification terminal owned by Linseed Field Corporation. The two power plants will have shared use over these utilities for the receiving, storing, and processing of LNG, hence driving down individual capital costs and operating expenses.