The Philippine Economic Zone Authority (PEZA) has anticipated the energy needs of locators operating factories inside its economic zones and has tapped power generation and distribution companies to help ensure adequate supply through energy facilities within the business enclaves.

This comes amid the inconvenient reality that the Philippines has some of the highest electricity costs in the region, a major disincentive for both foreign and local investors. “This is a recurring issue in the Philippines because, apparently, our country has the third-highest electricity rates in the region, after Singapore and Japan,” PEZA director general Tereso Panga said in an interview.

“We can be competitive as we invite power generation and distribution utility companies to set up their facilities inside the ecozones. As we implement our energy efficiency, decarbonization, renewable energy, and sustainable development programs, we are able not only to bring down the cost of power but also to promote clean and green production,” Panga explained.

Electricity cost and supply reliability are recurring competitiveness concerns for the Philippines.

He said these are crucial determinants that investors look for in deciding where to locate their investments, apart from the usual ease and cost of doing business checklist.

“As we create pockets of development all over the country through the ecozones, we can provide world-class, environment-friendly, and viable locations for investors. Our ecozones can enable the Philippines to become the preferred investment destination in the region,” he said.

Panga said they are currently in talks with an American producer of solar concentrators and closed-loop geothermal power for their RE push to energize locators in its 420 ecozones.

Embedded power source

According to Panga, PEZA can establish power plants within the country’s economic zones because it has franchising authority, meaning it can authorize a power generation or distribution utility company to set up a facility inside an ecozone to meet locators’ requirements.

Through these embedded power systems, PEZA can augment power supply and provide for higher-quality, more reliable, and competitively priced electricity in the ecozones.

The resulting power rate is much lower than rates outside the ecozones. This is because the embedded power supply is devoid of transmission charges, and our tariff rates do not bear stranded costs, following the Energy Regulatory Commission formula for tariff rate setting outside the ecozones,” he said.

Further, Panga stressed that, in some ecozones with embedded power generation and distribution, the pass-on/all-in rate can approximate the subsidized power rates offered by our competitors in ASEAN.

Moreover, another PEZA strategy to bring down power costs is to promote the entry of tried, proven, and tested new technologies in power generation.

LNG used as feedstock

“We were the first in the country to have allowed anaerobic process, thermal oxidation, district cooling, and battery energy storage facilities in the ecozones. We are also in active talks with investors that will introduce new technologies to the country such as solar concentrator, closed-loop geothermal power, and trigeneration facility using LNG as feedstock,” he said.

In all these, Panga said technology providers only need to deal with PEZA to secure business registration and permits to operate their facilities — which makes it much easier to attract investors, given the ready off-takers inside the zones and the fiscal incentives and EODB measures provided by PEZA.

“It is the PEZA Board, where DoE and DoST are represented, together with seven other key agencies involved in the ecozone development program, that approves the operations of ecozone utilities providers,” he stated.