Research on Electric Power Development in the Philippines
With a population of 105 million, the Republic of the Philippines is the second most populous country in Southeast Asia. The Philippines is a major member of the Association of Southeast Asian Nations (ASEAN) and one of the members of the Asia-Pacific Economic Cooperation (APEC). In 2018, China and the Philippines established a comprehensive strategic cooperative relationship. In recent years, the trade between China and the Philippines has maintained a sustained and rapid growth momentum. In 2020, the bilateral trade in goods between China and the Philippines reached 61.3 billion US Dollars, and China has become the Philippines’ largest trading partner.
From 2015 to 2019, the economic growth of the Philippines has reached more than 6%. Compared with the major Asian economies, it is only lower than India, China and Vietnam. The economic development has achieved remarkable results. Affected by the Covid-19 pandemic in 2020, economic development has declined, but it has gradually recovered. The rapid economic development has brought huge demand for electricity, and the high electricity price under the existing electricity mechanism has further stimulated the investment and development of the electricity industry. On the other hand, weak infrastructure, excessive restrictions on foreign investment, and lack of employment have restricted the development of electricity in the Philippines to a large extent, thereby restricting economic growth.
According to the 2020-2040 energy plan of the Philippine Department of Energy, the Philippines will need about 68.63GW of new installed capacity by 2040, with an average annual growth rate of about 6.68%. By the end of 2020, the installed capacity in the Philippines was only 26.286GW. It can be seen that the power market demand in the Philippines is strong and the development potential is great. Combined with the analysis of the energy supply situation in the Philippines, in the next ten years, coal-fired power plants will still serve as the basic load for power supply, while gradually developing LNG and other clean and reliable energy power generation, and cooperating with the development of renewable energy projects as peak load.
In 2001, the Philippine government promulgated the Electric Power Industry Reform Act (EPIRA), which divided the power industry into four sectors: power generation, power transmission, power distribution and power supply. Among them, fully open and strive to achieve complete competition in the field of power generation and power supply, and implement regulated competition in the field of power transmission and distribution. The purpose of the Act is to completely market the power industry. The state will no longer directly invest in the construction of power stations, and the existing state-owned power generation assets will be sold one after another. Almost all new power generation capacity in the future will be built by private investors. The function of the government is to provide legal services. , policy and regulatory environment. In addition, the power generation industry does not have too many restrictions on the entry of foreign investors. Although the power grid is a “natural monopoly”, privatization-like incentives are still arranged through franchise auctions.
In 2007, State Grid Corporation of China, Monte Oro Grid Resources Corporation (MOGRC) and Calaca High Power Corporation (CALACA) jointly bid to obtain the only franchise in the power transmission in the Philippines, and established the National Grid Corporation of the Philippines (NGCP), which is responsible for the investment and operation of transmission assets across the Philippines. With the Participation of State Grid Corporation of China, with the help of China’s technological advantages, has successfully reduced the transmission loss of the Philippines’ power grid from 16 % to 9%. It has also greatly improved the reliability of the power grid and improved the situation of frequent power outages in the Philippines. At the same time, it has also driven chinese equipment manufacturers and engineering contractors to enter the Philippine market.
菲律宾经济增长迅速，电力需求旺盛，且电力基础设施建设亟待发展。但受外资投资限制的影响，外资投资电力需求不高，需要对项目进行具体的甄选。中资企业应结合各自的优势，寻找合适的设备制造商和本地施工合作伙伴进行合作开发。对最新的、前沿的技术和业务，应提前进行推介和布局，如综合能源、储能技术、智能电网等方面的业务。在商业模式和投融资方面，应积极探索与属地合作伙伴联合开发的机会，积极探索联合投资的模式。 The Philippine economy is growing rapidly, the demand for electricity is strong, and the construction of electricity infrastructure is in urgent need of development. However, due to the restrictions on foreign investment, the demand for foreign investment in electricity is not high, and specific projects need to be selected. Chinese-funded enterprises should combine their respective advantages to find suitable equipment manufacturers and local construction partners for cooperative development. The latest and cutting-edge technologies and businesses should be promoted and deployed in advance, such as businesses in integrated energy, energy storage technology, and smart grids. In terms of business models and investment and financing, opportunities for joint development with local partners should be actively explored, especially the mode of joint investment.