As the Philippines takes steps to secure its power supply in the short and medium term, Cebu, the country’s fastest-growing economic hub, is also gearing up to meet the energy needs of its burgeoning IT-BPM, Tourism, and Manufacturing sectors.
During a recent energy forum in Makati City, Energy Secretary Raphael Lotilla highlighted the Department of Energy’s (DOE) support for utilizing existing coal capacity to sustain the country’s economic growth. With the Philippines maintaining its position as ASEAN’s fastest-growing economy in 2023 and expected to continue this trend through 2024, Central Visayas, particularly Metro Cebu, led all of the Philippines’ regions with a 7.3% growth rate in 2023.
Lotilla stated that the Philippines currently retains more than 6,300 megawatts of dependable coal capacity that is ten years old or younger. Lotilla emphasized that maximizing the use of existing energy infrastructure helps avoid imposing additional cost burdens on the economy and consumers.
Cebu’s Energy Dependence on Neighboring Islands
Cebu heavily relies on electricity imports from neighboring islands like Panay and Leyte, with additional supplementation from Luzon. Approximately 60 percent of the electricity comes from facilities located outside Metro Cebu.
Following the significant Panay Blackout earlier this year and anticipating a power shortage in Cebu over the next 3 to 4 years, Governor Gwendolyn of Cebu stressed the importance of constructing baseload power plants within the province. This is crucial to meeting the growing demand for reliable power and supporting the rapid expansion of the economy and population.
“We cannot be relying mainly on others for our power. We need to be self-sufficient, not in 2027 but now,” said Garcia.
Cebu’s rapid progress is fueled by its advantageous location, robust infrastructure, thriving tourism sector, and growing business process outsourcing (BPO) industry. This development substantially contributes to the national GDP (Gross Domestic Product), generating employment opportunities, drawing foreign investments, and fostering regional prosperity.
On the sidelines of the recently concluded Cebu Business Month Summit at the SM Seaside City, acting Cebu City Mayor Alvin Garcia mentioned in an interview that the city is implementing measures to guarantee an ample power supply.
Garcia emphasized the need to attract investments from private sectors, particularly the existing power generation companies, and allow them to expand their capacity to supply power to Cebu Island. During the same event, Aboitiz Power Corporation, via its subsidiary Therma Visayas Inc. (TVI), declared its preparedness to produce an additional 150 megawatts (MW) of power, which is expected to be operational by 2028. Ronaldo Ramos, the COO for operated assets of the AboitizPower Thermal Business Group, stated that completing the brownfield expansion plant in Toledo City hinges on the swift approval and issuance of the required permits. Ramos, who discussed Energy Security at the Cebu Business Month Summit, ensured that once all these prerequisites are approved, the company will commence construction before the end of 2025.
Cebu’s Energy Security Concerns
The Philippine grid operator NGCP reported that in April 2024, the Luzon and Visayas grids experienced their highest peak demands of the year, with the Visayas grid peaking at 2,525 MW. This surge in demand led to the overloading of the power systems, resulting in numerous Red and Yellow alerts across both grids.
High peak demands in the following weeks led to persistent tight power supply conditions. The Department of Energy (DOE) reported that from April 16 to May 23, 2024, the Luzon power grid had 6 Red Alerts and 20 Yellow Alerts, while the Visayas grid had 7 Red Alerts and 20 Yellow Alerts.
Cebu province contributes to half of the Visayas region’s total demand, with Metro Cebu, including Mandaue, Lapu-Lapu, and Cebu cities, accounting for over half of the province-wide demand. According to NGCP, Cebu is a focal point for power consumption in the Visayas.
The DOE projects that energy demand for Cebu Province will reach approximately 1,400 MW in the next two years and is expected to outpace supply by 2027 unless new baseload power plants are constructed.
The Department of Energy (DOE) has stated that exemptions are allowed for committed, indicative, and expansion plans despite the moratorium on new coal plant development. During the Makati Forum, Lotilla expressed optimism about the significant potential for growth in renewable energy, particularly solar and wind. However, he noted that their current contribution to the power mix is only at 22 percent, falling short of the target of 35 percent in the next six years. On the other hand, coal currently accounts for 62 percent of the country’s energy needs. Lotilla emphasized the DOE’s commitment to ensuring sufficient baseload capacities while striving to increase the share of renewable energy in the power mix.
Source: Economic powerhouse Cebu aligning with Philippine energy security goals