=== pep-2023-2050-vol2-section-f1-page-087.pdf === In terms of on-grid installed capacity, this increased to 28,258 MW83 in 2022 from 26,882 MW in 2021 while dependable capacity was observed to slightly decline to 23,598 MW from 23,855 MW in 2021.84The decrease in dependable capacity is related to the recorded 0 MW capacity from Ilijan Natural Gas Power Plant as its gas sales purchase agreement (GSPA) with Malampaya ended in June 2022. The country’s power generation meanwhile intensified by 5.1 percent registering at 111,516 GWh in 2022 from 106,115 GWh in 2021. Coal remained the most dominant fuel for electricity generation at almost 60.0 percent equivalent to 66,430 GWh. Renewables and natural gas closely followed with 22.1 percent (24,684 GWh) and 16.0 percent (17,884 GWh), respectively. As the backbone linking electricity generation down to distribution, the transmission substation capacity in 2022 was at 48,801 Megavolt-Ampere (MVA), while the total transmission line length reached 21,027 circuit-kilometers (ckt-km). The transmission system in the main grid is a government asset, owned by the National Transmission Corporation (TransCo). However, the obligation to operate, maintain, and expand the grid was given to the National Grid Corporation of the Philippines (NGCP), a private company that secured the 25-year concession and holds the congressionally granted 50year franchise, which officially started in 2009. On the distribution side, 125 distribution utilities (DU) are operating in the main grid. The oversight on the 100 electric cooperatives (ECs) is being exercised by the National Electrification Administration (NEA). The 24 private investor-owned utilities (PIOUs) and one (1) LGU-owned utility (LGUOU) are under DOE’s supervision. Off-Grid. In off-grid areas, installed capacity rose to 673.77 MW in 2022, a 6.0 percent growth from 636 MW in 2021. Dependable capacity also increased by 10.7 percent, registering 548.296 MW in 2022 from only 495 MW in 2021. The National Power Corporation-Small Power Utilities Group (NPC-SPUG), as asset owner of both transmission and substation facilities in off-grid areas, is responsible for the operation and maintenance. Transmission line length and substation capacity in 2022 totaled 1,137.72 ckt-km. and 215 MVA, respectively. The NEA remains as oversight of the 21 off-grid ECs, while DOE keeps tab on the single multi-purpose cooperative serving as local utility in small islands and isolated grids (SIIG). Sales and consumption in off-grid areas reached 1,689 GWh in 2022 with the residential sector comprising 54.0 percent of the total. Generation Monitoring of Power Generation Projects. As the power sector is mainly private sector driven, the DOE continuously monitors its development including the timely completion of power generation projects. These projects provide the additional generating capacity to enhance the grid’s supply stability and reliability and address the country’s increasing electricity requirements. For the period 2022 to June 2023, the additional generating capacities provided an aggregate installed and dependable capacities of 1,111.0 MW and 955.3 MW, respectively (Table 41). Nearly 81.0 percent of the new power generating plants is located in Luzon. Of the total, coal comprised 69.0 percent, solar with 10.0 percent, oil-based with 9.0 percent and the remaining is contributed by hydro, biomass, and geothermal. 83 84 2022 DOE Power Statistics Ibid Vo l u m e 2 77 === pep-2023-2050-vol2-section-f1-page-088.pdf === Table 41. List of Newly Commissioned Power Plants from 2022 to June 2023 (On-Grid) Power Plant Plant Type Operator Location Date Commissioned/ Commercial Operation Date LUZON Capacity (MW) Installed Dependable 898.44 766.24 Dinginin Unit 2 Coal GN Power Dinginin Mariveles, Bataan October 2022 725.00 668.00 Hypergreen Biomass Hypergreen Energy Corporation Bocaue, Bulacan April 2022 12.00 10.00 Sta. Rita Solar (Phase 3B) Solar Jobin-Sqm Inc. (JOBIN) Subic Bay, Freeport Zone November 2022 34.40 27.50 Bataan Solar Energy Project Solar Bataan Solar Energy, Inc. (BSEI) Mariveles, Bataan June 2022 4.40 3.70 Arayat-Mexico Solar Power Plant Solar Greencore Power Solutions 3, Inc. Arayat, Pampanga July 2022 72.00 51.00 Petron RSFFB PH3 (own-use) Coal Petron Corporation Limay, Bataan Dec 2022 44.40 0.00 Butao Irrigation Drop Hydro Mindoro Grid Corporation San Manuel, Pangasinan February 2022 1.40 1.20 Man-Asok Hydro Benguet Electric Cooperative Buguias, Benguet July 2022 3.24 3.24 Inarihan Hydro Bicol Hydropower Corp. Panicuason, Naga City April 2022 VISAYAS 1.60 1.60 172.20 149.40 Isabel Modular Diesel Ancillary Service Power Plant Oil Isabel Ancillary Services Co. Ltd. (IASCO) Isabel, Leyte March 2022 86.30 70.70 Tubig HEPP Hydro Taft Hydroenergy Corporation Taft, Eastern Samar and Hinabangan, Samar October 2022 15.90 15.90 San Carlos Biopower Biomass San Carlos Biopower, Inc. San Carlos City, Negros Occidental June 2022 20.00 18.00 South Negros Biopower Biomass South Negros Biopower, Inc. La Carlota City, Negros Occidental June 2022 25.00 22.40 North Negros Biopower Biomass North Negros Biopower, Inc. Manapla, Negros Occidental June 2022 MINDANAO 25.00 22.40 40.40 39.70 11.00 Mati Bunker C Oil Supreme Power Corporation (SPC) Mati City, Davao Oriental November 2022 11.00 Mindanao 3 Binary Geothermal Plant Geothermal Energy Development Corporation Kidapawan, North Cotabato June 2022 3.70 3.00 Marbel 1 HPP Hydro Euro Hydro Power (Asia) Holdings, Inc. Koronadal City, South Cotabato June 2022 0.80 0.80 Lake Mainit Hydro Agusan Power Corporation Jabonga, Agusan del Norte March 2023 Total 24.90 24.90 1,111.04 955.34 Issuance of Power Generation Policies. The DOE’s responsibility of supervising the electricity industry involves the formulation of policies to ensure grid security, reliability, and stability. The issuance of Department Circular (DC) 2022-05-0015 titled “Supplementing Department Circular 2021-06-0013 on the Framework Governing the Test and Commissioning of Generation Facilities for Ensuring Readiness to Deliver Energy to the Grid or Distribution Network” on 20 May 2022 allowed the power plants to continue injecting generated electricity to the grid after successful completion of test and commissioning process. This also enables the power plants to support the anticipated increase in demand, specifically during summer. On 20 April 2023, the DOE issued DC2023-04-0008 titled Prescribing the Policy for Energy Storage System in the Electric Power Industry. Cognizant of the benefits from energy storage system (ESS) given the high influx of variable renewable energy (VRE) in the country’s power system, the Circular repealed the earlier ESS policy framework (DC2019-08-001285). The ESS technologies include battery energy storage system (BESS), compressed air energy storage (CAES), flywheel energy storage (FES), and pumped storage hydropower (PSH). The ESS proponents can apply and register their ESS for one or more of the following purposes: a) provision of ancillary service; b) provision of energy through bilateral supply contracts or trading in the Wholesale Electricity Spot Market (WESM); c) manage the variability of renewable energy (RE); d) auxiliary load management for generation companies; e) transmission and distribution facility upgrades deferment; f) transmission and distribution utility power quality management; g) end-user demand management; and h) distribution utility demand management. Correspondingly, the DOE also issued DC2023-07-0022 on 17 July 2023 titled Implementing Guidelines for the Decommissioning and Mothballing of a Generating Plant or Unit Pursuant to Section 2.8 of DOE Department Circular 2010-03-0003.86 The policy prescribes the guidelines on the review process and evaluation of applications for decommissioning87 or mothballing88 of a generating plant or unit including embedded generating facilities regardless of technology and mode of connection. However, it does not apply to self-generation facilities, qualified end-users, and distributed energy resources. More importantly, the Circular excludes the decommissioning and mothballing of a nuclear power plant as this will be covered by a separate Department issuance. “Providing a Framework for Energy Storage System in the Electric Power Industry” issued on 1 August 2019 “Directing all Power Generation Companies, the Transmission Service Provider, and All Distribution Utilities to Ensure Adequate and Reliable Electric Power Supply in the Country” issued on 26 February 2010. 87 Refers to the permanent retirement of a generating plant or unit from operation upon reaching its maximum economic life and generation of electricity is no longer technically viable, subject to the confirmation of the DOE under the DC. 88 Refers to temporary deactivation or removal from service of a generating plant or unit, within the specified period provided by the applicant and to be restarted and used to supply power at a future date. As stated in the DC, the period within the applicable outage allowance pursuant to the issuances of the Energy Regulatory Commission (ERC) shall not be considered as mothballing activity. 85 86 78 Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-089.pdf === To ensure that the grid has a stable and steady supply of electricity, the DOE continued to accentuate and reiterate to power industry participants their obligations in providing the required Ancillary Services (AS)89 and adherence to the Grid Operating and Maintenance Program (GOMP).90 The former considers the safe and reliable operation of the grid by having sufficient ancillary services to meet power quality and reliability. Meanwhile, the latter mandates power generating companies (GenCos) to submit to NGCP its three-year planned outage schedules. It also directs the public posting of the approved GOMP and allows hydropower plants to conduct maintenance during the peak months or from April to June. Further, to underpin the energy transition foreseen in the power sector, the coal moratorium policy91 issued in 2020 remains in effect, encompassing restrictions in the processing of applications for new coal power projects. Plans and Programs Power Generation Roadmap The generation sub-sector’s action plans are in support of the 2050 objective of ensuring energy security, resiliency, affordability, and sustainability. Figure 19. Power Generation Roadmap Short Term Medium Term 2023-2024 Generation 2025-2028 • Smooth integration of new and emerging power generation technologies into the country’s energy mix • Enhance policy on the performance and operation facilities toward self-healing grid system • Policy support to incentivize more investments in generation • Development of omnibus guidelines for the processing of generating unit/s requirements for commercial operation and other purposes • Smooth integration of new and emerging power generation technologies into the country’s energy mix • Policy on Virtual Power Plant/ Consolidation of Distribution Energy Resources System Long Term 2029-2050 • Enhance and utilize technologies in power generation in support of cleaner energy transition and decarbonization • Increase power generation flexibility 2050 OBJECTIVE Ensure security, resiliency, affordability, and sustainability For the short-term (2023-2024), actions to be taken are the integration of new and emerging generation technologies, enhancement of policies on performance and operation, incentivizing generation investments, and development of omnibus guidelines for processing of generating unit/s requirements for commercial operation. In the medium- (2025-2028) to long-term (2029-2050), identified action plans are formulation of a policy on virtual power plant, consolidation of distributed energy resources system, enhancing and utilizing new technologies in power generation to support energy transition, and increasing power generation flexibility. Smooth Integration of new and emerging power generation technologies into the country’s energy mix. Technological advancements in industry give rise to sustainable electricity production. Pursuing the energy transition points to considering and integrating these emerging technologies into the system once commercially available and viable. The various technologies serving as options are offshore wind, nuclear, hydrogen, ammonia, among others. The move for eventual inclusion of these options in the energy mix requires support in the form of policy formulation. DC 2019-12-0018 titled “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid” DC 2020-02-0004 titled “Providing Guidelines on the Planned Outage Schedules of Power Plants and Transmission Facilities and the Public Posting of the Grid Operating and Maintenance Program (GOMP)” 91 DOE-AGC-20005580 titled “Advisory on the Moratorium of Endorsements for Greenfield Coal-Fired Power Projects in line with Improving the Sustainability of the Philippines Electric Power Industry” issued on 22 December 2020 89 90 Vo l u m e 2 79 === pep-2023-2050-vol2-section-f1-page-090.pdf === Enhance policy on the performance and operation of generation facilities toward self-healing grid system. Realizing a self-healing grid system necessitates investments in advanced technologies for real-time monitoring and automation in generation facilities. The key aspect of the policy enhancement is ensuring that generation facilities are resilient, dependable, and adaptable to abrupt changes in the power system. Achieving interoperability within the generation system enhances the overall flexibility and adaptability of the power network, contributing to a more reliable and efficient energy infrastructure. Policy support to incentivize more investments in generation. The objective of supply security remains at the core of the energy agenda in the planning period. Augmenting the existing capacity requires the right timing of investments, as well as policies that are facilitative. To entice the necessary investments, the DOE is keen on designing policy support mechanisms to facilitate greater access to financing for potential power generation projects and incentivizing connections for RE-based capacities as identified in the smart and green grid plan (SGGP). Enhance and utilize new technologies in power generation in support of cleaner energy transition and decarbonization. In support of the energy transition direction, there is a need to accelerate the development, adoption, and utilization of emerging clean energy technologies for power generation. This action point is in correlation to the integration of offshore wind, hydrogen, ammonia, etc. The DOE is steadily progressing towards this objective by formulating policies, feasible incentives, and development goals that are inclusive, ensuring an equitable environment and a level playing field for the diverse range of emerging technologies. Development of omnibus guidelines for the processing of generating unit/s requirements for commercial operation and other purposes. The DOE is set to formulate an omnibus guideline that will consolidate all existing policies, EVOSS application processes, and all other related permitting processes before reaching commercial operation of a project. Policy on Virtual Power Plant / Consolidation of Distributed Energy Resources System. As technology advances, there is a corresponding need to adapt to changes in the power industry. Distributed Energy Resource (DER) systems and Virtual Power Plants (VPP) are among the potential futures in the power sector. 92 The DOE is currently looking into potential strategies to promote the deployment and adoption of these technologies by creating a policy framework focusing on market participation, interoperability mechanisms, and grid-readiness. The introduction of incentive programs is also being considered to further support and promote these technologies. Increase power generation flexibility. The Philippines’ power system progresses into having VRE in electricity generation due to the government’s enabling laws and policies. This is the foreseen transformation of the system within the planning horizon. In a power system where VRE is increasing, operations of the system increase in complexity. The gradual integration of VRE introduces additional levels of variability and uncertainty in the net load.93 With energy transition as the driver for redefining the power system, the country is looking at natural gas option to serve as a transition or bridge fuel to increase flexibility of the grid, while waiting for other renewable technologies to develop (e.g., floating solar, pumped hydropower, etc.). These plants can provide the intermediate or mid-merit supply requirements of the country. DERs, defined in ERC Resolution No. 17, s.2023, are decentralized power sources connected to distribution system or electrical system of endusers that could be aggregated to meet demand. VPP, on the other hand, is an energy management system optimizing the operation of DERs. 93 Source: International Renewable Energy Agency (IRENA). 2018. Power System Flexibility for the Energy Transition [pdf]. Available at https://www.irena.org/-/media/Files/IRENA/Agency/ Publication/2018/Nov/IRENA_Power_system_flexibility_1_2018.pdf. 92 80 Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-091.pdf === Monitoring Implementation of Power Generation Projects. Forming part of ensuring grid supply security is the continuous monitoring of the timely completion and implementation of committed and indicative power projects. Coordination with these project proponents is done by the DOE to assist in resolving challenges encountered in operating and providing supply to the grid. The aggregate capacity of committed power projects as of 3rd quarter of 2023 is around 12,600 MW. Natural gas comprises 48.2 percent of the total followed by RE (32.8 percent) and coal (18.3 percent). Nearly 50.0 percent of the capacity (6,338.7 MW) is seen to operate from 2023 to 2025 (Table 42). On the indicative power projects, the total capacity for the planning period is 68,912 MW. About 85.5 percent of these projects is RE-based totaling around 58,917 MW, while natural gas with 12.1 percent share or 8,320 MW. Coal and oil account for a meager 2.4 percent aggregate share (Table 43). Table 42. Committed Power Projects (as of 30 September 2023) Luzon Plant Type No. of Projects Visayas Rated Capacity (MW) No. of Projects Mindanao Rated Capacity (MW) No. of Projects Philippines Rated Capacity (MW) No. of Projects Rated Capacity (MW) Coal 10 1,900.00 1 135.00 1 270.00 12 Oil-Based 1 11.04 4 19.67 2 56.00 7 2,305.00 86.71 Natural Gas 10 6,070.00 - - - - 10 6,070.00 Geothermal 3 66.00 4 55.60 - - 7 121.60 Hydropower 20 146.87 3 40.20 14 84.42 37 271.49 Solar 36 2,970.14 1 300.00 2 121.00 39 3,391.14 Wind 3 260.00 1 13.20 - - 4 273.20 Biomass 3 11.282 4 44.00 3 26.00 10 81.28 86 11,435.33 18 607.67 22 557.42 126 12,600.43 41 1,394.00 17 370.00 11 260.00 69 2,024.00 Total BESS Table 43. Indicative Power Projects (as of 30 September 2023) Luzon Plant Type No. of Projects Visayas Rated Capacity (MW) No. of Projects Mindanao Rated Capacity (MW) No. of Projects Philippines Rated Capacity (MW) No. of Projects Rated Capacity (MW) Coal 4 1,400.00 0 0.00 1 120.00 5 Oil-Based 1 60.00 1 95.20 0 0.00 2 1,520.00 155.20 Natural Gas 7 7,720.00 0 0.00 1 600.00 8 8,320.00 Geothermal 8 345.00 2 68.00 0 0.00 10 413 Hydropower 66 6,683.56 6 381.60 10 746.70 82 7,811.86 Solar 75 7,368.75 19 1,620.42 8 256.68 102 9,245.84 Wind 63 31,383.40 23 9,850.10 2 136.00 88 41,369.50 Biomass Total BESS 2 14.40 0 0.00 2 62.00 4 76.40 226 54,975.10 51 12,015.32 24 1,921.38 301 68,911.80 20 916.60 23 792.00 3 118.00 46 1,826.60 Vo l u m e 2 81 === pep-2023-2050-vol2-section-f1-page-092.pdf === Transmission The transmission sector is an indispensable pillar of the electricity industry as it links generation to distribution. It is the main backbone and highway for transmitting high voltage electricity from power producers to smaller distribution networks, and eventually to end-users. As the government prioritizes energy transition-centric policies and programs, the successful realization of these initiatives critically depends on the availability of transmission facilities as well. Over the past decade, the country’s electricity grid faced perennial challenges that affected the efficiency and overall performance of the transmission system. These include among others, various right-of-way (ROW) acquisitions, natural calamities and human-induced hazards, contracting of adequate ancillary services (AS), as well as prolonged delays in conducting System Impact Study (SIS), which considerably contributed to the deferred implementation and completion of critical transmission projects. Consequently, these hurdles resulted in putting a halt in the efficient delivery of electricity services to the consumers, as demonstrated by the occurrence of tight power supply incidences, issuance of several yellow and red alert notices, line congestions, and constrained or stranded power generation capacities that brought unwanted supply disruptions thereby reducing the reliability of the power grid. Recognizing these longstanding impediments as stumbling blocks for the sector’s growth, the government is taking a bold move to implement policy reforms, and necessary interventions that will establish a more proactive approach in improving the initiatives on transmission system planning, strengthening regulatory support, enhancing operational efficiency, and expediting the clockworks governing project implementation. Complementing government efforts through the Transmission Development Plan (TDP) 2022-2040. As the Transmission Network Provider (TNP) and System Operator (SO) of the country’s main electrical grid, the NGCP is mandated to prepare and annually update the TDP, pursuant to Rule 6, Section 10 of the Implementing Rules and Regulations (IRR) of Republic Act (RA) 9136, or the Electric Power Industry Reform Act (EPIRA) of 2001. On 29 December 2022, the DOE approved and adopted the NGCP’s TDP 20222040, which should serve as the primary document for transmission development that addresses the increasing electricity requirements and in support of incoming power generating facilities. The TDP should be geared towards the attainment of the Clean Energy Scenario (CES) outlined in the Philippine Energy Plan (PEP) 20202040. This strategic alignment much reflect the overarching goals and aspirations set forth within the power sector’s transmission roadmap. The NGCP developed the “TRANSMISYON 2040,” a strategic framework which stands for “Transmission Resiliency and Augmentation for Nationwide Smart Grid Management through Inter-connected Systems, Organization, and Networks 2040.” This blueprint maps out a comprehensive direction for the transmission sector, encompassing the NGCP’s priority targets for each Regulatory Period, along with decisive strategies. These include fostering capacity-sharing through interconnected transmission networks, progressively transitioning to smart grid systems, establishing a fully looped grid configuration fortified with mandatory redundancy, reinforcing grid resilience through infrastructure improvements and asset replacements, and attaining full integration of RE sources and emerging technologies. Moreover, the NGCP’s priority thrusts for transmission development should be driven by continuous expansion and development of key transmission backbones and reinforcements, programs and initiatives that strengthen grid resilience, facilitation of transmission projects within Competitive Renewable Energy Zones (CREZ), integration of next-generation technologies, refined strategy for developing 69-kV facilities, and expanded electricity access through off-grid interconnections. The summary of ongoing and planned transmission projects being implemented by NGCP on a per grid basis are listed in Annexes 13 to 15.94 94 82 For comprehensive details, including sub-components of the transmission projects, refer to the NGCP's published TDP 2022-2040, accessible at https://ngcp.ph/article?cid=16600. Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-093.pdf === Tracking progress to expedite the completion of critical transmission projects. The timely completion of transmission projects, which involve line extension, system upgrades, construction of new transmission corridors, or grid interconnection further improves the delivery of electricity service and augments the reliability of the transmission network. Recognizing these as instrumental in ensuring uninterrupted power supply to the consumers, the DOE is keeping track and closely monitoring the progress of the following key transmission infrastructure projects: • The Hermosa–San Jose (HSJ) 500-kV Transmission Line Project is part of the North Luzon 500-kV backbone project aimed at enhancing the resiliency and system reliability of the Luzon grid. The project serves as a new 500kV corridor for the bulk power generation which will accommodate new capacity additions, especially in the Bataan and Zambales areas. In addition, the project will ease congestion in the Bataan corridor enabling all available power capacity in the North to be delivered to areas with high demand, including Metro Manila. Meanwhile, the old Hermosa 230-kV Substation will transmit power through the construction of a 230-kV Tie Line to the new Hermosa 500-kV Substation. This involves the installation of shunt reactors, line reactor, and capacitor that will regulate system voltage during periods of both low and peak usage. The original target date of completion of the HSJ 500-kV T/L Project was in June 2019, and has since been moved ten times due to permitting, regulatory, and ROW issues. On 27 May 2023, the NGCP successfully energized the transmission line segment, enabling the flow of 545 MW initial load. At present, the HSJ transmission line is loading at 2,000 MW capacity, with February 2024 as the new target date of completion being eyed by the NGCP. • The Cebu–Negros–Panay (CNP) 230-kV Backbone Stage 3 Project forms part of the initiative to enhance the power transmission system of the Visayas grid. This hinges from the Transmission Master Plan and seeks to augment power transmission capabilities by developing a 230-kV backbone, extending from Cebu and Negros reaching up to Panay Island. The first phase of this project is the interconnection of the Negros and Panay electrical nodes through submarine cables, which was completed and energized in October 2016. The second stage is the construction of 230-kV facilities in the existing Cebu 138-kV Substation that will facilitate the integration of the proposed transmission line from Toledo City. The CNP Stage 3 Project serves as the final stage for the Cebu–Negros–Panay 230-kV Backbone Project and will construct a 230-kV infrastructure spanning from the Barotac Viejo Substation in Panay to a new Magdugo Substation in Cebu. This proposed network comprises overhead transmission lines, submarine cable connections, and associated new substation facilities. Designed at 800 MW of transmission line capacity, the CNP Stage 3 Project will ensure the effective transmission of excess power generation from Panay and Negros to Cebu, through a high-capacity transmission corridor. The project is envisaged to address grid congestion that hampers the efficient transfer of energy within the Visayas sub-grid, particularly the RE generation from Negros Island. The CNP Stage 3 Project has undergone seven (7) schedule adjustments since its original target date of completion in December 2020. Currently loading at 270 MW, the CNP Stage 3 Project stands at an overall completion rate of 97.2 percent and is expected to be fully completed by March 2024. • The Mindanao–Visayas Interconnection Project (MVIP) is a flagship project that will realize the country’s vision of “One Grid Philippines”, which aims to integrate the three major transmission networks – Luzon, Visayas, and Mindanao – into a unified grid. Furthermore, the MVIP is the first ever project conferred with a Certificate of Energy Project of National Significance (CEPNS) issued by the Energy Investment Coordinating Council (EICC) on 08 May 2018, in light of its vital contributions towards ensuring power supply security and reliability across the grids. This priority project will connect Mindanao to the Visayas and Luzon power grids. Such strategic connection serves several key objectives, to include the reduction of power supply interruptions, optimization of local energy resources, integration of sustainable energy sources, and the facilitation of energy resource sharing throughout the country, among others. Vo l u m e 2 83 === pep-2023-2050-vol2-section-f1-page-094.pdf === Upon its completion, the MVIP will facilitate the exchange of 450 MW of capacity between the Mindanao and Visayas grids, effectively allowing the sharing of reserves between the two grids. Moreover, any surplus power generated by the MVIP will be transmitted to Luzon, enhancing the reliability and stability of the power system, while ensuring a more efficient and secure energy supply for the entire country. Overall, the implementation status of the MVIP currently stands at 99.3 percent. The testing and commissioning phase commenced on 30 April 2023 with an initial load of 22.5 MW. This capacity is steadily increasing, with a current transfer capacity of 270 MW, as of July 2023. Similar to other transmission projects, the completion of the MVIP exhibited a moving schedule having been adjusted ten times since its original target date of completion in December 2020. Meanwhile, with the DOE’s close monitoring and coordination with the NGCP, the MVIP is expected to achieve its full commercial operation at a capacity of 450 MW by January 2024. In addition to overseeing the HSJ, CNP, and the MVIP backbone and interconnection projects, the DOE is closely monitoring the progress of other significant transmission projects being undertaken by the NGCP. Reinforcing the grid by building a modern, smart, and green energy system. The government’s notable progress in establishing a conducive climate for the sector is aligned with the path towards energy transition. Navigating this direction led to the ambitious goals and targets outlined in the PEP-CES that revolve around diversifying energy sources, intensifying energy efficiency and conservation efforts, and advocating for cleaner energy alternatives to ensure a sustainable path of development. With the aggressive push for RE, it is imperative to advance a green and smart transmission system. This will efficiently integrate and manage the anticipated capacity increase from renewables that is expected to become operational from 2024 to 2050. Recognizing this importance, the DOE initiated the formulation of a Smart and Green Grid Plan (SGGP) that seeks to establish a comprehensive roadmap for transforming the country’s existing electric grid into a green, smart, and sustainable transmission system in support of the Philippine Energy Transition Program (PETP). The SGGP is envisioned as a strategic blueprint for the development, deployment, and operation of a modern transmission infrastructure that integrates clean energy sources and emerging technologies and enables a sustainable, reliable, and resilient power grid. Specifically, it aims to address the projected increase in demand, system reliability and security, power quality and technology, market operation support, policy direction, and island interconnections. Further, the SGGP considers the anticipated changes in the energy mix, because of the increasing penetration of RE sources (i.e., offshore wind projects95), mainstreaming of electric vehicles (EVs) in the transport sector, and the entry of emerging and other clean technologies such as nuclear energy and ESS. In pursuit of this goal, the DOE is taking the lead in formulating the SGGP, with support of TransCo, including a group of technical consultants.96 Said plan will assist the DOE in making policy decisions, enhancing technical competencies, identifying policy gaps and challenges, as well as recommending appropriate solutions through policy development and government interventions. The planning process involves conducting thorough assessments of the current transmission system, identifying its strengths and weaknesses, and proposing strategies to address potential issues. Moreover, extensive research and analysis will be performed to determine the feasibility and impact of the proposed strategies and technologies and identify potential risks and challenges that may arise from their implementation. The recommendations generated from these assessments aim to ensure the achievement of the country’s energy security and sustainability goals, and guarantee that electricity supply to consumers remains reliable, efficient, and cost-effective. To guide the overall process, certain specific objectives must be achieved in the transmission expansion planning. Initially, the expansion should support generator entry and accommodate load growth. The grid needs to be capable of accommodating high variable renewable energy (VRE) integration and remain adequate during demand peaks. Additionally, the grid should be prepared to incorporate scenarios, including the integration of offshore wind by 2030, and the implementation of the Mindoro and Palawan interconnection to the Luzon and the Northern Luzon transmission corridor. All of this should be satisfied while ensuring the grid’s capability to facilitate least-cost market dispatch. Taking into account the findings of the World Bank (WB) transmission planning study, titled, “Technical Assistance on Transmission Development in Support of Offshore Wind Deployment and Improved System Reliability in the Philippines,” which identifies the most affordable transmission upgrades and additions to support OSW deployment. Under the gradual deployment portfolio, the WB analysis identified Northern Mindoro, Northwest Luzon, and Manila, as having 6.0 GW of potential OSW capacity with the lowest levelized cost of energy (LCOE) of PhP0.27 per kilowatthour (kWh). 96 Funded by the United States Agency for International Development (USAID) under the Energy Secure Philippines (ESP) Project 95 84 Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-095.pdf === Part of the planning process involves envisioning the required capacity and performance of the 2050 Philippine Grid to accommodate the entry of new generator capacities, grid enhancement technologies, and the transmission and delivery of the projected electricity demand throughout the country. The development of the 2050 Grid requires a systematic approach, involving the sizing and siting of generators, forecasting and spatial disaggregation of demand, and identification of dispatch scenarios. Generator siting is necessary for the identification of optimal locations of future expansion capacities as outlined in this PEP. This process considers various factors, including RE service contracts, CREZ, the evolving transmission network, petroleum service contracts, LNG terminals and ports, and the topography of target build areas. The siting process utilizes geographic information system (GIS) layers that encapsulate all relevant data. This integration enables the assessment of the applicability of established site suitability criteria, such as proximity to existing substations, colocation within CREZ areas, etc. The generator sizing process considers typical unit capacity additions for different technology types to determine the appropriate plant size for each designated site. On the other hand, in demand forecasting, the 2023 Nodal Demand Dispatch Schedule from the Independent Electricity Market Operator of the Philippines (IEMOP) served as a basis for demand disaggregation. This data is employed for the nodal allocation of the total electricity demand based on the power outlook. Similarly, the determination of the dispatch scenarios is an integral component of the network analysis stage. The scenarios guarantee the adequacy and security of the grid amidst critical and highly probable load and generation distribution variations. This process considers both seasonal and daily changes in demand, as well as the inherent variability in power supply caused by the integration of RE at varying penetration levels and the deployment of battery energy storage systems. The final steps of the planning process involve the identification of all feasible network expansion projects. These projects are the potential components of the evolution of the current grid to its future state. The projects include capacity expansion and voltage upgrades of existing transmission lines and substations, new transmission corridors, and voltage regulation projects, among others. The final combination and the implementation schedule of these projects are determined through optimization. The selection process considers the minimization of required investments while ensuring the adequacy and security of the network throughout the entire planning horizon. The groundwork for crafting the SGGP commenced in May 2023 and should be completed by first quarter of 2024 for inclusion in this PEP. The SGGP will serve as a supplementary or auxiliary plan, which the NGCP must adopt including its proposed transmission infrastructure projects. The NGCP needs to come up with an implementation plan (within six (6) months) following the PEP publication to ensure that the identified transmission projects are integrated in the next regulatory period and would be carried out effectively and on schedule. Instituting due diligence on power grid operations through performance assessment and audit. In a proactive move to assess the overall performance and compliance of the NGCP with its mandate and responsibilities as provided under existing legislations, policies, and operational standards set forth under the Philippine Grid Code (PGC), the DOE promulgated Department Order (DO) 2023-06-0018, titled, “Creating the Performance Assessment and Audit Team for the Operations of the Transmission Network Provider and System Operator (PAAT-TNPSO) and Providing for Its Responsibilities” on 08 June 2023. The DO complements DC2017-05-000897 and DC2017-12-001698 which laid out the general framework and implementing guidelines for assessing and auditing the operational performance of power generation, transmission, and distribution facilities. On the other hand, the establishment of the performance assessment and audit (PAA) team aims to support government bodies like Congress and the Office of the President (OP) in continuously reviewing energy-related policies and legislations, while providing a foundation for the development of energy policies to ensure a secure, reliable, and affordable electricity supply. It also serves as the basis for recommending actions to Congress regarding the NGCP’s franchise, which serves as the country’s TNP and SO. 97 98 “Establishing Policies and Guidelines for Conducting Performance Assessment and Audit of Power Generation, Transmission, and Distribution Systems and Facilities” issued on 3 May 2017. “Adoption of Guidelines for the Performance Assessment and Audit of Power Generation, Transmission, and Distribution Systems and Facilities” issued on 28 December 2017. Vo l u m e 2 85 === pep-2023-2050-vol2-section-f1-page-096.pdf === Further, this initiative facilitates the assessment of the NGCP’s performance in line with its obligations under the concession agreement. In doing so, the PAA will be conducted in a transparent and timely manner, providing a basis for improving operations and ensuring compliance with the TDP. Additionally, this initiative aligns with industry best practices and will support the enforcement of an incentive and penalty system by the Energy Regulatory Commission (ERC) with the aim of holding the NGCP accountable for ensuring grid security and reliability. The PAA will be led by the DOE, with members from various agencies representing the Grid Management Committee (GMC), Philippine Electricity Market Corporation (PEMC) through its Market Surveillance Committee (MSC), PEMC Audit Committee, TransCo, ERC and the Power Sector Assets and Liabilities Management (PSALM) Corporation. In addition to this, the DOE may authorize qualified entities to conduct these audits and assessments. Meanwhile, the audit committee will assess various areas, including compliance, planning and engineering, environment, health and safety, operational aspects, technical performance, customer services, information technology, and management effectiveness. Advocating higher policy support through a proposed Executive Order (EO) governing the Philippine Transmission Sector. In addition to the efforts to integrate the power grids and interconnect off-grid areas, the DOE is pursuing another initiative to address the perennial challenges being faced by the transmission sector. This involves proposing two (2) EOs that aim to effectively address the timely implementation of transmission projects and ensure efficient operation of the transmission system. The first EO will establish transparency in all NGCP arrangements with generation companies for the implementation of projects for transmission. Further, it promotes the interconnection of power plants to distribution systems in cases where transmission facilities are either unavailable or insufficient. On the other hand, the second EO is geared towards enhancing the acceleration of critical and priority transmission projects by facilitating their implementation through TransCo, or alternatively, by any designated agency or Government-owned and Controlled Corporation (GOCC) acting on behalf of TransCo. Upon promulgation, the policy instruments will streamline the coordination and cooperation among various stakeholders, thereby ensuring a secured, reliable, and efficient transmission system in the country. Distribution The distribution sector connects the electricity producers with end-users and this comes into play once high-voltage electricity is transmitted over long distances to reach the demand centers. From the load centers, the distribution system assumes responsibility for voltage reduction to deliver electricity that is reliable and safe for consumers within the franchise area. A resilient and responsive distribution system depicts a utility with accountability in providing reliable electricity services. It is along this line that the initiatives of the government and mandated entities primarily focused on sustained efforts in distribution utility planning, policy development, and innovating the electric distribution system. The primary goal is to ensure that this segment of the power supply chain remains armed and adaptable in meeting the electricity needs of the consumers while fostering inclusive economic growth throughout the country. Continuing the efforts to enhance Distribution Development Planning. The promulgation of DC2021-03-000399 on 02 March 2021 brought significant changes in the formulation of the Distribution Development Plan (DDP). Such policy instituted greater transparency and accountability among the distribution utilities (DUs) and facilitated the adoption of a standardized and comprehensive DDP template. Aligned with this objective, the DOE launched the Competitive Selection Process (CSP) e-based Portal in December 2021, enabling industry stakeholders to access important information on the DU’s planned CSP activity in procuring long-term Power Supply Agreement (PSA). Serving as the central hub for all CSP activities of the DUs, the online portal empowers consumers by providing them with comprehensive information at every stage of the competitive bidding process as this is posted on the DOE website. This also allows consumers to gain a better understanding of the generation cost, which is the largest component of the electricity bill. 99 86 “Prescribing the Policy and Guidelines for the Formulation of the Distribution Utilities Distribution Development Plan Integrating the Relevant Laws, Policy Issuances, Rules and Regulations.” Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-097.pdf === Among the relevant information that are readily accessible in the e-Portal include CSP policy issuances and advisories, DU profile and bid bulletin, individual and aggregated electricity demand and supply requirements by grid, as well as the respective Power Supply Procurement Plan (PSPP) of the DUs (Figure 20). Figure 20. DOE-CSP Web Portal In addition, the DOE in its CSP Advisory on 22 September 2022 clarified the provisions outlined in Section 8 of DC2018-02-0003100 and DC2021-09-0030101, specifically delineating the roles and responsibilities of the DOE, ERC, and NEA considering their distinct powers and functions defined under the EPIRA. The advisory provided valuable guidance to the DUs in conducting the CSP to ensure a fair and transparent process in a manner that promotes competition and accountability within the electric power industry. On the other hand, the DOE published the 2021-2030 DDP on 26 January 2023, providing detailed information on the DUs annual demand and supply profiles over the next decade. This comprehensive plan encompasses both individual and regional levels for effective planning and operation. At the individual level, it presents a snapshot of the DUs uncontracted requirements based on projected demand, considering existing PSA and those awaiting approval from the ERC. Meanwhile, the regional profile presents a panoramic view that factors in spatial dimensions and geographical boundaries. This holistic approach enables effective demand planning, optimal operational management, and strategic infrastructure enhancements aimed at establishing a more efficient, reliable, and resilient power grid. Further, an integral highlight of the 2021 DDP is the comprehensive CSP schedule for each DU. This specifically addresses meeting the uncontracted requirements, assuring a continuous, uninterrupted, and cost-effective electricity service for the end-users. Instituting further improvements on the CSP Policy. The DOE is continuously working on refining the CSP policy to align with the principles and objectives of EPIRA in promoting a more efficient and competitive energy market. “Adopting and Prescribing the Policy for the CSP in the Procurement by the Distribution Utilities of Power Supply Agreement for the Captive Market” issued on 01 February 2018. “Amending Certain Provisions of and Supplementing Department Circular No. 2018-02-0003 on the Competitive Selection Process in the Procurement by the Distribution Utilities of Power Supply Agreement for the Captive Market” issued on 24 September 2021 100 101 Vo l u m e 2 87 === pep-2023-2050-vol2-section-f1-page-098.pdf === A significant development on this is the issuance of DC2022-06-0027 on 20 June 2022, which outlines the Guidelines for the Accreditation of Third-Party Auctioneer (TPA). The ERC for its part will formulate policies and procedures concerning the submission, evaluation, amendment, and revocation of the TPA’s accreditation. This measure was introduced in recognition that some DUs may not have established their Third-Party Bids and Awards Committee (TPBAC) or are not fully prepared in proceeding with CSP for procurement of required power supply. With this, the option to engage a TPA has been stipulated in the policy, allowing the TPA to conduct the CSP on the DU’s behalf, especially in cases where a TPBAC or Joint TPBAC is absent or not yet operational. The policy ensures that the CSP can still proceed efficiently and effectively even in the absence of a functioning TPBAC within the DU. On 30 June 2023, the DOE also issued DC2023-06-0021 titled “Prescribing the Policy for the Mandatory Conduct of the Competitive Selection Process by the Distribution Utilities for the Procurement of Power Supply for their Captive Market,” repealing all the previously issued CSP policies. This policy upholds a more streamlined CSP procedure by defining the individual roles and responsibilities of the DOE, ERC, and NEA in the review and approval of the DU’s PSA applications. This measure is designed to be adaptive and flexible, catering to the specific needs of the Dus, while facilitating efficient, timely, and transparent procurement of power supply for the benefit of electricity consumers. Prior to promulgating this policy, the DOE conducted a series of virtual public consultations involving the DUs, GenCos, Civil Society Organizations (CSOs), and consumer groups to solicit their inputs. These consultations were held on 13, 17, and 19 April 2023, engaging the Mindanao, Luzon, and Visayas energy stakeholders, respectively. One of the main highlights of the recent policy includes a clause on the CSP exemption. This provision states that the supply of electricity through any of the following entities shall be excluded from undergoing CSP: a) the NPC servicing off-grid areas; b) the PSALM through bilateral contracts from undisposed assets with Independent Power Producers (IPPs); c) the DUs exercising the Opt-in Mechanism under the Green Energy Auction Program (GEAP); d) embedded generating plants with contracted capacity of less than 10 MW; e) DUs with negotiated Emergency Power Supply Agreement (EPSA)102; and e) New Power Providers (NPPs) with less than 1 MW demand serving the off-grid areas. Similarly, the policy emphasizes the obligations of the DUs and mandated entities in the conduct of the CSP which are the following: a) preparation and timely submission of the DDP and PSPP to the DOE; b) uploading of the approved PSPPs in the CSP e-Based Portal by 30th of June each year; and c) publication of relevant bid documents, as these will serve as references for the issuance of the Certificate of Conformity by the DOE for private DUs and NEA for ECs in terms of contract quantity and cooperation period. To support this initiative, the ERC will issue the implementing guidelines and the needed regulatory support for the evaluation of PSAs resulting from the CSP undertaken by the DUs. The ERC, as part of its regulatory oversight function, has been putting efforts to assist the DUs in facilitating power supply contracting in a timely, competitive, and effective manner. The policy also mandates the NEA to provide guidance and advise all ECs to perform CSP at least one (1) year prior to its existing PSA expiration. To ensure timely execution of the CSP, the NEA shall extend technical assistance to ECs as deemed necessary. Recognizing the importance of this endeavor, the ERC and DOE entered in a collaborative partnership in pioneering the PSA Caravan. This groundbreaking initiative aimed to assist the DUs in rationalizing and optimizing their power supply sources. The primary objective was to ensure that the supply contracts entered by the DUs follow a leastcost process to the benefit of the consumers and foster overall cost-efficiency in the electricity sector. As part of the campaign, a comprehensive review of power supply contracts was conducted, forming an integral part of the government’s extensive efforts to address the persistent issue of high electricity costs in the country. The caravan effectively resulted in putting into action strategic price mitigation measures, spawning tangible relief to consumers. The negotiated procurement of EPSA shall be filed with the ERC within thirty (30) calendar days after the occurrence of the force majeure/fortuitous events with a maximum and nonextendible period of one (1) year from its execution. 102 88 Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-099.pdf === The nationwide PSA Caravan kicked off in Laoag, Ilocos Norte on 10 November 2022, aiding six ECs from Region I and the Cordillera Administrative Region (CAR). Further, the caravan reached Cagayan de Oro City on 15 November 2022, engaging 10 participating DUs and ECs from Region X. The event culminated in Iloilo City on 22 November 2022, pulling together 11 ECs from Region VI. Meanwhile, the ERC and DOE are aiming to roll out the PSA Caravan in the rural regions to assist the off-grid ECs with their power supply contracting. Among the other notable consumer-centered measures implemented by the ERC include the suspension of the collection of the Feed-in Tariff Allowance (FIT-All)103 and the introduction of the Bill Shock Loan Program. The deferment of FIT-All entails temporarily stalling the collection of charges levied on electricity consumers to fund the FIT system. This decision aims to ease the burden on consumers and alleviate the impact of high electricity costs. The ERC initially implemented the suspension of the FIT-All collection for a period of three months (December 2022 to February 2023)104 and extended it for another six months (March to August 2023)105. In the ERC Resolution106 issued in August 2023, the regulator once again extended the suspension stating that it will start by September 2023 until otherwise lifted by the Commission in the event that the FIT-All Fund available shall be deemed insufficient to cover the monthly fund requirements. On the other hand, the Bill Shock Loan Program was launched by the ERC and the Land Bank of the Philippines (LBP) on 14 April 2023 to protect consumers from unforeseen increases in their electricity bills. By implementing staggered billing by the DUs, the scheme provides flexibility to affected consumers whenever electricity price hikes ranging from 10.0 to 15.0 percent occur. This can effectively manage their obligations and alleviate the impact of bill shocks. The LBP’s loan facility will then be used by the DUs to fulfill their contractual obligations to their suppliers. To date, one DU has availed of the bill shock loan program. Monitoring of Distribution Utility Capital Expenditure (CAPEX) Projects. The continuous upgrading of the distribution system is essential as it directly improves the delivery of electricity service and maintains the seamless operation of the distribution network. Mindful of its importance, power utilities are making concerted efforts to modernize and enhance existing distribution facilities and infrastructure by investing in various capital expenditure projects. The timely implementation of CAPEX projects reinforces the reliability and efficiency of distribution thereby improving the system’s overall performance. It also enables regulatory compliance with the prescribed standards, as well as contributes to reducing energy losses and power service interruptions. Table 44. 2021 Capital Expenditures Projects Grid Sub-transmission Facilities (ckt-km) Distribution Facilities (ckt-km) Substation Capacity (MVA) Luzon 2,398 36,253 20,995 Visayas 216 11,826 189 Mindanao 46 430 156 2,660 48,509 21,340 Total Source: 2022-2031 Distribution Development Plan Note: Totals may not add up due to rounding-off In 2021, the efforts and investments made by the ECs and DUs resulted in the extension of 2,660 ckt-km of sub-transmission assets, expanding the reach of the distribution network. Approximately 48,509 ckt-km of distribution lines were constructed or upgraded, contributing to the improved electricity distribution to end users (Table 44). The FIT-All is a basic charge imposed on all on-grid electricity consumers, included as a component of the electricity bill to support RE development in the country. ERC Resolution No. 12 series of 2022 titled “A Resolution Adopting the Suspension of the Collection of Feed-In Tariff Allowance (FIT All)” issued on 16 November 2022. ERC Resolution No. 2 series of 2023 titled “A Resolution Adopting the Extension of Suspension of the Collection of Feed-In Tariff Allowance (FIT All)” issued on 22 February 2023. 106 ERC Resolution No. 11 series of 2023 titled “A Resolution Adopting the Extension of Suspension of the Collection of Feed-in-Tariff Allowance (FIT-All)” issued on 4 August 2023. 103 104 105 Vo l u m e 2 89 === pep-2023-2050-vol2-section-f1-page-100.pdf === Aside from line extensions, the DUs have also increased the capacity of their substations by 21,340 MVA for the same period. This will ensure a robust and reliable infrastructure that can meet the growing electricity requirements in their service areas. Fostering Digitalization in the Electric Power Industry. The DOE is carrying out measures to drive digitalization by actively promoting the adoption of various digital solutions, such as online database management systems within the power sector. This initiative empowers both electric power industry participants and policymakers as access is enabled to accurate and real-time information for effective policy development and better decision-making. This innovative approach fosters collaboration and transparency leading to improved service delivery and a more responsive consumeroriented industry. Pursuing the goal of a consumer-oriented power industry led into a remarkable stride by introducing the DOE Electric Power Database Management System (DEPDMS) in 2019. The DEPDMS uses a web portal and serves as a systematic tool designed to facilitate the streamlined submission of various reports, data, and information, associated with the power industry. The portal is seen to create a seamless and efficient submission process, while upholding strict adherence to the reportorial obligations of the DUs pursuant to various policy directives - DC2010-03-0003, DC2013-05-0006, DC2015-04-0002, and DC2017-12-0013. On 08 February 2022, the DOE promulgated DC2022-02-0001, which outlines the policies for the systematic management of the reportorial requirements for the industry participants. The policy highlighted the roll-out of the online system and the importance of conducting capacity-building activities for mandated entities and stakeholders. To effectively implement the policy, the DOE continuously holds focus group discussions (FGDs) and end-users’ training sessions for power utilities across the regions. These activities provide the industry participants with opportunities to familiarize with the DEPDMS, address queries, and enhance understanding of the features and functionalities of the online system. Relatedly, the issuance of DC2023-03-0005 on 14 March 2023 provides supplemental guidelines to DC2022-020001, specifically for DUs, and DC2023-04-0006 for Retail Electricity Suppliers (RES). The policy directive specified the additional reportorial requirements, particularly information on the Suppliers and DUs’ Monthly Operations Report and the frequency of submission. Moreover, it prescribes the use of standard templates and report uploading on the DEPDMS web portal. Likewise, a provision setting the timeline for the initial submission is also stipulated in the Circular. Plans and Programs The updated Distribution Roadmap outlines the refocused plans and programs for the short-, medium- and long-term, each with specific objectives to improve the overall efficiency, reliability, and sustainability of the distribution system (Figure 21). Figure 21. Distribution Roadmap Short Term Medium Term 2023-2024 Distribution 2025-2028 • Enhance the digitalization of Distribution Development Plans • Ensure timely completion of Distribution Development Plans • Enhance the existing Competitive Selection Process Policy • Conduct policy review on the regulation and performance of Distribution Utilities • Review and develop climate-proof standards for distribution utility infrastructures • Develop policy to incentivize distributed energy resources and prosumer • Supplement existing policy toward smart grid systems and interoperability 2050 OBJECTIVE Ensure security, resiliency, affordability, and sustainability 90 Philippine Energy Plan Long Term 2029-2050 • Transition to Smart Grid to improve the reliability of distribution facilities • Increase utilization of RE resources for power generation • Encourage consumers to utilize RE for non-power productive application === pep-2023-2050-vol2-section-f1-page-101.pdf === SHORT-TERM Enhance Digitalization of Distribution Development Plans. The government’s move to use digitalization is a significant step towards modernizing and optimizing the distribution sector. This initiative involves adopting digital tools and innovative solutions to improve the way distribution projects are planned, executed, and monitored. In line with this, the DOE is aiming to develop an online system for rendering pertinent information, such as historical energy data, electricity demand and supply projections, CAPEX programs, among others, as well as a digital platform for the submission of DDPs by the ECs and DUs. Ensure timely completion of Distribution Development Plans. Pursuant to Rule 7, Section 4(p) of the EPIRA-IRR and DC2021-03-0003, DUs are mandated to prepare an annual DDP and submit the same to the DOE no later than the 15th of March every year. Considering that the plan is crucial for meeting the energy requirements and having a stable power supply for DUs, the DOE and NEA are enforcing the timely preparation, submission, and consolidation of DDP reports by the power utilities. In doing so, the DOE is seeking to further streamline the planning activities and processes to comply and follow the specified timetable and result to reduction of delays in the conduct of CSP and project implementation. Enhance the existing Competitive Selection Process Policy. The CSP’s implementation objective of being transparent and consumer-centric involves the continuous improvement of existing guidelines to maintain its effectiveness. Achieving this requires the DOE, NEA, and ERC to regularly enhance the CSP rules through policy review and assessment. By instituting improvements on the CSP policy, the government can foster a competitive and efficient electricity market that benefits consumers through reliable and affordable electricity services. Conduct policy review on the regulation and performance of Distribution Utilities. The DOE is set to review and evaluate the regulations governing the performance of the DUs covering the following: a) appraising existing protocols and performance metrics with the intent of identifying strengths and weaknesses in existing policy and regulatory framework; b) promoting effective governance; and c) ensuring that the operations of the DUs are aligned with best industry practices. Once completed, this initiative entails enhancing and institutionalizing a set of performance standards for the DUs to assess the quality of service provided within their service franchise areas, identify potential areas of improvement to address operational inefficiencies, and propose solutions and recommendations to further improve the delivery of electricity service to all consumers. Review and develop climate-proof standards for distribution utility infrastructures. In the face of increasing climate change impacts, it is crucial to have a distribution network that can withstand adverse weather condition and reduce disruption in the delivery of electricity services to consumers. The development and review of existing standards for DUs involves analyzing the current state, performance, and vulnerabilities of infrastructure, identifying areas for improvement, and collaborating with relevant stakeholders to establish resiliency standards. These measures will strengthen the system and contribute to mitigating the impacts of extreme weather events and enhance the overall stability and reliability of the grid. MEDIUM-TERM Develop policy to incentivize distributed energy resource (DER) and prosumer. The DOE is actively promoting the widespread adoption of DERs (i.e., micro-grid systems and solar rooftop installations) and encouraging third party investors and consumers to become prosumers. A policy will be drafted aimed at promoting the seamless integration of DER and accelerating its adoption into the grid, as well as providing incentives to attract more prosumers. Among the key components of the proposed policy is the enhanced net-metering program, which allows prosumers to receive credits or fiscal benefits for the surplus energy supplied back to the grid. It will also consider providing grants and rebates that offer direct monetary incentives for prosumers. These incentives are seen to reduce the costs associated with DER acquisition and installation, making it more accessible and affordable. Furthermore, the policy will explore creating market-based incentives by encouraging DUs to purchase RE-based generation from prosumers. This involves setting targets for DUs to procure a certain percentage of their energy supply from distributed sources thereby facilitating market opportunities for prosumers as well as meeting the RPS requirements of the DUs. Vo l u m e 2 91 === pep-2023-2050-vol2-section-f1-page-102.pdf === Supplement existing policy toward smart grid systems and interoperability. The promulgation of the National Smart Grid policy through DC2020-02-0003 issued on 12 March 2020 establishes the general framework for the electric power industry and the Smart Distribution Utility Roadmap (SDUR). The policy envisions that by 2040, the country’s distribution network is fully equipped with modern, smart, and innovative systems that utilize advance technologies capable of optimizing the distribution of electricity, managing energy demand efficiently, and integrating clean and sustainable energy sources into the grid. As part of the government’s extensive effort to strengthen smart grid development, a supplemental policy is to be crafted to usher the deployment, installation, and integration of smart, digital technologies and solutions into the existing electrical distribution network. Additionally, it will ensure the interoperability of the various segments of the distribution infrastructure to enable the seamless and smooth operations of the entire power system. LONG-TERM Transition to Smart Grid to improve the reliability of distribution facilities. The move to a smart grid system will only be realized once the necessary support measures are in full swing and within stakeholders’ reach. This calls for periodic review of policies and regulations, updating of infrastructure standards, overseeing the timely operation of smart grid projects, and most importantly, gaining access to financing facilities to support the DUs. Increase utilization of RE resources for power generation. A green energy future points to the government laying ambitious plans and bold targets aimed at expanding RE use for power generation. As such, the need for a resilient and responsive power distribution system has become of paramount importance. Aligned with this endeavor, the DOE will steer strategic action plans to secure the sufficiency, reliability, and readiness of power distribution facilities as this will assure that the entirety of the network is capable of accommodating and managing the anticipated influx of RE-based generation to the grid. The DOE will also advocate and strongly push for the modernization, enhancement, and upgrading of the distribution sector reinforced by innovative technologies and solutions. Encourage consumers to utilize RE for non-power productive application. Apart from generating electricity, RE can also be used for various non-power applications such as heating, drying, and cooling, among others, and this can be beneficial for the different economic sectors. In agriculture for instance, solar and wind energy can run irrigation systems, as well as operate farm equipment and machineries for drying crops, fruits, and other vegetable produce. The health, commercial, and industrial sectors can take advantage of the productive uses of RE specifically heating and cooling solutions. Hospitals and other health institutions may have access to unlimited supply of hot water, while processing plants can deploy boilers needed for industrial processes. Similarly, cold storage facilities may be utilized for storing medical supplies and raw materials as well as processed products in commercial and industrial buildings. Advancing this goal necessitates the DOE to explore the need for developing pertinent policies and support mechanisms to incentivize consumers for harnessing RE for non-power and other productive applications. Retail Electricity Supply Retail Competition and Open Access (RCOA) As an enabling policy associated with transparency and enhancing consumer empowerment, RCOA allows endusers or contestable customers (CCs) to choose their preferred electricity supplier at an arranged contract price. The move for RCOA’s effectiveness in the power industry is based on the ERC’s declaration that is attributable to meeting the conditions set in the EPIRA. Over the years, RCOA registered participants substantially grew from 962 in June 2013 to 2,108 in September 2023, recording an increase of 119.1 percent (Table 45). The CCs comprised 93.2 percent (1,965) of the total and the remaining from retail metering service providers (RMSP) with 3.04 percent (64), suppliers with 2.56 percent (54), and suppliers of last resort (SOLR) with 1.2 percent (25). 92 Philippine Energy Plan === pep-2023-2050-vol2-section-f1-page-103.pdf === Table 45. Summary of RCOA Registration Total Registered RCOA Participants Membership Category Contestable Customers June Sept June Sept 2013 2022 2023 2023 June 2013 vs. Sept. 2023 Sept 2022 vs. Sept. 2023 40.13% Jun 2023 vs. Sept. 2023 D ≥ 1 MW 892 1,222 1,240 1,250 2.29% 0.81% 750 kW ≥ D >1 MW - 426 426 424 -0.47% -0.47% 500 kW ≥ D >749 MW - 275 284 291 5.82% 2.46% Total 892 1,923 1,950 1,965 120.29% 2.18% 0.77% RES107 19 38 39 39 105.26% 2.63% 0.00% LRES108 13 15 15 15 15.38% 0.00% 0.00% Total 32 53 54 54 68.75% 1.89% 0.00% SOLR 9 25 25 25 177.78% 0.00% 0.00% RMSP 29 63 64 64 120.69% 1.59% 0.00% Total 962 2,064 2,093 2,108 119.13% 2.13% 0.72% Suppliers As of the latest statistical data provided by the ERC on the competitive retail electricity market, following are the number of Prospective Participants as of June 2023 (Table 46). Table 46. Summary of RCOA Registration (Prospective Participants) Prospective Participants in the Retail Market Membership Category D ≥ 1 MW Contestable Customers June June Mar June 2013 2022 2023 2023 June 2022 vs. June 2023 Mar. 2023 vs. June 2023 289 291 307 -65.58% 6.23% 5.50% 750 kW ≥ D >1 MW 228 231 233 - 2.19% 0.87% 500 kW ≥ D >750 MW 589 649 732 - 24.28% 12.79% 1,106 1,171 1,272 42.6% 15% 8.63% Total 892 June 2013 vs. June 2023 892 On the policy side, the DOE issued DC2024-03-0009109 on 01 March 2024, declaring 26 March 2024 as the commercial operations date of RCOA and Green Energy Option Program (GEOP) in the Mindanao region. The Circular provides all eligible and interested electricity end-users in the Mindanao grid with greater flexibility in securing their electricity supply. Further, the policy allows for voluntary participation in RCOA and demand aggregation, consistent with existing ERC rules and regulations. Plans and Programs Implement RCOA in Mindanao. Given Mindanao’s unique conditions, the effective implementation of RCOA requires harmonization of existing policies and the periodic review of pertinent rules and guidelines. In addition, the ERC Resolution No. 18 series of 2018 stipulates that for RCOA to take effect in Mindanao, separate rules and procedures must be developed. Implement Retail Aggregation in Luzon, Visayas, and Mindanao. The policy on electric retail aggregation came to light with the issuance of the ERC Resolution No. 4 series of 2022.110 Refers to Retail Electricity Supplier Refers to Local Retail Electricity Supplier DC titled “Declaring the Commercial Operations Date of Retail Competition and Open Access (RCOA), Retail Aggregation and Green Energy Option Program (GEOP) in Mindanao.” 110 Issued on 26 June 2022 107 108 109 Vo l u m e 2 93 === pep-2023-2050-vol2-section-f1-page-104.pdf === According to the ERC, retail aggregation can be done where RCOA is operational and effective. It is primarily a scheme wherein two or more end-users or all end-users within a contiguous area are joined together and treated as a single contestable customer, based on the current threshold demand prescribed under the rules, wherein such customers shall be part of the contestable market, and thus have the same benefits enjoyed by CCs in RCOA.111 The ERC further mentioned that aggregation of electricity requirements of end-users whose total monthly average peak demand is at least 500 kilowatts (kW) within a contiguous area shall be implemented effective 26 December 2022. In addition, aggregation of end-users within the geographical boundaries may be allowed particularly on a) subdivisions, b) villages, c) business districts, d) special economic zones, e) condominium buildings, f) commercial establishments such as malls, g) mixed-used development complexes, and h) such other geographical areas where similarly situated end users are located, and in which supply or electricity can be measured through metering devices. Comprehensive Review of Retail Rules (switching and disconnection). Contestable customers already supplied by RES are now allowed to switch to other retail SOLR without the burden of securing clearances from current supplier. This is in consonance with the ERC’s amendment of its Resolution No. 9 s. 2018 or the “Rules Supplementing the Switching and Billing Process and Adopting a Disconnection Policy for Contestable Customers.” 112 As contained in the ERC’s amended rules (ERC Resolution No. 1, series of 2023)113, switching of RES of its choice by the end-user should be under the following conditions: a) an eligible end-user will not be allowed to switch to a RES should it have an outstanding balance with the Network Service Provider; b) a CC already served by a RES will be allowed to switch or to be supplied by a new RES or SOLR notwithstanding the existence of an outstanding balance;114 and, c) an eligible enduser that will migrate to the competitive retail electricity market (CREM) is entitled to refund of its security or bill deposit from its DU. Amendments to WESM and Retail Rules and Manuals regarding Implementation of the Electric Retail Aggregation Program. The policies emanating from the DOE and ERC need to be harmonized with the WESM and Retail Rules and Manuals. The power industry stakeholders are given the opportunity to convey amendments and raise to the Rules Change Committee (RCC) for review and approval of the Philippine Electricity Market (PEM) Board. Accordingly, the DOE gives final approval on the proposed amendments. Adopt lower thresholds for RCOA in Luzon, Visayas, and Mindanao. The DOE is considering lowering the RCOA threshold to reach the household level for the country’s three main grids. A study is set to be undertaken by the DOE to cover an assessment of the retail market readiness, evaluation of local guidelines and resolutions to support RCOA, analysis of economic and technical impact of lowering RCOA threshold, and comparison of RCOA policy and regulatory framework with other jurisdictions having similar market design. Continuing review of retail rules and manuals. In both medium- and long-term, the DOE will continue its review of retail rules and manuals with the objective of synchronizing this with newly issued policies. Develop policy for enhance and digitized customer switching procedure. In the medium-term, the IEMOP, serving as the Central Registration Body (CRB) shall develop and enhance the process of digitizing the switching of CCs. The longterm horizon will dwell on the implementation of the digitalized switching procedure. Source: https://www.erc.gov.ph/ContentPage/82786 Source: https://www.erc.gov.ph/ContentPage/82995 ERC Resolution No. 1, Series of 2023 titled “Amendment to ERC Rules Supplementing the Switching and Billing Process and Adopting a Disconnecting Policy for Contestable Customer” [Available at https://www.erc.gov.ph/IssuancesPage/1/0] 114 Refers to the amount due under previous unpaid bills including the amount indicated in its current bill. 111 112 113 94 Philippine Energy Plan