=== pep-2023-2050-vol3-section-d-page-048.pdf === D. COLLABORATION WITH THE ATTACHED AGENCIES I. Philippine National Oil Company The Philippine National Oil Company (PNOC) was created on 09 November 1973 to ensure an adequate supply of oil and oil products in response to the global energy crisis that affected the country in the early 1970s. Since then, the PNOC has undergone amendments to its charter that included the exploration, exploitation, and development of all energy resources in the country, as well as the acquisition of refineries and petroleum transport and marketing firms which include Esso Philippines29 and Petron30. As a holding company, the PNOC created 24 subsidiaries to fulfill its mandates, which were later privatized or bolished. As the parent company, the PNOC continues to exercise oversight over the programs and projects of its remaining subsidiaries, namely the PNOC-Exploration Corporation (PNOC EC) and the PNOC-Renewables Corporation (PNOC RC). Financial assistance, if necessary, is likewise provided. Its reorganization into an operating company was authorized by the Governance Commission for GOCCs (GCG) in September 2014. In 2022 alone, the PNOC generated a net income of PhP3.36 billion, which includes the PhP5.24 million gained by the company from the sale of properties located in Batangas, Laguna, Tarlac, Bulacan and Bataan. Currently, the PNOC’s priorities include the management of its real estate assets and banked gas, as well as the efficient operation of its 19.2-hectare Energy Supply Base (ESB) in Mabini, Batangas, and the 530-hectare PNOC Industrial Park in Limay and Mariveles, Bataan. The PNOC is also involved in research for the development of various energy-related infrastructure projects aimed at achieving energy security and stability. Projected look of the ESB Port Following the entry into a Gas Sales Purchase Agreement (GSPA) with two (2) subsidiaries of FirstGen (First NatGas Power Corporation and Prime Meridian PowerGen Corporation) in December 2021, the PNOC signed another GSPA with South Premiere Power Corporation in June 2022. Relatedly, a total of 11.084 petajoules (PJ) was off taken by FirstGen for 2022 as part of the PNOC’s obligation to deliver the contracted banked gas. 29 30 41 ESSO Phils. was renamed to Petrophil Corp. in 1973. Petron was partially privatized in 1994 through the signing of a stock purchase agreement with Saudi Aramco. San Miguel Corporation took full control of Petron in 2009. Philippine Energy Plan === pep-2023-2050-vol3-section-d-page-049.pdf === In terms of its commitment to sustainable development and social responsibility, the PNOC continues to strengthen its Corporate Social Responsibility (CSR) Program through the conduct of various initiatives for the benefit of communities and environmental conservation, which include outreach programs, regular tree-planting activities, and coastal clean-up drives. Plans and Programs To support its mission of complementing the private sector’s efforts in developing energy sources and broadening the adoption of renewable energy technologies in the most cost-effective manner, PNOC will serve as: Catalyst of Emerging Energy Sources and Technologies. In support of the DOE’s intensified promotion of offshore wind (OSW) development in the country, the PNOC is set to repurpose its ESB into an OSW Power Integration Port. The project aims to serve about 32 OSW energy service contracts with 27.45 GW total potential capacity. The PNOC is also exploring the development of aquavoltaics system, which revolutionizes energy generation by positioning solar panels on stilts above fishponds. This system covers only 40.0 to 60.0 percent of the water surface, positioned three (3) meters above the water level. Still in the conceptual phase, this innovative approach aims to effectively utilize space, generate clean electricity, and reduce evaporation by 85.0 percent, all without interfering with fish farming activities. With added benefit of water cooling, the system has a capacity of 40 MW/100 hectares (ha). Aside from the rehabilitation of the Industrial Park in Bataan, it will also be promoted as a strategic location for liquefied natural gas (LNG) and LNG-related businesses. This entails strengthening partnerships and creating new alliances for the development of businesses in the natural gas industry, and other energy and energy-allied projects. Service Provider for Government Entities. Part of the PNOC’s plans and programs include serving as a retail energy supplier for government entities by giving them the option of sourcing more from renewable energy (RE) sources, which will lead to lower generation costs. Another project for government entities is the installation of rooftop solar PV systems through partnerships with the private sector. Social Enterprise of Energy Projects. With the goal of being a strategic niche player in the Philippine energy industry, the PNOC aims to carry out the hybridization of off-grid areas with RE technology, which will be implemented together with the National Power Corporation (NPC). Another project that supports the government’s thrust towards energy transition and the development of indigenous energy resources is the identification of small-scale natural gas-to-power projects. A. PNOC Exploration Corporation The PNOC EC has been actively involved in the exploration, development, and production of oil, gas, and coal resources since its creation in 1976. It has been a valuable partner of the DOE in ensuring the country’s continuous energy supply. The PNOC EC currently holds interests in nine (9) Petroleum Service Contracts (PSCs) and two Coal Operating Contracts (COCs)31 (Table 8). Of the total PSCs, the company operates and holds a 100.0 percent interest in four (4), while actively partnering with other oil and gas exploration companies in the remaining contract areas. These include the 10.0-percent stake in the Malampaya Deepwater Gas-to-Power Project (SC 38), its primary revenue asset. In 2022 and 2023, revenues generated from Malampaya reached PhP4.56 billion and PhP3.71 billion, respectively. For COCs, PNOC EC holds and operates a 100.0 percent interest for both contracts. 31 As of 24 November 2023 Vo l u m e 3 42 === pep-2023-2050-vol3-section-d-page-050.pdf === Table 8. PNOC EC Contracts SC/COC Location Petroleum Service Contracts SC 37* Cagayan Basin SC 57* Offshore NW Palawan (Calamian) SC 59* SW Palawan (West Balabac) SC 79* East Palawan (Araceli) SC 38 (10%) Offshore NW Palawan SC 58 (50%) Offshore NW Palawan (West Calamian) SC 74 (5%) Offshore NW Palawan (Linapacan) SC 75 (35%) NW Palawan SC 6B (20%) NW Palawan (Cadlao) Coal Operating Contracts COC 41* Zamboanga Sibugay COC 204* Malangas The PNOC EC expanded its CSR initiatives by assisting and protecting the local communities and the environment through its four Kaagapay Programs: (1) Kaagapay sa Karunungan; (2) Kaagapay sa Kalikasan; (3) Kaagapay sa Kalusugan; and (4) Kaagapay sa Kabuhayan. Figure 26. PNOC EC Areas of Interest Plans and Programs The PNOC EC is committed to enhancing the country’s energy self-sufficiency by providing additional supply of petroleum, natural gas, and coal for domestic requirements. To fulfill this commitment, the PNOC EC will continue to implement the work program of its petroleum and coal contracts, ensuring that timelines are met. Further, the PNOC EC will intensify its efforts to expand its current portfolio through the pursuance of farm-in32 opportunities for both local and overseas assets. In pursuit of its corporate vision, the following projects have been prioritized in its roadmap: 1. 2. 3. 4. 5. SC 38 Malampaya – scheduled to conduct exploration drilling in 2025, leading to production in 2026; SC 6B Cadlao – oil production in 2024 with potential additional drilling in 2025; SC 37 Cagayan – planned drilling of Chico-1 prospect in 2024; SC 57 Calamian – conducting a seismic program in 2024; COC 41 Mine 3 Coal Project – currently in development (incidental production) phase, leading to production in 2024; 6. COC 41 Mine 4 Coal Project – targeting production in 2025; and 7. Asset Acquisition Project – continuous evaluation of domestic and overseas areas. 32 43 Farm-in refers to the process by which one company (farmee) acquires rights to explore, develop, and produce in a specific area owned by another company (farmor). This is done through a Farm-in Agreement, where the farmee undertakes activities in exchange for a share of rights, production, or profits. Philippine Energy Plan === pep-2023-2050-vol3-section-d-page-051.pdf === B. PNOC Renewables Corporation The PNOC RC stands as a wholly owned subsidiary of the PNOC, serving as the government's technical and research entity dedicated to spearheading the advancement and execution of sustainable RE and energy efficiency programs and projects. It holds the mandate to champion and carry out extensive research, development, utilization, manufacturing, sales, marketing, distribution, and commercialization of cutting-edge renewables, non-conventional, and alternative energy technologies. Since 2008, the PNOC RC has remained dedicated to advancing the interests of consumers and stakeholders, improving the welfare of its employees, advocating for environmental stewardship, and fostering the holistic wellbeing of communities. As a partner agency, the PNOC RC collaborates closely with both National Government Agencies (NGAs) and Local Government Units (LGUs) to ensure the effective implementation of the Energy Efficiency and Conservation (EEC) Law, thereby playing a crucial role in promoting sustainable and responsible energy practices in the Philippines. Over the years, the PNOC RC has demonstrated a strong commitment to sustainable energy initiatives, successfully developing and completing several notable RE and EEC projects. Some of these noteworthy projects include: Solar Rooftop Projects. The PNOC RC collaborated with NGAs and academic institutions to launch the Rooftop Solar PV installation project in 2015. Among the notable achievements in this endeavor were the installations of the solar rooftop projects in the University of the Philippines – Diliman Campus (240-kWp), Philippine International Convention Center/PICC (1,050-kWp), and the House of Representatives (200-kWp), which promoted the adoption of cleaner and more efficient energy sources. The PNOC-RC provided comprehensive technical services, including the preparation of a technical study and support throughout the bidding process for the House of Representatives. This effort led to the successful installation of 436 Solar PV modules at the South Wing Annex building of the House of Representatives. PICC 1,050-kWp Solar Rooftop HOR 200-kWp Solar Rooftop Hydropower Projects. The PNOC RC collaborated with the National Irrigation Administration (NIA) by signing a Memorandum of Agreement (MOA) in 2012 for the development of the six (6) initial sites located at the Pampanga River Irrigation System (PRIS) Main Canal, Barangay Poblacion West, Rizal, Nueva Ecija. These sites held a potential installed capacity of 1.0 MW and an estimated annual generation of 4.64 GWh. Energy Efficiency Projects. As an accredited Energy Service Company (ESCO) by the DOE, PNOC RC capitalized on an opportunity to collaborate with the Philippine Public Safety College (PPSC), extending technical support and financial assistance for the implementation of an energy-efficient lighting system. The partnership between the PPSC and PNOC RC was formalized through a MOA signed in March 2016. The five-year collaboration involved the replacement Vo l u m e 3 44 === pep-2023-2050-vol3-section-d-page-052.pdf === of 3,725 bulbs in traditional fluorescent and compact fluorescent lamp (CFL) lighting fixtures by lightemitting diodein (LED) in various locations including PPSC training camps, the Philippine National Police Academy (PNPA), and the National Police College (NPC). Transitioning to energy-efficient LEDs is anticipated to curtail lighting energy consumption by up to 50.0 percent. Technical Services with Private RE Companies. In 2022, PNOC RC entered into a MOA with private companies to jointly develop large-scale RE projects. Under this partnership, the PNOC RC assumes the role of industrial partner, responsible for executing pending pre-development activities for the project. In exchange for these services, the private RE company compensates the PNOC RC. The PNOC RC's commitment involves spearheading crucial pre-development tasks for the RE project, including (1) securing of Service Contract; (2) securing relevant permits and licenses; (3) preparing prefeasibility studies; (4) conducting feasibility studies (optional); (5) assisting in the application and processing of interconnection agreement; (6) supporting negotiations for power supply agreement (PSA); and, (7) assisting in securing project funding (optional). This collaboration enables PNOC RC to leverage its expertise in driving forward RE projects through their essential pre-development stages. Plans and Programs The priority programs identified by the PNOC RC strongly focus on accelerating RE technologies, signifying its commitment to facilitating access to affordable, reliable, and resilient energy while promoting clean and sustainable energy. These initiatives aim to expedite the adoption of RE technologies in alignment with national targets, paving the way for a more sustainable and greener energy future for the Philippines. Among these programs are the following: 1 2 Intensification of solar rooftop programs in government agencies in partnership with private entities through technical consultancy. • Continue to operate and maintain its existing RE projects. • Bridge the gap between RE developers and regulatory agencies to expedite the implementation of RE projects. • Development of big-ticket RE projects through technical services and Joint Venture partnerships. Figure 27 elaborates on the PNOC RC’s strategies and initiatives, which include providing technical services for significant RE projects, intensifying solar rooftop installations, and developing hydropower and waste-to-energy projects. Figure 27. Plans and Program 45 Philippine Energy Plan === pep-2023-2050-vol3-section-d-page-053.pdf === II. National Electrification Administration Since its inception in 1969, the National Electrification Administration (NEA) has been the government’s implementing arm for rural electrification efforts. Tasked with the pivotal role of overseeing electric cooperatives (ECs), NEA aims to provide reliable and affordable electricity in the country’s remote areas, ensuring that electricity access will be provided to the unserved and underserved communities of the country. Despite steady progress in household electrification, NEA and its partnerECs remain unwavering in their commitment to intensify efforts in expanding electricity access. To support President Ferdinand Marcos, Jr.'s “Bagong Pilipinas” thrust of achieving 100 percent total electrification by 2028, NEA aims to provide electricity to 2.7 mllion households within the franchise areas of the electric cooperatives from 2024 to 2028. Plans and Programs Sitio Electrification Program. In collaboration with the ECs, NEA strives to energize even the most remote sitios through the Sitio Electrification Program (SEP). As of November 2023, 1,006 out of the targeted 1,085 for the year have been successfully energized. In 2022, NEA was able to energize 951 out of the 1,085 sitios earmarked for that year. These efforts align with the agency’s overarching goal of providing electricity to 10,535 sitios within the current administration’s term, with an estimated cost of PhP26.34 billion. Barangay Line Enhancement Program. The Barangay Line Enhancement Program (BLEP) seeks to improve distribution lines in barangays that previously relied on generator sets, solar home systems, and other RE sources for their electricity supply. For 2024, NEA intends to enhance two barangay lines and upgrade the remaining 419 barangay lines by 2028. The successful realization of this target requires a total funding of PhP4.64 billion. Photovoltaic Mainstreaming (PVM) Program. To accelerate rural electrification and achieve inclusive development in remote areas of the country, NEA has been continuously promoting the utilization of RE in rural electrification efforts. For households not connected to the grid and not covered by the electrification programs, NEA aims to deploy solar home system (SHS) units in 5,000 households in 2024. The goal is to expand SHS installations to 857,671 households by 2028 with a funding requirement amounting to PhP35.57 billion. Funding Assistance Programs. Through its Enhanced Lending Program, NEA has been instrumental in providing increased access to essential financing services for ECs to support their various operational needs, system improvements, and electrification projects. As of August 2023, the agency has successfully disbursed PhP846.7 million in loans to 22 ECs, with P411.86 million earmarked for capital expenditure of 16 ECs. In addition, NEA oversees the Electric Cooperatives Emergency and Resiliency Fund (ECERF) intended for the restoration or rehabilitation of the ECs damaged infrastructure due to calamities, fortuitous events, or force majeure. NEA is committed to facilitating the timely release of EC loans estimated at PhP1.0 billion annually along with the ECERF, which has a budget allocation of PhP750 million annually to assist the affected ECs. Capacity Building Program. To keep up with the evolving power industry landscape, NEA remains steadfast in its commitment to continuously enhance the technical capabilities of the ECs. Within the planning period, NEA aims to further strengthen the capacities of the ECs in conducting the Competitive Selection Process (CSP) and ensuring their compliance with the Renewable Portfolio Standards (RPS). This effort also involves assisting them in developing effective mitigation plans based on the most critical assets identified in vulnerability risk assessment, as well as preparing them for the implementation of Supervisory Control and Data Acquisition (SCADA) and Geographic Information System (GIS) under the smart grid roadmap. Vo l u m e 3 46 === pep-2023-2050-vol3-section-d-page-054.pdf === III. National Power Corporation Established in 1936, the National Power Corporation (NPC) is mandated by the Electric Power Industry Reform Act (EPIRA) of 2001 to perform missionary electrification functions throughout the country. Part of its mission is to ensure the delivery of adequate and reliable power supply in remote islands that are not yet being served by the private sector through the New Power Providers (NPPs) and Microgrid Service Providers (MGSPs). In addition to its main function, NPC engages in watershed and dam management, while advocating the optimal use and operation of its remaining power generation assets. To meet the growing needs of off-grid communities, NPC regularly formulates the Missionary Electrification Plan (MEP) and implements strategic programs to support the attainment of the government’s total electrification program. These initiatives are aligned with the administration’s call towards fostering inclusive growth and enabling access to clean and affordable electricity, thus contributing to the broader goals of sustainable development. To effectively fulfill its mandate, NPC remains committed to implementing its plans and programs that complement the DOE’s strategic direction of ensuring energy security, expanding energy access, and promoting a low-carbon future. Plans and Programs Sustaining 24/7 Operations in SPUG Areas. Of the total 171 off-grid islands, NPC maintains operations in 148 areas through the Small Power Utilities Group (SPUG), while the remaining 23 isolated grids are being served by the NPPs and MGSPs. As of June 2023, NPC-SPUG provides 24/7 power service to 73 locations. Additionally, 19 areas benefit from more than 12 hours of service operations, while 56 areas receive less than 12 hours of power supply per day. To further improve the operations of SPUG facilities in remote and underserved areas, NPC is committed to implementing its modernization program through the re-fleeting of generating sets and augmenting existing capacities. This involves the replacement and refurbishing of aging and inefficient units, as well as the commissioning and leasing of additional gensets for increased service hours. Capacity Addition Program. In fulfilling its mandate, NPC has programmed 32.81 MW of additional capacities scheduled for implementation within the term of the current administration. This initiative aims to augment the existing installed capacity of 244.39 MW (as of October 2023) from NPC-SPUG power plants, ensuring a sufficient and steady supply of electricity throughout missionary areas. Part of the strategy is the integration of 29.39 MW harnessed from RE sources, underscoring NPC’s unwavering commitment to promoting the use of sustainable sources for power generation. In addition, NPC intends to deploy 3.42 MW of additional capacities through standalone mini-grids, extending electricity access to new areas. Transmission and Distribution System Projects. In a proactive move to further strengthen the reliability and resilience of existing infrastructure, NPC is set to execute transmission and distribution system projects from 2024 to 2028. These include the installation of approximately 418.35 circuitkilometers (ckt-kms.) of transmission lines and the extension of about 204.18 ckt-kms. of distribution lines for existing and new missionary areas, covering the small island grids in Luzon (Catanduanes, Masbate, Palawan, Marinduque, and Mindoro) and island provinces in Mindanao (Sulu and Basilan). In addition to line extensions, NPC aims to increase the capacity of existing substations by adding a total of 90 Megavolt-Ampere (MVA), including the construction of eight (8) switching stations. These projects will improve the power network infrastructure, while meeting the growing electricity demand in off-grid areas. Total Electrification Program. In accordance with Section 16.1 of the Implementing Rules and Regulations (IRR) of RA 11646 or the Microgrid Systems Act (MSA), NPC will continue its missionary electrification functions in areas where no participating or winning MGSP has been identified following a CSP. Consistent with the National Total Electrification Roadmap (NTER), NPC is targeting to accomplish 9,599 household connections between 2024 and 2028 by implementing various modes of electrification solutions, such as distribution line extension, regular connections, microgrid systems, or stand-alone home systems, among others. In pursuit of this goal, NPC is committed to collaborating closely with the DOE, NEA, and electric power utilities to facilitate and fast-track the government’s target of achieving 100.0 percent household electrification by 2028. 47 Philippine Energy Plan === pep-2023-2050-vol3-section-d-page-055.pdf === Hybridization Program. To mitigate the risks and address the challenges posed by climate change, the government is boldly pushing for climate-centric plans and programs toward transitioning to cleaner and more sustainable sources of energy. NPC, on its part, has established complementary strategies promoting hybrid technologies that combine various RE sources with energy storage systems and fossil-based generators. This proactive approach is seen to effectively improve off-grid power system operations, leading to greater energy supply sufficiency, reliability, and sustainability. To attain this goal, NPC is accelerating the rollout of its hybridization program in 99 missionary areas Solar Hybrid Facilities in SPUG Areas Source: https://www.napocor.gov.ph through the deployment of solar photovoltaic (PV) units from 2024 to 2028 with an aggregate capacity of 24.85 megawatt-peak (MWp) supported by a battery energy storage system (BESS). This translates to a potential reduction of about 32.07 million liters of oil consumption, equivalent to a monetary savings of PhP2.18 billion. IV. National Transmission Corporation The National Transmission Corporation (TransCo) is a governmentowned and controlled corporation responsible for overseeing and holding ownership of the country’s transmission assets. Following the awarding of a 25-year Concession Agreement in 2008, the authority for the management, operation, and expansion of the transmission network was officially transferred to the National Grid Corporation of the Philippines (NGCP). However, the redefined TransCo remains dedicated to advancing its strategic plans and programs to fulfill its mandated key responsibilities. Plans and Programs Ensure Compliance of NGCP to the Concession Agreement. TransCo upholds its oversight role by ensuring NGCP's compliance with the terms and conditions of the Concession Agreement and the DOE policies. This commitment involves continuously monitoring the transmission assets being operated and managed by NGCP, including regular inspections in accordance with the annual inspection schedule. Likewise, it remains dedicated to overseeing NGCP’s submissions to the ERC by conducting technical reviews and assessments of their proposed transmission projects, as well as participating in regulatory hearings. Fund Administration of Feed-in-Tariff Allowance (FIT-All) and Green Energy Auction Program (GEAP). TransCo is responsible for the management, administration, and allocation of the FIT-All Fund for the benefit of FIT-eligible RE developers and participants in the Green Energy Auction Program (GEAP). To ensure prompt disbursement and enhanced efficiency of revenue distribution, TransCo is aiming to fully digitalize FIT and GEA revenue billing and payment processes, as well as the generation of financial reports using the Automated FIT-All Fund Management System (FFMS). Stand-alone Operation as Small Island Grid System Operator. To mitigate recurring power outages and prevent system failures in off-grid areas, Transco is mandated to function as the system operator (SO) to manage and operate small grid power systems. With the recent commencement of its initial operations in the Mindoro Grid, TransCo is in the process of finalizing the Mindoro Grid Protection Philosophy and Setting Guidelines. Consequently, the SO exit/ phase-out plan will be formulated and implemented in anticipation of its interconnection with the Luzon Grid. Accelerate Settlement of Right-of-Way Claims. TransCo is responsible for all existing right-of-way (ROW) claims that were accrued before the transfer of its operational duties to NGCP. In 2022, TransCo initiated a total of 199 rightof-way claims for settlement and expropriation cases, surpassing its initial target of 176. As part of ongoing efforts to enhance operational efficiency and service delivery, TransCo plans to include the ROW claims and monitoring system in its digitalization initiative to streamline the claims and settlement process, guaranteeing the smooth and unhampered operation and maintenance of its transmission lines. Vo l u m e 3 48