PHILIPPINE ENERGY PLAN

2005 Update

Towards Energy Independence &

Power Market Reforms
ENERGY PLAN
FRAMEWORK
I. Energy Plan Framework
II. Energy Demand and Supply
Outlook
III. Energy Sector Agenda
- Energy Independence
- Power Market Reforms
IV. Investment Requirements
 ENERGY PLAN FRAMEWORK
FIVE-POINT REFORM PACKAGE
ECONOMIC ANTI-CORRUPTION EDUCATION AND
ENERGY SOCIAL JUSTICE
GROWTH AND THROUGH GOOD YOUTH
INDEPENDENCE AND BASIC NEEDS
JOB CREATION GOVERNMENT OPPORTUNITY

ENERGY SECTOR AGENDA ENERGY SECTOR GOALS

! ENERGY INDEPENDENCE
! 60% SELF-SUFFICIENCY LEVEL BY 2010
AND SAVINGS
! FAIR AND REASONABLE ENERGY
! POWER MARKET REFORMS PRICES IN A COMPETITIVE ENVIRONMENT
PRIMARY ENERGY SUPPLY FORECAST

2004 Imported
Imported Coal
Coal
2005
9.0% Oil
Oil 6.4% 4.6%
1.7%
Coal Coal
3.3% 3.2%
Indigenous Gas Gas
Energy 6.3% In d ig e n o u s
E n e rg y 7.7%
55.9% Hydro
5.6%
5 7 .1% Hydro
4.6%
Geothermal
Biomass, 6.8% B io m a s s ,
Geothermal
Imported Oil Solar & Wind So la r & Wind 6.3%
35.1% 32.1% Imported Oil 30.8%
36.5% Total: 285.8 MMBFOE

Self-sufficiency : 55.9% Self-sufficiency : 57.1 %

Imported
Imported
Imported Gas 2010 Gas 2014
2.1% Oil Imported Oil
Coal 4.6%
3.6% Coal 2.3%
8.0%
Coal 7.7% Coal
4.9%
4.8%
In d ig e n o u s Gas
Gas
E n e rg y 10.7% Indige no us
Hydro Ene rgy 10.7%
6 1.5 %
4.3% 57.8% Hydro
Geothermal 4.5%
B io m as s , 6.6%
B io m as s , Geo the rm a l
S o la r & Wind
Imported Oil Imported Oil S o la r & Wind 5.8%
31.5%
28.4% Total: 372.3 MMBFOE 29.8% 29.8%
Total: 452.9 MMBFOE

Self-sufficiency : 61.5 % Self-sufficiency : 57.8 %

 FINAL ENERGY DEMAND FORECAST
BY FUEL

350 Alternative Fuels

Electricity
300
RE
250 Natural Gas
Coal
200
Jet Fuel
150 LPG
Kerosene
100
Fuel Oil

50 Gasoline
Diesel Oil
-
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
 FINAL ENERGY DEMAND FORECAST
in MMBFOE BY SECTOR

350

300

250 Agriculture
Transport
200
Residential
150
Commercial
100 Industry

50

-
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
ENERGY SECTOR AGENDA
I. Energy Independence
" Increase indigenous oil and gas reserves
" Aggresively develop renewable energy potential such
as biomass, solar, wind and ocean resources
" Increase use of alternative fuels
" Form strategic alliance with other countries
" Strengthen and enhance energy efficiency and
conservation program
II. Power Market Reforms
" Create a transparent privatization process
" Create an investment climate attractive to investors
I. ENERGY INDEPENDENCE
 ENERGY INDEPENDENCE
A. INCREASE RESERVES OF INDIGENOUS OIL AND
GAS
" Intensive promotion of oil and gas exploration
# Award of 8 new Service Contracts
$ UK’s Premier Oil over Ragay Gulf
$ Singapore’s Gas to Grid over Central Cebu
$ China’s South Sea Petroleum over the Agusan-
Davao Basin
$ JAPEX over Tañon Strait
$ Malaysia’s Petronas over offshore Mindoro
$ RP’s Aragorn over Cagayan Basin
$ Phil-Mal (Philippines Malaysian) over Southern
Cebu
$ AustralAsian Consortium’s Ottoman Energy in NW
Palawan
 ENERGY INDEPENDENCE

Coal
" Reduce coal imports by 20% in ten years
# Boost local coal production
# Identify additional coal exploration areas
# Enhance promotional activities on Clean
Coal Technology (CCT)
# Increase mine productivity
 ENERGY INDEPENDENCE

B. DEVELOP RENEWABLE ENERGY POTENTIAL

Increase renewable energy-based capacity by
100% in ten years in accordance with Renewable
Energy Policy Framework (REPF)
 ENERGY INDEPENDENCE
Geothermal
" To be the world’s leader in geothermal
energy
# Active promotion of geothermal exploration
through Geothermal Bid Round
$ 10 prospective geothermal sites with 300 –
510 MW potential capacity
" Explore new and underexplored
prospective sites
# PNOC-EDC developing new geothermal
power projects
$ 40 MW in Northern Negros online by March
2007
$ 20 MW in Southern Negros
 ENERGY INDEPENDENCE
Wind
Philippine Wind Energy Potential Map
" To be the largest wind power
producer in Southeast Asia
# Launched in June ’04 the first ever wind
investment kit for 16 wind power areas
with 345 MW potential capacity First
commercial 1.1 MW wind-diesel hybrid
project in Batanes in Aug. ‘04
# Northwind’s 25MW wind farm power
contructed in Bangui, Ilocos Norte to come
on stream by April 2005
# PNOC’s 40MW wind farm power in Burgos,
Ilocos Norte to be constructed in 2005
 ENERGY INDEPENDENCE

Solar
" To be the region’s solar manufacturing hub
# Cypress Sunpower’s USD300M solar manufacturing
plant
$ Inaugurated in March 2004
$ Initially to produce some 8 million wafers equivalent to 25 MW
$ Expected to increase to 150 MW by 2007

# CEPALCO’s 1,082 kWp PV Plant in Cagayan de Oro

$ Largest grid-connected PV plant in developing world
$ In tandem with 7 MW hydropower plant
 ENERGY INDEPENDENCE

Hydropower
" Push for the development of all viable and mini-hydropower
plants

Biomass
" Promote biomass development and utilization for power and
non-power applications
 ENERGY INDEPENDENCE
C. INCREASE THE USE OF ALTERNATIVE
FUELS
" CNG for Transport
# Infrastructure development
$ Batman-1 and spur lines
$ LNG terminal
# Transport Sector
$ CNG buses to start plying major routes of Manila to Laguna by the first
semester of 2005
$ 8 local bus operators signed purchase contracts for 160 units of CNG
buses from China and Korea
$ Discounted CNG price for public transport signed on 26 January 2005
$ Groundbreaking of the CNG Mother Station on 05 March 2005
 ENERGY INDEPENDENCE
C. INCREASE THE USE OF ALTERNATIVE
FUELS
" Coco Bio-Diesel Program
# Initially to utilize CME on government vehicles
# PNOC-EDC launched in October 2004 its Small-
Scale CME Plant
" Ethanol as gasoline blend
# Cooperation with Thailand
# Sugar industry launched the Philippine Fuel Ethanol
Alliance
 ENERGY INDEPENDENCE
D. FORGE STRATEGIC ALLIANCES
" Cooperation with Thailand on biofuels
development
" Joint development efforts on upstream exploration
with neighboring countries
" Russia as a new oil supplier
" Australia, China and Indonesia as primary coal
suppliers
 ENERGY INDEPENDENCE
E. STRENGTHEN ENERGY EFFICIENCY AND
CONSERVATION PROGRAMS
" 23.4 MMBFOE average annual energy savings in ten
years through the National Energy Efficiency and
Conservation Program (NEECP)
# 8.1 MMBFOE to come from alternative fuels for
transport
# 15.9 MMBFOE to come from energy efficiency and
conservation program
 ENERGY INDEPENDENCE
Two-Pronged Program
1. Fuel Efficiency and Conservation Program
" Road Transport Patrol
" Fuel Economy Run
" Voluntary Agreements
" Government Enercon Program
" Energy Audit
" Infomercials / Publications / Collaterals
2. Electricity Efficiency and Conservation Program
" Power Patrol
" Partnership for Energy Responsive Companies (PERCS)
" Partnership for Energy Responsive Ecozones (PEREZ)
" Energy Standards & Labeling of Appliances/Equipment
" Government Enercon Program
" Energy Audit
" Energy Use Standards for Buildings
" Heat Rate Improvement in Power Plants
" Systems Loss Reduction
 II. POWER MARKET
REFORMS

A. Power Development Plan

B. Privatization
B. Investment Climate
C. Way Forward
 A. POWER DEVELOPMENT PLAN

POWER SECTOR SITUATION

Generation / Transmission / Distribution, 2004
Installed Dependable Peak
GRID Capacity Capacity Demand PLANT TYPE Installed
% Share
(MW) (MW) (MW) (MW)
Luzon 12,162 10,871 6,323 Oil-based 3,669 24
Visayas 1,721 1,520 963 Hydro 3,217 21
Mindanao 1,665 1,402 1,177 Geothermal 1,931 12
Total 15,548 13,792 8,463 Coal 3,967 26
Natural Gas 2,763 18
Total 15,548 100
Distribution Utilities
Electric Cooperatives 119
Private Dist. Utilities 17 Interconnection
LGUs 10 • Leyte-Luzon (440 MW)
Barangay Electrification, as of 12/04 • Leyte-Cebu (200 MW)
No. of Brgys. Electrified
No. of Remaining Brgys.
38,763
3,182
• Cebu-Negros (100 MW)
• Negros – Panay (100 MW)
T/L length = 21,021 ckt-kms
• Leyte-Bohol (100 MW)
POWER GENERATION MIX
Philippines, 2004

Geothermal Hydro
18.4% 15.3%

Natural Gas
Coal
22.6%
28.9%
Oil-based
14.8% TOTAL : 55,958.04 GWh
 POWER GENERATION MIX
Main Grid, 2004
LUZON GRID
MINDANAO GRID
Geothermal Hy dro Coal
7.6% 10.7% 38.9% Oil-based
26.6%

Hy dro
60.4%
Natural Gas
31.7% Oil-based
VISAYAS GRID Geothermal
11.0% Total: 6,996.0 GWh
Total: 39,936.2 GWh 13.0%
Geothermal Hy dro Coal
0.4% 7.2% Oil-based
70.2%
22.2%

Natural Gas
Total: 9,025.9 GWh 0.0%
 PEAK DEMAND VS. CUMULATIVE
INSTALLED CAPACITY
in MW
Luzon Visayas Mindanao
Year Cum ulative Cum ulative Cum ulative
Peak Installed Peak Installed Peak Installed
Dem and Capacity Dem and Capacity Dem and Capacity

2005 7,643 12,292 1,113 1,834 1,371 1,890

2006 7,964 12,332 1,170 1,834 1,458 1,990
2007 8,635 12,332 1,238 1,888 1,535 2,300
2008 9,372 12,482 1,308 2,013 1,615 2,350
2009 10,171 13,322 1,383 2,013 1,697 2,400
2010 11,018 14,322 1,463 2,013 1,784 2,450
2011 11,917 15,372 1,550 2,108 1,883 2,500
2012 12,871 16,422 1,644 2,208 2,001 2,600
2013 13,884 17,472 1,742 2,358 2,124 2,650
2014 14,959 18,672 1,849 2,458 2,256 2,800
Annual Growth Rate 8.16 5.72 5.91
 POWER SUPPLY-DEMAND PROFILE
Luzon

2 0 ,0 0 0

1 5 ,0 0 0

1 0 ,0 0 0

5 ,0 0 0

-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

E xis t in g C o m m it t e d In dic a t iv e P e a k D e m a nd
 POWER SUPPLY-DEMAND PROFILE
Visayas

3 ,0 0 0

2 ,5 0 0

2 ,0 0 0

1 ,5 0 0

1 ,0 0 0

500

-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

E xis t in g C o m m it t e d In d ic a t iv e P e a k D e m a nd
 POWER SUPPLY-DEMAND PROFILE
Mindanao

3,000

2,500

2,000

1 ,500

1 ,000

500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Exis ting C o m m itte d Indic a tive P e a k De m a nd

CAPACITY ADDITIONS

LUZON
LUZON
7,200
7,200MW
MW
(2008 – 2014)
(2008 – 2014)

VISAYAS
VISAYAS
600
600MW
MW
(2008
(2008 –2014)
– 2014)

MINDANAO
MINDANAO
850
850MW
MW
(2005 – 2014)
(2005 – 2014)
 COMMITTED POWER PROJECTS

Capacity Commissioning
Project Name Location
(MW) Year
Luzon 65
Northwind Power 25 Feb-05 Ilocos Norte
PNOC-EC Wind Power 40 Aug-06 Ilocos Norte
Visayas 228.4
Guimelco DPP 3.4 Mar-05 Panay
Pinamucan Transfer 110 Jun-05 Panay
Talisay Bioenergy 30 2007 Negros
Northern Negros Geo 40 Jul-07 Negros
PNOC-Palinpinon Geo 20 Jul-07 Negros
Bais Bioenergy 25 2008 Negros
Mindanao 285
Transfer of PB 101, 103 and 104 75 2005 South Mindanao
Mindanao Coal 210 Jan-07 Misamis Oriental
Total 578.4
INDICATIVE POWER PROJECTS
Capacity Commissioning
Project Name Location
(MW) Year
Luzon 510
Tarlac Bioenergy 40 2008 San Miguel, Tarlac
Pagbilao Coal III 350 Dec-08 Quezon
Tanawon Proj (Bacman Opt.) 40 2009 Sorsogon
North Luzon Phase 2 Wind Project 40 2009 Ilocos Norte
Manito-Kayabong Geo Project 40 2011 Manito, Albay
Visayas 470
Rehab of Alijis 7.5 Mar-05 Bacolod City
Bacolod City DPP 7.5 Dec-05 Bacolod City
San Carlos Wind Farm 30 (net 9) Jul-06 Negros Occidental
Victorias Bioenergy 50 (net 32) 2008 Negros Occidental
Toledo Power Exp. Project 100 2008 Cebu
KEPCO Clean Coal 200 2008 Cebu
Toledo Expansion 100 2008 Cebu
Bogo Bioenergy 25 2008 Bogo, Cebu
Dauin Geo Project 40 2012 Negros Oriental
Cabalian Geo Phase I 50 2010 Southern Leyte
Cabalian Geo Phase II 40 2011 Southern Leyte
Mindanao 376
Mt. Apo Geothermal Expansion 20 2007 North Cotabato
Cabulig Hydro 8 2007 Misamis Oriental
Minergy Expansion 30 2007 Cagayan de Oro
Mt. Apo Geothermal Expansion 2 50 2008 North Cotabato
Tagoloan Hydro 68 2008 Bukidnon
Sultan Kudarat Coal 200 2009 Sultan Kudarat
Grand Total 1,356
 POWER MARKET REFORMS
B. PRIVATIZATION
" Privatize 70% of the installed capacity of NPC’s
generating assets in Luzon and Visayas by 2005
# 3.5-MW Talomo Hydropower
# 1.6-MW Agusan Hydropower
# 1.8-MW Barit Hydropower
# 0.4-MW Cawayan Hydropower
# 1.2-MW Loboc Hydropower
# 600-MW Masinloc Coal
" Privatize TransCo
" Continuously implement transmission system upgrade
and expansion program
 POWER MARKET REFORMS

C. INVESTMENT CLIMATE
" Implement WESM in Luzon and Visayas by 2006
" 100% barangay electrification by 2008
" Open at least ten SPUG areas to private sector
participation
" Single digit national average systems loss of
distribution utilities by 2010
 POWER MARKET REFORMS
D. WAY FORWARD
" Continued active private sector participation
# EPIRA restriction on the government to put up additional
generating capacities
# Private sector to finance much needed power infrastructure

# Address critical power supply situation in some areas

" Creating a conducive environment for investment

# Market-based environment to promote a competitive power
generation sector
# Tariff rate mechanism that would balance the interests of the
investors and consumers
INVESTMENT
REQUIREMENTS
2005
2005 –– 2014
2014
 INVESTMENT REQUIREMENTS
in Billion Php

TOTAL in Total in Billion

2005-2009 2010-2014
Billion Php USD
ERD 1,100.36 20.00
Coal 78.39 83.92 162.31 2.95
Geothermal 78.80 1.43
Hydropower 304.70 5.54
Biomass, Solar & Wind 67.30 1.22
Oil & Gas 179.39 307.86 487.25 8.86
Downstream 330.09 6.00
Oil 28.54 0.52
Natural Gas 156.42 2.84
Energy Efficiency 58.54 86.59 145.13 2.64
Power 554.00 10.20
Main Grid 535.60 9.74
Small Island Grids 9.36 9.04 18.40 0.33
Electrification 6.89 6.89 0.13
The PEP will serve as the
blueprint of all players in the
energy sector for the next
ten years.

http://www.doe.gov.ph