The economics of blackouts in Europe and the Philippines’ way to blackouts



RA blackout due to the electric voltage already started in Europe on December 23, in Kosovo and then in Serbia. There have also been warnings about the power supply to the UK, as France’s nuclear output has declined dramatically and they need to source power elsewhere.

The continent has seen calm weather over the past few months, so wind generation was low and the electricity supply tight, bordering on blackouts as early as September of this year. So they switched to natural gas and prices have skyrocketed – from just € 19.12 on December 31, 2020 to € 180.27 on December 21 this year, 9.4 times higher than the 2020 bar or higher. by 843%.

Blackout economics is the policy of reducing the supply of stable, reliable, and distributable energy while increasing the supply of unstable, unreliable intermittent energy such as wind and solar, resulting in stretched and thin reserves as demand increases. It is a deliberate decision to invite blackouts while constantly raising electricity prices.

The biggest practitioner of the blackout economy is said to be Europe’s largest economy, Germany. Despite this tight electricity supply and very high gas prices, Germany, which had 17 nuclear power plants until 2011, will shut down three of its six remaining nuclear power plants at the end of this month – that is, say next week – then will close the last three by December. 2022. In addition, they will also shut down all coal-fired power plants by 2030.

Germany’s new government, led by the political Social Democratic Party (SPD) and the Socialist Green Party of the Greens, has accelerated this irrational energy transition. The pro-business and pro-market Free Democratic Party (FDP) which has joined the coalition has been compromised by the socialist energy program of its two partners.

This should not be the case as the world has a huge reserve of conventional energy like natural gas and coal, both now and in the future.

Many countries have abundant reserves on the ground, so if they continue with their current annual production for domestic and export markets, their reserves to production (R / P) ratio will last for hundreds of years. Proven natural gas reserves in Russia are 37,392 billion cubic meters (BCM) and 12,619 BCM in the United States. The R / P ratio for natural gas is 334 years in Venezuela, 231 years in Turkmenistan, 144 years in Qatar and 128 years in Iran.

For coal, the R / P ratio is much longer: 1,429 years in Ukraine, 514 years in the United States, 407 years in Russia, 334 years in Germany and 315 years in Australia. R / P ratio of our ASEAN neighbors: Indonesia is 62 and Vietnam is 69. No data for the Philippines is provided (see table 1).

So, for the Philippines, an abundant supply of coal may come from Indonesia, Vietnam, Australia, and the United States, and liquefied natural gas (LNG) to augment or replace Malampaya’s natural gas may come from the Middle -East and US.

A blackout is the failure or complete shutdown of electricity due to heavy storms and very low power on days and times of high demand. A brownout is a partial blackout, when the capacity and voltages of the system are reduced by at least 10-25%.

Consider these four reports in Business world this month:

“Renewable energy projects with a capacity of 16,000 MW make the first DoE cut” (December 9),

“PHL joins the OECD clean energy financing program” (December 13),

“PSALM ordered not to take more responsibility for Mindanao electricity cooperatives in front of billions” (December 17),

“Meralco calls for tenders for 170 MW emergency power supply” (December 24).

The first two reports are linked. More unstable and intermittent renewable energies (RE) such as 10,935 MW of wind power and 4,251 MW of solar will be added in the coming years, with a single coal-fired power plant (300 MW in San Carlos City, Negros Occidental) and a huge LNG plant (6,492 -MW at Navotas by San Miguel Electric Corp.) having obtained authorization from the Department of Energy (DoE). The Philippines has signed with the Organization for Economic Co-operation and Development (OECD) Clean Energy Finance and Investment Mobilization (CEFIM) program, which will push more intermittent RE into the country’s grid.

The third report concerns the tight financial situation in which the Power Sector Assets and Liabilities Management Corp finds itself. (PSALM). As of October 31 of this year, two delinquent electric cooperatives owed PSALM 15.41 billion pesos: 12.40 billion pesos from Lanao del Sur Electric Cooperative, Inc. (LASURECO) and P2.91 billion from Maguindanao Electric Cooperative, Inc. (MAGELCO).

This could be the main reason why PSALM received 16 billion pesos by Congress for 2021 and 2022 (see this column from September 13, Taxpayers across the country will pay off the loans of these two power co-ops that may not have the intention of paying, and plunge their customers into obscurity if their abuse is no longer tolerated.

The latest report concerns Meralco’s plan to achieve peak power supply covering February 26 to July 25, 2022 to protect itself and its customers against potential outages and price spikes in the wholesale electricity market in the United States. cash (WESM) during those five months. Good movement.

At a Philippine Independent Electricity Market Operator (IEMOP) press conference on December 21, they reported that the Load Weighted Average Price (LWAP) for December billing had increased. at 6.32 P, 2 / kWh due to the scarcity of supply caused by forced and planned shutdowns of the main power plants.

The price increase in 2019 was understandable given strong demand before the pandemic as some large factories went into forced outages. The drastic drop in 2020 was due to the strict and prolonged lockdown of the pandemic and business closures. Prices jumped again to P5-8 / kwh from May to October 2021 except September, leading to prices this year approaching those of 2019 (see table 2).

A number of large conventional power plants like coal, natural gas, large hydroelectric and geothermal power plants are old and aging, sometimes resulting in unscheduled or prolonged shutdowns for repairs and maintenance. We need new large power plants of similar technology, as well as small modular reactors (SMRs) – nuclear weapons – to deliver base and average merit power and avoid blackouts and even brownouts.

Energy development should be driven by market demand and supply, not by environmental politics and lobbying. A highly politicized energy policy leads to more politics than a stable power supply. We must avoid the European path and follow the one that many of our big Asian neighbors have taken.

Happy New Year, dear readers.

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

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