2014-03-27 13:26:32 - Recently published research from Business Monitor International, "Philippines Power Report Q2 2014", is now available at Fast Market Research
The Philippines' power sector continues to expand, with growth of between 3% and 5% expected throughout our current forecast period to 2018. Recovery following the widespread devastation of Typhoon Haiyan may hamper growth in the short term, but a range of projects in the pipeline means we see strong potential in the longer term, an outlook boosted by an increasingly positive domestic investment environment.
Typhoon Haiywan struck in November 2013 and its effects will be felt for some time to come. The disaster affected 10% of the population and caused at least 10,000 deaths. As well as the devastating human impact, the typhoon also destroyed wide swatches of the country's infrastructure, including taking down power transmission and distribution networks as well
as impacting on geothermal and other power plants. The islands of Samar and Leyte were particularly affected, and a great deal of recovery work remains to be done. This recovery work is delaying a range of projects that were planned before the typhoon struck.
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Despite the delays we still expect to see growth in the longer term, with construction expected to commence throughout 2014 on a range of projects including coal fired plants and various renewable energy projects. Thanks to these projects we are forecasting that electricity generation in the Philippines will grow by 3.77% in 2014, reaching 75.21 terawatt hours (TWh). Highest growth will be seen in the renewable sector, at 9.42% growth in 2014, though renewable generation will continue to lag behind thermal, coal and gas generation. Oil-fired power stations will see their contribution to electricity generation decline slightly, by just under 0.03% in 2014, a decline we expect to continue in the next few years.
Consumption is also expected to increase throughout the forecast period at around 4% per year. We remain concerned at the Philippines' ability to match demand to supply, and as such the country's power situation will remain tenuous for the foreseeable future, Overall we do not expect the Philippines to develop a significant power supply shortfall during our 10-year forecast period, with some scope for a limited generation surplus. We note, however, that in order to avoid any shortages or an import requirement, investment commitments need to be met in full. Reducing losses will also be key, and thanks to better technology and more efficient distribution lines we expect to see an overall trend of lower transmission and distribution losses (from 10.76% in 2013 to 8.94% in 2023).
Key trends and developments in the Philippines' electricity market:
* Typhoon Haiyan caused havoc in the Philippines in November 2013. The latest situational report from the National Disaster Risk Reduction and Management body estimates that 9.6mn people were affected by the supertyphoon, with damage reported across 41 provinces. Leyte and Samar islands were totally cut off from the electricity grid, and it took the National Grid Corporation of the Philippines several weeks to restore the connection.
* In December 2013 First Natgas Power Corporation (FNPC) signed contracts for equipment supply and construction services with Germany-based Siemens. FNPC is a wholly owned subsidiary of Philippinesbased renewable energy firm First Gen Corporation and the contracts involve the design, engineering, construction, procurement and completion of the US$600mn San Gabriel Project in Santa Rita.
* Filinvest Group is planning to invest around PHP40bn (US$890mn) for the construction of a 405MW coal-fired thermal power plant. Filinvest, which is planning to execute and develop the project individually, is in talk with several banks to provide financial support to the project. The circulating fluidized bed coal-fired thermal power plant will be constructed inside the PHIVIDEC Industrial Estate in the country.
* San Miguel entered into an agreement with South Korea's Korean Water Resources in September 2013 to operate and maintain the 218 Angat hydropower plant in the Bulacan province, Luzon. The introduction Retail Competition and Open Access - which came into force in mid-2013 - was widely expected to help raise competition among utilities and lower prices, Manila's Meralco has gone against the tide, announcing electricity rate increases in November 2013.
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