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Philippines Power Report Q3 2013 - New Market Report

New Energy market report from Business Monitor International: "Philippines Power Report Q3 2013"


Boston, MA -- (SBWIRE) -- 08/14/2013 -- Developments this quarter illustrate that the government is not yet ready to reduce its dependence on coal-fired sources of electricity in favour of cleaner sources of energy. A handful of new coal-fired power projects have been announced over the past few months, and while hydroelectric sources of power will continue to play an important role in the electricity-generating mix, a lack of rainfall has put their unreliability under the spotlight. Outages in H113 have underlined the vulnerability of the power sector, with businesses claiming that blackouts have led to considerable financial losses. Looking forwards, the role of gas in the electricity-generating mix will remain stable, although we may revise our forecasts following First Gen's plans to construct liquefied natural gas storage and regasification facilities, which could then facilitate the distribution of this fuel. And despite its irregularities, hydropower will continue to receive investment, with new projects planned.

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We forecast electricity generation in the Philippines to grow by 3.77% in 2013, to reach 73.01 terawatt hours (TWh). Electricity generated by gas-fired power stations will be responsible for the majority of this growth, and natural gas will outperform the market as a whole, climbing by 4.23% over 2013. Oil-fired power stations will see their contribution to electricity generation decline slightly, by 0.06% in 2013. We forecast hydroelectric power to represent 13.43% of total electricity generation, although a lack of rain has seen it operating below capacity.

Between 2013 and 2022, we forecast growth in electricity generation to average 4.07% per annum, underpinned by a similar annual average increase in electricity consumption (4.30%). We expect to see the share of natural gas in total electricity generation increase from 36.89% in 2013 to 36.83% in 2022, as the country seeks to exploit its natural gas reserves and lower electricity generation costs, while coal-fired sources of power will also make important gains, from 28.16% of the electricity generation mix in 2013 to 30.56% by 2022. However, we highlight that the country's power situation will remain tenuous for the foreseeable future, due to the numerous challenges standing in the way of private investment. The government's Philippine Energy Plan will see coal taking an increasing share in the electricity-generating sector, but it the short term, there are genuine concerns of power outages, until new capacity is installed.

Key trends and developments in the Philippines' electricity market:

- SMC Global Power Holdings, San Miguel's energy unit, announced in May 2013 that it plans to invest US$1.5bn in two coal-fired power units; a 600MW on in Bataan and a 300MW one in Davao. Both are scheduled to begin operations in 2015.

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