Green energy think tank questions LNG viability

April 13, 2023

2–3 minutes

The Center for Energy, Ecology, and Development, a sustainability think-tank, on Thursday raised questions on the viability of the government’s push for liquefied natural gas (LNG) as the solution for the power crisis currently affecting the country as Atlantic, Gulf & Pacific Company (AG&P) said this week that it has received the country’s first LNG cargo at its import terminal in Batangas City, which will then be regasified and used to fuel adjacent gas power plants.

AG&P’s delivery of LNG from Vitol Asia Pte. Ltd. comes amid ongoing procurement and price disputes involving San Miguel Corporation’s South Premiere Power Corp. 1,200 MW Ilijan gas plant and another proposed plant by SMC subsidiary Excellent Energy Resources Inc – two plants intended to be the primary recipient of regasified fuel from the AG&P terminal.

“The delivery is being celebrated as a solution to the power crisis, but LNG carries more problems than solutions for power cost and security issues we confront. It makes no sense for the Philippines to entertain an energy development pathway that places LNG front and center. Global LNG supply remains tight and volatile a year since the Russia-Ukraine war began, and long-term contracts for LNG supply have already been sold out for the next couple of years,” said Gerry Arances, Executive Director of CEED.

Arances also pointed out that even if the energy companies in the Philippines do get hold of supply, prices will become prohibitive, citing an analysis published by the Institute for Energy Economics and Financial Analysis (IEEFA), which estimated that rates from LNG-fired power generation in the Philippines could be roughly PHP9/kWh to as much as PHP16/kWh.

“LNG is coming in just as ongoing procurement talks allow generation companies to dictate the prices of electricity and pass on additional costs to consumers with reckless abandon. LNG would be one source of electricity, but what is the point when it is too expensive for ordinary Filipinos? We don’t want to live in darkness, but having expensive electricity will be as bad as having no electricity since people can’t turn on their lights anyway,” said Arances.

Arances pointed out that there is an alternative energy source for the Philippines which does not have the drawbacks associated with LNG and other fossil fuels.

“Renewable energy is affordable and readily available in the country, on top of being more environment-friendly. Biddings under the Green Energy Auction Program (GEAP) resulted in prices as low as PHP 3.40/kWh in 2022. A new round of auctions in June would soon allow over 11,600 MW of new renewable energy capacity to come online in the next few years. This casts doubt on the wisdom of getting into a future where we would keep wondering where the next shipment would come from, or how much consumers’ pockets will be emptied by volatile prices, when we have an abundance of cheap energy from renewables just within reach,” said Arances.