Philippine Energy Demand

This is the reason why one cannot go wrong by betting on energy stocks like AP, AEV (which is 80% composed of AP), SCC (The only large-scale Coal producer in the country), EDC and FGEN. AP is more favorable in times of power crisis since they have a much higher exposure on the WESM compared to EDC which is involved in long-term. fixed-price supply contracts. Here are some of the important points in the $155 “Philippines Power Report 2010” from Business Monitor International.

Philippine Energy Demand

§ The country’s power consumption is expected to increase by 23% from 2010 to 2014.

§ Population is expected to expand from 91.4 Million to 100.1 Million over the period

§ GDP per capita and electricity consumption per capita to increase by 46% and 10% respectively by 2014

§ Projections suggest 5.0% average annual growth in overall power generation between 2010 and 2014

§ Philippine Energy Demand is forecasted to grow by 45.6% from 2012 to 2019

§ Between 2010 and 2019, Philippine electricity generation is forecasted to increase 59.9%, which is around the middle of the range for the Asia Pacific Region. (30.3% in 2014-2019, and 22.7% in 2010-2014)

§ An increase of 25% in hydro-power use during 2010-2019 is a key element of generation growth

§ Thermal Power generation is forecasted to rise by 66% between 2010 and 2019

On Coal

§ The Philippines has a high coal import dependency and also relies upon imported oil, as its domestic production is insufficient to meet national needs

§ Coal accounts for 24% of energy demand in 2010

§ The country relies on imports for much of its coal consumption, primarily from Indonesia, China, and Australia

§ In 2008, the country consumed 9.3mn tones, (up more than 50% since 2000), while producing only 3.3 mn tonnes.

§ Emerald Energy Corporation, the Philippine subsidiary of French utilities player GdF Suez announced it is backing down from a multi-million dollar agreement for the acquisition of the Calaca coal-fired power plant citing a deterioration in the physical condition of the plant since it won the bid 16 months ago.

§ The Philippines’ coal consumption is forecasted to increase from an estimated 6.2mn to 8.4mn by 2014. This equates to a rise in demand from 9.3mn to 12.6mn tonnes of hard coal

Renewable Energy

§ Projections suggest that by 2014, the share of usage of renewable energy will increase from 6% to 10%. A very good improvement compared to the negative growth of Oil, Flat growth of Coal, and a slight increase of hydro-electric.

§ The Philippines is the second largest producer of geothermal energy in the world behind the US, with around 2GW of installed geothermal capacity. The government had originally set a goal of increasing this figure to 3.1 GW within a decade, which would have made the Philippines the largest geothermal energy producer (This coincides with EDC’s goal of becoming the number 1 geothermal producer in the world).

§ The Renewable Energy Act provides fiscal incentives for potential investors in renewable energy such as tax credits, lower taxes on machinery, and tax exemption of carbon credits, and other non-fiscal incentives

§ The BOI is proposing a package of tax incentives for the power generation sector in an effort to reduce shortages in some provinces suffering form power blackouts due to droughts.

§ RE Law also includes a Renewable Portfolio Standard requiring the country’s electric utilities to obtain a certain portion of their electricity from clean, indigenous renewable energy sources.

§ The Philippines ranks third in the region for the proportion of renewable in the power mix