DOE issues a moratorium on endorsement of greenfield coal-fired power projects to improve the sustainability of the Philippines’ electric power supply
The Department of Energy (“DOE”) has issued a moratorium on the endorsement of greenfield coal-fired power projects to improve the sustainability of the Philippines’ electric power supply. The moratorium took effect on 27 October 2020 and was issued to aid in the implementation of the Department’s policies aiming to improve energy sustainability, reliability, and flexibility in the country. The DOE has been moving towards the increase of the share of renewable energy in the energy mix and the promotion of new technologies and system flexibility.
The moratorium, in the form of an advisory embodied in a Memorandum dated 22 December 2020, states that the DOE will no longer process applications for greenfield coal-fired power generation facility projects requesting its endorsement. However, the moratorium does not affect operational coal-fired power generation facilities, and coal-fired power projects which have been considered under any of the following parameters:
- Committed power projects;
- Existing power plant complexes which already have firm expansion plans and existing land site provision; and
- Indicative power projects with substantial accomplishment, specifically the following:
- With signed and notarized acquisition of land or lease agreement for the project; and
- With approved permits or resolutions from local government units (city/municipality/province) and the Regional Development Council where the power plants will be located
The Memorandum states that the moratorium comes at a time where coal plants account for 66% of the total additional capacity installed into the country’s grid for the past 10 years. As a result, the growth of the power sector was affected by the abrupt changes in electricity consumption patterns due to the COVID-19 pandemic. It posed challenges in the operation of power systems either through sudden electricity demand reduction or sustained operation of baseload power plants. The DOE recognizes the shift to a more flexible power supply mix will result to a more sustainable power system that is resilient to structural changes in demand. The moratorium period is expected to serve as a driver for the power sector to transition to a more reliable, flexible, and sustainable power system in the Philippines.