NGCP: Lack of supply hampers ‘firm’ reserve power

By Angelica Y. Yang, Reporter

PRIVATELY owned National Grid Corp. of the Philippines (NGCP) said on Tuesday that it had not fully entered into a “firm” contract to buy reserve power, leaving the Energy department hanging after its call days earlier for such ancillary services to be fully contracted ahead of the summer months.

Even though the grid system operator wanted to contract on a firm basis, the supply was not there, said Ronald Dylan P. Concepcion, NGCP special counsel for legal and regulatory affairs, during the virtual hearing called by the Joint Congressional Energy Commission.

“A reserve can only be procured if there is sufficient supply of power. If there is no supply provided by generation companies, there is no reserve or there is no ancillary services to be procured,” Mr. Concepcion said.

“It’s not as easy as procuring ancillary services from a plant that is dedicated for ancillary services as desired by some proponents that will result in a firm contracting of ancillary services to which the NGCP is not totally agreeable with,” he added.

Mr. Concepcion was responding to a question from Senator Sherwin T. Gatchalian, chairman of the Senate energy committee.

Last week, the Department of Energy (DoE) flagged NGCP for not having enough firm-contracted reserves or ancillary services (AS) for the grid as of end-2020.

AS contracted from power generation companies will mean higher costs for NGCP, Mr. Concepcion said. “Definitely, a firm contracting ancillary services will be much more expensive.”

He said ancillary services are not a remedy for the lack of power supply because if a plant shuts down, the availability of supply is affected along with the contracted reserves.

“We are advocating, as of now, a policy to have a mix of firm and non-firm (AS) because… (this) will give us a better mix of reserves,” he said.

He said that NGCP was “continually looking for AS providers” for the Luzon, Visayas and Mindanao grids.

His statement comes days after the DoE said that NGCP was not compliant in terms of the required reserve levels procured under firm AS contracts.

DoE data show that NGCP had only contracted regulating, contingency, and dispatchable reserves of 237 megawatts (MW), 180 MW, and 145 MW, respectively, for the Luzon grid as of the fourth quarter last year.

The Luzon grid’s required capacity for regulating, contingency and dispatchable reserves are at 491 MW, 647 MW, and 647 MW. These reserves are considered as ancillary services.

Based on a 2019 DoE circular, NGCP can procure these types of reserves only through firm contracts.

During the hearing on Tuesday, DoE Secretary Alfonso G. Cusi said that having sufficient reserves in place will solve the problem of having yellow and red alerts.

A yellow alert is issued when reserves fall below ideal levels. This is subsequently downgraded to a red alert — with the possibility of power interruptions — when the supply situation worsens.

Mr. Cusi likened the reserve power under a non-firm contract to a deflated spare car tire.

May spare tire ka, wala namang hangin (You have a spare tire but there’s no air in it) — that is the equivalent of a non-firm reserve. Na-flat-tan ka, may spare tire pero wala namang hangin, anong gagawin mo? (You’ve got a flat tire, and you have a spare tire with no air, what are you going to do?) We’ve been saying from day one that we cannot have a reserve that is not firm, that is not there,” he said.

On the issue of ancillary services, Mr. Gatchalian requested the DoE and the Energy Regulatory Commission to “sit down” and talk about what can be done. “This is a standing policy for a very long time. It’s in EPIRA (Electric Power Industry Reform Act of 2001) and it can be enforced,” he said.

Meanwhile, Mr. Cusi also gave updates about the transmission development plan (TDP), which he described as “another issue.”

“In fact, I have not approved — I did not approve the TDP because of the lack of participation by TransCo (National Transmission Corp.),” he said, explaining that the plan needed the DoE’s approval.

NGCP previously said that the latest version of the TDP will cover 2021 to 2040 and would take into account the needs of the power grid.