UP professors push geothermal as better and cheaper option to nuclear power

Posted at 02/10/2009 11:38 AM | Updated as of 02/10/2009 12:51 PM

Instead of re-opening the controversial Bataan Nuclear Power Plant (BNPP) the government should focus on enhancing geothermal power capacity in Visayas and Mindanao as a way to fill the projected 2012 energy shortage, professors at the University of the Philippines said at a recent forum on the pros and cons of nuclear energy.

Geothermal power is not only cheaper, speakers at the forum pointed out that it also does not require expensive decommissioning costs that nuclear power plants entail.

The forum was the second in a series of discussions to evaluate the advantages and disadvantages of House Bill 4631 or the Bataan Nuclear Powerplant Commissioning Act of 2008, a bill that aims to re-open and rehabilitate what became known as the country’s “white elephant.”

The bill was authored by Pangasinan Rep. Mark Cojuangco and Pampanga Rep. Juan Miguel Arroyo.

Marcos Era relic

The BNPP was a brainchild of the Marcos administration and was built to solve the dwindling energy source of the time. Built with a US$1.2 billion budget acquired thorough loans that eventually ballooned to US$2.4 billion, it is the largest debt the country has occurred for a single unit.

Although completed, the plant became nothing more than a white elephant as it never produced a single watt and was never put to good use. Various “defects” found during the Aquino administration and strong resistance from various civil groups led to the eventual closure of the plant.

Recently, however, the energy department raised the possibility of rehabilitating the mothballed plant once again as a way to address a projected energy shortage come 2012.

Figures stipulated in the 2006 to 2012 Energy Plan from the Energy department showed that there will be an estimated 1,495 megawatt shortage, according to Giovanni Tapang, chair of AGHAM and assistant Professor at the University of the Philippines’ National Institute of Physics.

The Energy department projects that 2534 to 3400 megawatts of power is needed by 2012 to supply the anticipated demands of the country. Luzon will be needing 1750 megawatts, Visayas requires 390 megawatts, and Mindanao, 394 megawatts of energy.

To this effect, the DOE is targeting to build 7,200 megawatts in new power generating capacity for Luzon from 2008 to 2014, 600 megawatts in Visayas from 2008 to 2014, and 850 megawatts in Mindanao from 2005 to 2014.

Shortage in Visayas, Mindanao

“At the moment, we don’t feel the shortage because we have lots of extra power,” said Tapang. He explained that power generation is basically concentrated in Luzon and the grid is currently experiencing an oversupply of energy.

Despite this excess, the energy cannot be distributed to Visayas and Mindanao for lack of transmission lines. “If you generate power in Luzon and send it to Visayas and Mindanao, you get line cost,” said Kelvin Rodolfo, Professor Emeritus at the University of Illinois at Chicago and adjunct Professor at the University of the Philippines’ National Institute for Geological Sciences.

The BNPP is within the Luzon grid. Even if it is revived, it cannot address the power needs of Visayas and Mindanao if there are no transmission lines, Tapang said.

Further, Tapang added that, “The shortage can be addressed even without the operation of a nuclear plant” as even the Energy Plan made no mention of using BNPP to augment its energy resources.

Included in the potential sources is the construction of different plants in various strategic locations in the country. According to Tapang, the energy plan identified Mindanao as a potential spot for numerous hydro plants.

Although the geothermal potentials left were small-scale and can only produce a maximum of 100 megawatts of energy, majority were in Visayas and Mindanao and could be used to boost their respective energy grids.

Cheaper option

“Small localized plants” will cut the cost of power in the regions as it will require less cost in power transmission, according to Rodolfo.

Moreover, Tapang adds that geothermal power is a cheaper and better option compared to nuclear. He states that investing on a geothermal power plant, which can create 750 megawatts of energy, costs US$1.43 billion.

The BNPP, which has the capacity to produce 650 megawatts of energy, already cost the Philippines US$2.3 billion.  The bill indicates that another US$1.4 billion is needed to re-open the nuclear plant.

Comparatively, a geothermal power plant, which can create 750 megawatts of energy, costs US$1.43 billion, according to Tapang.

Likewise, geothermal plants have low levelized costs, this includes the operation, maintenance, and the capital cost of the plant. Lower levelized costs mean cheaper energy.

According to Tapang, the levelized cost of nuclear energy range from US$97 to US$141 per megawatt. It is in the same price range as coal (US$67 to US$144) and solar (US$90 to US$145). Geothermal only has a levelized cost that ranges from US$42 to US$69.

Aside from these amounts, the bill also provides that one centavo per kilowatt hour will have to be deposited by the National Power Corporation to the national treasury for use in decommissioning the plant. This will amount to US$168 million over 30 years of operation.

But this number is small, Tapang quips. “Typical decommissioning in the United States costs US$325 million per reactor. Compared to typical rates, these are going to be small. We’re going to have to pay more.”

A computation of the direct costs of rehabilitating the plant shows that there will be 10 centavos per kilowatt hour charge for the total power generation, according to Tapang. For an average home that uses 300 kilowatt per hour of electricity every month, an additional 30 pesos, or nuclear tax, will be added on top of the original electricity bill.

The price does not include value-added tax and was based on the 48,000 gigawatts total consumption in 2007. Using this number as a basis, Tapang explains that consumers will need to pay 1,800 pesos for the first five years.

“If you look at the bill closely, there is still an additional US$500 million balance that needed to be taken up as loans,” Tapang points out. The idea of borrowing might cause additional problems since there is another possibility of paying for interests.

The money used to construct the BNPP also came from loans. “Delays and interest payments which drag the original price tag twice its original price can also drive this US$500 million loan higher,” Tapang warns.

If decommissioning costs are added, each household would have to pay 14 pesos monthly, or a total of 2,640 annually on top of the ordinary bill for the first five years. Costs are still to be collected as the plant is being used, says Tapang.

Blaming EPIRA

Despite the cheaper cost of putting up geothermal energy plants, initiatives have been staled due to the signing of the (Electric Power Industry Reform Act) EPIRA in 2001. “The government has sold or in the process of selling our generation plants and not in the business of building,” Tapang states.

The EPIRA restructures the power sector through privatization, selling all “disposable assets.” The government is expecting US$4 to US$5 billion proceeds for the plants.

“The problem is, if we leave it into investors, they would build these plants when it is viably economical to them, not necessarily if it is what the country needs. Kahit lumalaki yung ekonomiya natin, kung walang gustong mag-invest ay hindi maitatayo yung mga planta (Even if the economy grows, if nobody invests, none of these plants will get built.)” Tapang explains.

The inert construction of power plants further pushes the growing gap in electricity, according to Tapang. “We have to build a plant, if we want to have a stable energy supply. But the EPIRA and the policy of privatization are not building the plants for us.”

Realign projections

Tapang says the projections should also be adjusted to coincide with the current global financial crisis.

The current situation, according to him, was reminiscent of the 1997 Asian crisis. “The problem in 1997 was, while we had all these plants built, the others were not connected to the grid because we didn’t need them. There was an over-supply. All these had contracts. We are going to pay for them even if we don’t operate. That’s why the cost of power is so high even if we have a surplus,” he explains.

The changes in the projections will be big and the energy demand will be lower, says Tapang. Doing his own computation based on an IBON Foundation assumption that the GDP in 2009 will be half than 2007, Tapang came out with a slim 165 megawatt energy shortage come 2012.

“A large gap of over-supply will face us again if we don’t adjust our projections,” Tapang warns.