While the past few days have been very exciting, both in and out of the stock market, it has been confusingly troubling as well.
For instance, while the market almost always opened up on a surge, it continues to struggle to maintain its early momentum that by the end of the trading day, it either closes with a small loss or with a modest gain that is not enough basis to expect an imminent breakout.
A significant selling pressure always arises attributed to profit-taking as investors opt to secure gains after a period of upward movement.
Threats to political stability
No wonder this cautious sentiment has become a recurring theme among investors after some recent local events surfaced to become patent proofs to largely explain the market’s continuing softness and uncertainty.
At the forefront is about the extent of corruption and inefficiency in all levels of the civil service that has rendered how trivial and low-life our bureaucracy has become, which in turn could very possibly undermine the country’s political stability.
A classic example is the narrative on dismissed mayor of Bamban, Tarlac, Alice Guo. She became a public official not withstanding her status as a foreigner. When declared a wanted person by the Senate, she easily disappeared and escaped from our borders but surprisingly got apprehended through routine surveillance by the Indonesian police authorities.
Also, while high priest Apollo Quiboloy was captured locally, it came about after a 16-day laborious search in the Kingdom of Jesus Christ (KoJC) compound that required the deployment of no less than 2,000 police personnel, and the circumstances of his capture are now made confusing and troubling for the records.
Quiboloy’s lawyer says he surrendered freely to the Intelligence Service of the Armed Forces of the Philippines or ISAFP.
But if we are to take the media announcement of Interior and Local Government Secretary Benhur Abalos, the self-appointed “Son of God” was captured and arrested in his luxurious garden of Eden bunker.
The tale of two women and the protest against the extended use of LNG
We are experiencing similar confusion and trouble from diehard environmental advocates in questioning the country’s program of ending fossil fuel use in favor of renewable energy (RE) resources in the effort to help prevent climate change.
The discussions, however, have particularly shifted into questioning the extended use of liquefied natural gas or LNG as a serious deviation or an unnecessary transition bridge towards our decarbonization program.
These environmental advocates appear to have a better access to decarbonization information more than the cause-oriented groups I wrote about some weeks ago, namely the Sanlakas party-list organization and Power for People Coalition (P4P), who filed a case against Department of Energy Secretary Raphael Lotilla before the Ombudsman for endorsing the expansion of the Aboitiz-owned Therma Visayas Inc. (TVI) Unit 3 coal plant in Toledo City, Cebu.
To recall, their claim revolved around Lotilla’s decision as a violation of the 2020 moratorium on coal power projects in the Philippines imposed during the Duterte administration, which even to one without any legal background was obviously not.
Diehard environmental advocates wanted the country to go straight to installing RE plants without regard to the practicalities on the ground, not to mention the costs and inconveniences such proposal may cost the populace in the process.
As I see it, this proposal reminds me of the story about two women fighting for the only remaining seat in a point to point or P2P bus. As the story goes, no one would like to give in. The bus conductor could not prevail on them how to settle their argument on logical and practical terms until the annoyed bus driver shouted, “let the ugly one take the seat.” As you might have suspected, both women stood all the way to their destination — very tired and worn out.
Our decarbonization program has the same moral story as that of the two women mentioned above. As you can see, while the use of LNG in Europe including Japan in our doorsteps is declining, we cannot completely copy their act for several good reasons.
To start with, the government has a roadmap for the country’s energy plan. This is the Philippine Energy Plan for 2023-2050. In this plan, natural gas is projected to produce between 18.32% to 20.10% of gross generation output by 2030 and 13.17% to 24.19% by 2040.
The reason behind this is the fact that LNG is still a needed energy source to provide “baseload supply” while we transition into more RE sources. It is as well a versatile adjunct for “peak demand.”
Needless to say, baseload power sources are those plants that can deliver power consistently over 24 hours at a steady rate. Peak demand, on the other hand, is the time of the day in which consumer use for electricity is at its highest. A shortfall on any of these element leads to power outages.
According to the studies on the energy plan, “gas-to-power generation is a natural complement to variable renewable energy, especially if the aim is to maintain grid stability and strengthen energy security.” LNG-powered turbines are able to quickly ramp up or down the quantity of its power generation to complement the inherent intermittencies of renewable energy sources like solar and wind. Also, LNG only produces around half of the greenhouse effect of coal.
Capacity and cost factors
Peak electricity demand and nationwide electricity sales is estimated to grow by 5.19% and 5.49%, respectively, each year from 2023 to 2050.
Considering capacity factors or the ratio between the total metered quantity and the total registered capacity, the Philippines will need all forms of energy sources at its disposal to address this requirement. At present, the capacity factors of its energy sources are as follows: Geothermal, 65.5% to 71%; Coal, 57.5% to 68.5%; Natural gas, 44.2% to 64.2%; Hydro, 24.1% to 39.2%; Wind, 31%; Biomass, 25%; Solar, 20%.
Using solar as an example for more context, this means that out of 100 megawatts of installed solar capacity, only 20 megawatts is effectively produced.
Thus, it would take a solar facility with a stated capacity of 500 megawatts to generate the same amount of electricity as a baseload that has a gross generation output of 100 megawatts.
As we all know, the lower capacity factors of RE sources like solar and wind are mainly due to their intermittent or variable nature. They produce electricity in an inconsistent manner such that their output is varying in amount and subject to interruptions due to local weather conditions and/or seasonality.
This strengthens the case for the utilization of high-generating capacities like coal, natural gas, and nuclear to balance variable renewable energy to ensure grid stability and power reliability.
Moreover, while energy storage systems could actually address the intermittency of variable renewable energy, data show that integrating both is still quite costly today, potentially resulting in much higher power rates for customers.
Based on the 2022 study on “Levelized Full System Costs of Electricity (LFSCOE), a novel cost evaluation metric that measures the average cost of electricity generation over the lifetime of an asset, incorporating the problem of intermittency and dispatchability at the same time, findings show that storage costs and backup power significantly add to the cost of what is claimed as cheap solar and wind energy.”
The LFSCOE study shows that even if coal is seen to be more expensive at $76/MWh compared to onshore wind at $40/MWh and solar PV at $36/MWh, since coal has a much higher capacity factor and is less intermittent as a source, it has much less need for storage and backup power, rendering it cheaper at $78 to $90/MWh.
Meanwhile, when measured in LFSCOE terms, onshore wind is priced at $291 to $483/MWh, while solar PV is estimated at $413 to $1,380/MWh, assuming that any of them is serving alone an entire market. The rise in costs is due to the additional cost of their power storage system.
Summary
Suffice it to say, the countries mentioned to be stepping down on their use of LNG have other reliable energy sources available to their disposal, which include nuclear facilities, to give them “high power density and capacity factor as high as 93%.”
Under our present energy infrastructure, we are still far from such status. To insist then on a rigid policy to go straight to the installation of purely RE facilities, and not even allow a limited extension of LNG use, is not reasonable much less practical for what the populace may suffer in the process.
To do so, we may end up like the two women who were fighting over the only remaining seat in the bus, and ended up tired and worn out in their long ride for being without regard to compromise and common sense for mutual accommodation. – Rappler.com
(The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. You may reach the writer at [email protected])
