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Showing posts with label power industry. Show all posts
Showing posts with label power industry. Show all posts

Saturday, February 28, 2009

Opposing power projects is becoming a habit

There is a signature campaign going around mainly in web communities, students and professional groups vehemently opposing the re-opening of the Bataan Nuclear Power Plant (BNPP) and nuclear energy in general. I say vehemently because the organizers listed seven deadly sins of the plant and nuclear energy which ought to be opposed at all costs.

In Bacolod, environmental activists, with the prodding and aid from the clergy, have been mounting a scathing indictment of the geothermal project of Energy Development Corporation (PSE:EDC) in nearby Murcia. Specifically, they are opposing the entry of the geothermal developer into a tiny strip of land called the buffer zone between the existing field and power plant, on one hand and the Kanlaon National Park on the other.

In northern Mindanao, local groups are opposing the setting up a bioethanol plant because it is alleged that the planned processing plant would pollute the city’s watershed.

Why is it that certain groups have been opposing any power development with alarming regularity? It wasn’t too long ago that a prime mover of this coalition has sent a S.W.A.T.  unit to deface a coal plant in Luzon. More than a decade back, Kidapawan in North Cotabato had been the eye of a storm of protests against a geothermal plant. Now, that 106 MW geothermal facility has been supplying Mindanao with steady power, with not a whimper from any Philippine eagle that may have strayed within the geothermal reservation.

What is disturbing and disappointing with some of this highly organized opposition is sprinkling their arguments with supposedly scientific basis to make the presentation more palatable to those who are non-technically minded. I just hope that they get all their science right.

For the case of the BNPP, opposition to its opening and against nuclear energy are lumped together, as if these are two intertwined issues. Nothing could be farther from the truth. The construction of the BNPP has been tainted with scandal. Worse, the country ended up paying millions of dollars in loans and interest without getting a single watt of power.

But considering the nuclear option is a different matter altogether. Ever since Three Mile Island and Chernobyl, the nuclear world has changed a lot. Stringent standards have been put in place. Technology has advanced such that safety is becoming a non-issue.

True, the problem of final nuclear waste disposal still hangs—but who says the end user necessary takes the cudgel of burying the waste to oblivion? The usual arrangement is that the supplier could take responsibility of temporary storage.

Temporary storage of nuclear waste has been the bane of contention between the pros and cons, but the industry—if you call it that way—has an enviable record of safety.

Now, you ask, which is cleaner and greener, wind or nuclear energy? Nobody is pulling your leg, but if you go by science—this is probably a heresy—nuclear is cleaner than wind, according to an environmentalist who did the numbers. The carbon footprint of a nuclear plant is far smaller than a wind farm of comparable electrical output. Think of the manufacturing process of thousands of wind turbines and towers to equal the 600 MW size of a BNPP type.

Now, if you power New York City with wind energy, you would need a wind farm the size of New Jersey. Don’t get me wrong. I am not advocating the re-opening of BNPP—that is a political issue—but I am not closing my eyes altogether on the nuclear alternative, especially now that we would be facing a power crunch in the next few years.

For the case of geothermal, nearly all local projects have been met with some opposition. For the Mt. Apo (Mindanao) geothermal project, you needed some trees to cut and strips of land to bulldoze for the roads and pads, just like any other development projects, be it housing for the poor or a bridge to connect a far-flung barangay (village) to civilization.

For the Northern Negros project, some lepidopterans were surely disturbed, but t they have not abandoned their habitat. When the Bacman project was at full throttle, the native bats at Manito, Albay and Sorsogon, were probably irked at the drilling rigs. But since then, they have reclaimed their natural sanctuary.

On geothermal, it is difficult for the opposition to accept that the operator needs to preserve the watersheds, for these are the lifeblood of geothermal power. The hot water you are using to drive the turbines comes from the circulation of surface water which is abetted by a healthy watershed.

Even the greenest of them all, could have objections raised against them. Solar for example, needs hectares of land to be of any consequence to our energy mix.

What about the upcoming thermal ocean power which is slowly creeping into practical use?

Well, the residents of Donsol, Sorsogon would have the butandings to thank for to justify their opposition to a thermal ocean power turbine that could be place between Allen, Samar and the tip of Sorsogon. The residents of Bataan may have to invoke the rights of some melon-headed sharks to oppose the re-opening of BNPP.

 No, we are not condoning the use of polluting energy sources. While coal-fired plants are considered among the dirtiest—why do you think that the mighty U.S.A. is helpless in eradicating these smoke- and mercury-belching behemoths? Simple. It’s all about economics. Half of the American electric power comes from coal, and without it, the mightiest economy would grind to a halt.

What is important is we know how much power  we need, and if we need to generate that need, we should be at least confident that our choice is the most applicable given all the surrounding circumstances at any given time.

That choice should be grounded on sound science and engineering.

Monday, November 24, 2008

Aboitiz Power on the prowl; raises P3 billion

 Looks like Aboitiz Power Corporation (PSE:AP) is on the prowl again for more acquisitions after its Board approved the issuance of P3 billion worth of peso-denominated bonds through a private placement. Proceeds of the fund-raising exercise will become part of its war chest for acquisitions of power assets.

 In a disclosure to the Philippine Stock exchange, it said it may increase the issue size depending on the market appetite. The offering is handled by BDO Capital & Investment Corp., BPI Capital Corp., First Metro Investment Corp. and ING Bank N.V. and will run up to the end of the year.

 That such a fund-raising campaign is conducted in the middle of a raging financial crisis speaks well of the company. Lesser companies in times like this would rather seal the hatches and ride the storm rather than venture out into the open capital markets.

 But it is precisely these times when energy demand is expected to slow down that one should start top build up the necessary infrastructure. The best time to invest is when there is so much blood in the streets; just ask Warren Buffett, the legendary investor.

 In the past few years, the Aboitiz group has been actively adding power assets to its portfolio by buying assets from the government or other investors. In July, it bested Energy Development Corporation (PSE:EDC) in acquiring the Tiwi-Makban complex, the first geothermal asset sold by PSALM, the government arm tasked to privatize power assets. It is also the first geothermal asset held by the Aboitiz group.

 In a joint venture with SN Power of Norway, Aboitiz Power has taken over the operations of the Ambuklao and Binga hydro plants in Benguet in the middle of the year. Earlier in 2006, it has acquired a significant chunk of ownership in the 232-MW STEAG coal plant in Mindanao.

 Aboitiz Power has a large pool of government assets it can cast its net into. Among the assets scheduled for disposal by the government in 2009 include: 

  • the 116-MW Subic and 620-MW Limay diesel plants, both to be sold in January;
  • the 246-MW Angat hydroelectric plant, in February;
  • the 310-MW Navotas I and II diesel plants, and the 197.8-MW Naga gas and diesel plants, in April
  • the 192.5-MW Palinpinon geothermal plant, in July
  • the 850-MW decommissioned Sucat and the 112.5-MW Tongonan geothermal plant, in August
  • the 150-MW Bacon-Manito geothermal complex, in September and
  • the 54-MW decommissioned Cebu diesel plant, in October

  In the first nine months of the year, the company reported a P3.17 billion net income, a 35% net income growth year-on-year on the back of the continued expansion of its power generation business. However, it is likely that the overall income for the whole year will be tempered owing to the costs in acquiring the new assets Tiwi-Makban and Ambuklao-Binga.

 While the Aboitiz group belongs to an old, well established business clan, its power business is run by a new generation descendant in Luis Miguel Aboitiz, who is young, dynamic and has the required academic and business credentials to run a difficult business in trying times.

 Aboitiz Power is one energy company worth watching by investors, consumers and by the energy community at large.

(Disclaimer: The author does not hold any shares in any of the Aboitiz companies and does not intend to invest in them in the near future. He is not connected with the Aboitiz group, and is not tasked to write about them)