CHALLENGES OF DEVELOPING MICROGRIDS IN THE PHILIPPINES
Meralco’s experience on Cagbalete Island and Isla Verde
RAMON L. ASAÑA Jr. Head, Network Technology Strategy and Architecture Manila Electric Company (MERALCO) Outline
▪ MERALCO Company Profile
▪ Overview on Rural Electrification in the Philippines
▪ Overview on Microgrids
▪ MERALCO Microgrid Implementations
▪ Key Challenges of Developing Microgrids in the Philippines based on Meralco’s Experience on Cagbalete Island and Isla Verde
2 We are the largest power distribution company in the Philippines, serving close to 27 million Filipinos in 111 cities and municipalities, and in a franchise area of over 9,685 km2.
We serve the country’s social, political, and economic centers where 50% of our GDP is produced.
We are US$7.4 billion* company, serving our customers for the past 115 years, with the commitment to be the total energy solutions provider of choice in the Philippines. ______7,399 MW peak demand (2018 YTD) 41,389 GWh energy (output) sales 120 substations / 17,795 MVA substation capacity
*Market capitalization as of end 2017 Overview on Rural Electrification in the Philippines As of 2017, only 90.65% of the households in the Philippines and 97.73% in Meralco’s Franchise Area have access to electricity
Distribution of Unserved HH Population Household Distribution Unserved Households Projected Served HH Electrification Utilities HH (2015) Level (%) Meralco 6% Other DUs Electric 9% 13.34 11.72 1.62 87.92 Cooperatives
MERALCO 7.00 6.84 0.16 97.73% Electric Cooperatives Other 85% Distribution 2.29 1.95 0.34 85.05 Utilities
Grand Total 22.63 20.51 2.12 90.65%
Notes: • The Household Population number was projected and provided by NSO based from the 2010 Census • Served Household figure was sourced from the consolidated Distribution Development Plan (DDP) 2015-2024 of all the Distribution Utilities (DU) and National Electrification Administration’s (NEA) Status of Energization Reports
Source: NEA Updates on Rural Electrification Program; 2016 Year-end
Page 4 Overview on Rural Electrification in the Philippines Rural Areas Electricity Service Hours
• The Philippines is an archipelago of 7,641 islands
• About 2,000 islands are inhabited; hundreds of small islands have limited or no access to electricity
• These islands are usually powered with diesel generator sets only
o Only 18 out of 287 areas (or 6.2%) have 24/7
electricity; Source: MEDP – DOE 2016-2020
o 84 out of 287 (or 29.3%) have 10-22 hours;
o while the rest (64.2%) have less than 10 hours of electric service
Page 5 Overview on Rural Electrification in the Philippines
Philippine Rural Electrification Target
The 100 percent electrification of targeted and identified households accessible to the grid is target to be attained by 2022, while the 100 percent electrification of household in off-grid areas are expected in the long term period (2023-2040).
Page 6 Overview on Microgrids Key Components of a Microgrid
A microgrid is a localized energy grid aimed to achieve specific grid objectives, with the capability to Key Components: Non-exhaustive disconnect from the traditional grid and operate autonomously 1 Distributed Generation Fossil Fuel, Renewable Energy
2 3 Controls EMS, DR, Dynamic Pricing
3 Energy Storage Utility Batteries, Electric Vehicles 4 4 1 2 Electric Load Single, Multiple, Distributed *Microgrid designs vary based on the scope of work and the complexity of the objective
Source: HOMER Energy Page 7 Overview on Microgrids Distributed Energy Resources Types:
Small Wind Solar PV Turbine
Combine Heat Micro Hydro and Power
www.energids.be www.homepower.com
http://www.seao2.com www.eneria.fr Biogas Generator Tidal Energy Generator Diesel Generator
Page 8 Page 9 Page 10 Overview on Microgrids Integrating Intermittent Energy Sources in Microgrid
Intermittent + Energy Storage = Stable Power
Intermittent + Dependable Supply = Stable Power
Intermittent + Energy Storage + Dependable Supply = Most Ideal
Page 11 Overview on Microgrids Energy Storage Technology in Microgrid
Lead Acid Battery
Vanadium Redox Flow Battery
Lithium Ion Battery
Page 12 Overview on Microgrids
Microgrid Modes of Operations
Parallel/Grid-tied ▪ Operating connected and synchronized to the main grid ▪ Power may flow in and out of the microgrid
University of California San Diego Microgrid (USA)
Island/Isolated ▪ Operating independently from the main grid
Miyako Island Microgrid (Japan) Camiguin Island
Page 13 Overview on Microgrids What are the Use Cases of Microgrids?
Economics Achieve incremental income / cost • Self-Consumption • Diesel Optimization savings for the end-user by creating 1 • Battery Arbitrage an optimal energy mix in both • Peak Reduction • Net Metering supply and demand side • Facilities Upgrade Deferral
Ensure business continuity to end- Power Quality and 2 users by increasing quality of Reliability electric service
Market Participation Participate in the Electricity Energy, 3 • Energy Reserve and Ancillary Services • Reserve • Ancillary Services market
Provide electricity to off-grid 4 Electrification communities
Page 14 MERALCO Microgrid Implementations Meralco’s Microgrid Implementations APPLICATION ✓ Microgrids for the electrification of households located in remote islands and far-flung areas
✓ Hybrid energy system composed of solar PV, battery storage, and diesel gen-set to replace full diesel gen-set scheme as power source
CAGBALETE ISLAND ISLA VERDE LOCATION LOCATION Cagbalete Island is situated Isla Verde is situated along the in Mauban, Quezon and can bodies of Verde Island Passage be accessed via 1-hour boat between the Luzon main island ride from Mauban Port. It is and Mindoro. It lies south of a booming tourist attraction Batangas City and is composed because of its beautiful of 6 barangays. white sand beach. CUSTOMERS CUSTOMERS There are about 1,990 There are about 887 households in the island that households in the island that currently have no access to
currently have no access to electricity.
electricity. Page 15 MERALCO Microgrid Implementations
Current Power Supply Situation
EXISITING POWER SOURCE AVAILABILITY
DIESEL 6pm – 10pm GENERATORS Sizes range from 5 – 30 KVA daily operation
Few residents with their own diesel generators Note that not all households have access to are also selling electricity to neighbors electricity
DISTRIBUTION SYSTEM POWER QUALITY
Low quality of power due to: 230V • high voltage drops • overloaded generators single-phase system (evident on the flickering of the lights)
Page 16 MERALCO Microgrid Implementations
Objectives of the Pilot Projects
❑ Evaluate the feasibility and sustainability of using Microgrids for island electrification in providing reliable, affordable, sustainable, and clean 24/7 electric service • Demonstrate stable system operation with high RE penetration • Prove financial viability (least cost option) • Develop a sustainable O&M scheme • Develop a communications plan for the residents to boost awareness
❑ Gain actual learning experience from planning to operations and maintenance of Microgrids
❑ Prepare Meralco for future Microgrid installations • Replicate to other areas for electrification
Page 17 MERALCO Microgrid Implementations Resource Assessment Cagbalete Island
Page 18 MERALCO Microgrid Implementations
Load Curve Estimation of Cagbalete Island
Page 19 MERALCO Microgrid Implementations Proposed Microgrid Scheme for Cagbalete Island
Monocrystalline Consumption Prime Polycrystalline Flow Curve Back-up Thin Film Lithium Based
Load CAPEX/OPEX
• Hybrid Optimization Modeling Software used for designing and analyzing hybrid power systems
• It allows the user to input hourly power consumption profile and match renewable energy generation to the required load allowing a user to analyze microgrid potential, peak renewables penetration, ratio of renewable sources to total energy, and grid stability
• Additionally, It contains a powerful optimizing function that is useful in determining the cost of various energy project scenarios. This functionality allows for minimization of cost and optimization of scenarios based on various factors.
Page 20 MERALCO Microgrid Implementations Proposed Microgrid Scheme for Cagbalete Island
60 kWp 150 kWh 2 x 30 kW Solar PV Battery Storage Diesel Generator
AC DC DC
SYSTEM INTEGRATION PV Inverter Battery PCS Generator Controller
AC AC AC
communication communication communication
Micro-Grid Loads Controller
30 kW (200 HH)
Page 21 MERALCO Microgrid Implementations APPLICATION: ISLAND ELECTRIFICATION CAGBALETE ISLAND MICRO-GRID SLD
230 V Line to Ground 3PH 4W Load
Gen-Sets Master Controller Micro Grid Controller
Isolating Controller Controller Transformer
AC AC Inverter PCS DC DC
DC Line AC Line Communication Line
Page 22 Key Challenges of Developing Microgrids in the Philippines
Daily Generation Profile (Illustrative)
Page 23 Key Challenges of Developing Microgrids in the Philippines
Key challenges in developing Microgrids in the Philippines
Affordability Regulatory Policies Logistics
Choice of Technology & Scalability Sustainability System Optimization
Page 24 Key Challenges of Developing Microgrids in the Philippines Key Challenge: AFFORDABILITY OF ELECTRICITY
Rates imposed in Cagbalete Island FLAT RATE PER METERED RATE APPLIANCE • Very high electricity price is (Peso/kWh) (Peso/day) currently imposed in the island, about 7 times more than in the • 1 light bulb – P 10.0 mainland • 1 Radio – P 10.0 P 31.00 – 36.00 • 1 TV – P 15.0 per kWh • If rates are subsidized, effectively • 1 Ref – P 20.0 bringing down electricity price close to mainland rates, customers COMPARISON OF in the mainland will be burdened ELECTRICITY PRICES PER KWHR • Microgrid developers for rural Island Mainland* electrification must be prudent
36 and exert considerable effort in minimizing the amount of subsidies yet providing the same 10.50 quality of service to island customers
*latest 3-month average of a residential customer consuming 0 - 50 kWh; includes cross-subsidies Page 25 Key Challenges of Developing Microgrids in the Philippines
Key Challenge: REGULATORY POLICIES
• DUs, who have the resources and the to serve the islands, have no access to missionary electrification fund to cover the difference between the Full Cost Recovery Rate (FCRR) and Subsidized Approved Retail Rate (SARR).
• The process of waiving of franchise rights, QTP accreditation, approval of subsidized rates, and all other permitting and processing until the Microgrid is in operation entails significant effort and resources (may even take a few years)
Page 26 Key Challenges of Developing Microgrids in the Philippines
Key Challenge: LOGISTICS
• Cagbalete Island and Isla Verde Docking of boat going to Verde Island (no port) have no ports which makes transport of equipment (e.g., poles, transformers, generators, fuel) difficult
• Large boats are not regularly plying to/from the island to transport heavy equipment
• MERALCO estimates a 7 - 9 multiplying factor on manual Mini Port (made of wood) in Cagbalete Island hauling and installation costs incurred during construction of island microgrids*
• Hauling costs add not only on construction cost but also on O&M costs
*based on a time-and-motion study conducted on similar installations Page 27 Key Challenges of Developing Microgrids in the Philippines
Key Challenge: LOGISTICS
Narrow and steep road network Heavy vegetation
Page 28 Key Challenges of Developing Microgrids in the Philippines Key Challenge: CHOICE OF TECHNOLOGY AND SYSTEM DESIGN OPTIMIZATION
• Slowly gaining expertise in running initial Optimization simulations to determine optimal system size and architecture (lowest LCOE & NPV) Software
• Lack of tools and knowledge in conducting detailed engineering to ensure stable Microgrid operation with high RE penetration • Frequency control • Right sizing of BESS energy capacity and power rating (power to energy ratio) and appropriate technology (li-ion vs. redox flow vs. lead-acid) • Optimal diesel operation considering efficiency, reliability, and asset life
• Identification of appropriate technical specifications considering the prevailing environmental conditions such as high ambient temperature, humidity etc.
Page 29 Key Challenges of Developing Microgrids in the Philippines
Key Challenge: SCALABILITY
• Initial electrification initiatives usually do not achieve 100% electricity access • However, most of the systems are not scalable and normally implemented through various independent grids • Initial system voltage is 230V single-phase • Only tree branches or bamboo stems are used for holding the lines No provision for MV • If poles are installed, they are usually not sized to support distribution system primary line devices such as distribution transformers, insulators, and alley arms. • Forecasting methods specifically for island microgrids must be established. Demand increases significantly shortly after system commissioning. • Interoperability of systems (protocols, BMS) • Proper master planning (ultimate scheme) must be established Need to replace with poles that can carry primary lines Page 30 Key Challenges of Developing Microgrids in the Philippines
Key Challenge: SUSTAINABILITY
• In the Philippines, most of the existing off grid electrification which are not under SPUG and QTP schemes, are not sustainable.
• Generation systems, such as Defective diesel generator in Cagbalete Island diesel generators or small solar after only 4 years (~5,000 hrs) of operation home systems, usually fail after a few years of operation due to poor product quality or lack of maintenance.
• Hence, after an area has been electrified, the same effort is needed to re-electrify them again due to rapid deterioration of facilities. Solar panels installed in a house in Isla Verde now mounted on the roof using ropes only
Page 31 Key Challenges of Developing Microgrids in the Philippines Cagbalete Microgrid Project - Progress
SUSTAINABILITY? • Service Commitment • Good Maintenance Plan • Competent Service Provider • Remote Monitoring and Supervision • Quality Products • Community Partnership-Load Management
Page 32 Key Challenges of Developing Microgrids in the Philippines
Summary
• Microgrids are relatively new to the Philippines. Gaining of technical expertise and experience has just started. Economies of scale, particularly for battery storage, must be achieved in order to bring down the overall cost.
• Benchmarking with other Microgrid developers from other countries will help increase know-how. Engaging with technology partners are likewise important and beneficial.
• A lot of learning based on actual experiences will happen in the next few years as Microgrid deployment advances.
• The Government is a critical role player in expanding Microgrid implementations specifically in setting appropriate regulatory policies and building the necessary infrastructures.
Page 33 STRICTLY CONFIDENTIAL: FOR INTERNAL USE ONLY
End of Presentation 16 November 2018