No. Japan International Cooperation Agency Department of Energy, Republic of the Philippines Provincial Government of Palawan, Republic of the Philippines The Master Plan Study of Power Development In Palawan Province Republic of the Philippines Final Report (Technical Background Report) September 2004 Chubu Electric Power Co., Inc. Nomura Research Institute, Ltd. ED JR 04-008 Japan International Cooperation Agency Department of Energy, Republic of the Philippines Provincial Government of Palawan, Republic of the Philippines The Master Plan Study of Power Development In Palawan Province Republic of the Philippines Final Report (Technical Background Report) September 2004 Chubu Electric Power Co., Inc. Nomura Research Institute, Ltd. Preface In response to the request from the Government of Republic of the Philippines, the Government of Japan decided to conduct the Master Plan Study of Power Development in Palawan Province, and the study was implemented by the Japan International Cooperation Agency (JICA). JICA sent to the Philippines the study team headed by Mr. Yoshitaka SAITO of Chubu Electric Power Co., Inc. and organized by Chubu Electric Power Co., Inc. and Nomura Research Institute, Ltd. five times from February 2003 to September 2004. The team held discussions with the officials concerned of the Government of Republic of the Philippines and the Provincial Government of Palawan, and conducted related field surveys. After returning to Japan, the study team conducted further studies and compiled the final results in this report. I hope this report will contribute to the promotion of the plan and to the enhancement of friendly relations between our two countries. I wish to express my sincere appreciation to the officials concerned of the Government of Republic of the Philippines and the Provincial Government of Palawan for their close cooperation throughout the study. September 2004 Tadashi IZAWA Vice President Japan International Cooperation Agency September 2004 Tadashi IZAWA Vice President Japan International Cooperation Agency Tokyo, Japan Letter of Transmittal We are pleased to submit to you the report of the Master Plan Study of Power Development in Palawan Province. This study was implemented by Chubu Electric Power Co., Inc. and Nomura Research Institute, Ltd from February 2003 to September 2004 based on the contract with your Agency. This report presents the comprehensive proposal, such as the Optimal Power Development Plan considering environmental aspects in the Province, Transmission Development Plan and System Operation Plan considering appropriate placement of power plants, Rural Electrification Plan focusing on its sustainability and measures from technical, organizational and institutional aspects in order to realize the above plans. We trust that the realization of our proposal will much contribute to the enhancement of sustainability in rural electrification activities, the stable progress of electric power sector and will contribute the improvement of the public welfare as well in Palawan. In view of urgency to increase efficiency of the power sector and promote rural electrification, we recommend that the Government of Republic of the Philippines and the Provincial Government of Palawan implement our proposal by applying results of technology transfer in the study as a top priority. We wish to take this opportunity to express our sincere gratitude to your Agency, the Ministry of Foreign Affairs and the Ministry of Economy, Trade and Industry. We also wish to express our deep gratitude to the Department of Energy, the Provincial Government of Palawan, other authorities concerned of the Government of Republic of the Philippines for the close cooperation and assistance extended to us during our investigations and study. Very truly yours, Yoshitaka SAITO Team Leader The Master Plan Study of Power Development in Palawan Province Table of Contents Chapter 1 Introduction 1.1 Background ................................................................................................................1-1 1.2 Objectives of the Study .............................................................................................. 1-2 1.3 Work Plan................................................................................................................... 1-2 1.3.1 Flow of the Overall Study ................................................................................... 1-2 1.3.2 Study Schedule.................................................................................................... 1-4 1.4 Steering Committee, Working Groups and the Study Teams..................................... 1-5 Chapter 2 Current Status of Policy on Power Sector Development in the Philippines 2.1 Passage of the Electric Power Industry Reform Act and Reorganization of the Power Industry ..................................................................................................... 2-1 2.2 Promotion of Rural Electrification............................................................................. 2-2 2.2.1 Definition of Terminology................................................................................... 2-2 2.2.2 Outline of the RE Plans of the Philippines Government..................................... 2-3 2.3 Funding for RE........................................................................................................... 2-7 2.3.1 DOE Barangay Electrification Program (BEP) Fund ......................................... 2-8 2.3.2 DOE ER 1-94 Electrification Fund ..................................................................... 2-9 2.3.3 NEA Subsidies................................................................................................... 2-10 2.3.4 NPC-SPUG Missionary Electrification............................................................. 2-11 2.3.5 Funding from IPPs ............................................................................................ 2-13 2.3.6 Funding from ODA ........................................................................................... 2-13 2.4 Execution of RE Programs....................................................................................... 2-13 2.4.1 United Nations Development Programme (UNDP): Palawan New and Renewable Energy and Livelihood Support Project.................................. 2-13 2.4.2 Adaptable Program Loan from the World Bank................................................ 2-15 2.4.3 SHS Aid from the Government of the Netherlands (Environmental Improvement for Economic Sustainability, 2002 - 2006)...... 2-18 2.4.4 Proposed French Project (Photovoltaic Rural Electrification Service Project)......................................... 2-18 2.4.5 Spanish Project (Solar Power Technology Support to Agrarian Reform Communities)................................................................................................... 2-19 2.5 Outstanding Issues Related to RE Promotion .......................................................... 2-19 2.5.1 Setup for RE Promotion under the EPIRA........................................................ 2-19 2.5.2 Appropriation of Budget.................................................................................... 2-20 Chapter 3 Current Status of Power Sector in Palawan Province 3.1 Structure of Power Sector in Palawan Province......................................................... 3-1 3.2 Status of Barangay Electrification.............................................................................. 3-2 3.2.1 Status of Barangay Electrification based on the PGP Definition........................ 3-2 3.2.2 PGP Energy Programs and Projects .................................................................... 3-3 3.2.3 BAPA Scheme (Barangay Power Association) ................................................... 3-4 3.3 Generation Facilities .................................................................................................. 3-6 3.3.1 Diesel Power ....................................................................................................... 3-6 3.3.2 Solar and Wind Power ...................................................................................... 3-25 3.3.3 Mini and Micro Hydropower ............................................................................ 3-29 3.4 Distribution Facility ................................................................................................. 3-30 3.4.1 Distribution Facility of PALECO, BISELCO and BAPA................................. 3-30 3.4.2 Distribution Facility of Privately Owned Genset.............................................. 3-35 3.4.3 Existing Expansion Plan.................................................................................... 3-36 3.5 Generation and Transmission Facilities of the EC-Grids......................................... 3-38 3.5.1 Overview of the Generation and Transmission Facilities of the EC-Grid ........ 3-38 3.5.2 Existing Generation Facilities and Future Expansion Plan............................... 3-39 3.5.3 Existing Transmission Facilities and Future Expansion Plan ........................... 3-42 3.5.4 Present Situation of Power System Operations................................................. 3-45 3.5.5 Major Issues in the Generation Sector .............................................................. 3-47 3.5.6 Major Issues in the Transmission Sector........................................................... 3-48 3.6 Economic and Financial Analysis of