Philippines: Gwen assures investors of ample power supply

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Cebu Governor Gwendolyn Garcia has reassured investors that there will be sufficient power supply in the coming years, even with the anticipated influx of investments.

Garcia made this statement following the business sector leaders' fear that Cebu may lose its potential to host more investments, including the province's dream of becoming the next Silicon Valley, if the province does not speed up in putting more power plants.

'There is no need to worry,' Garcia said referring toCebu's thinning power supply.

The lady Governor said there are several power projects lined up to keep the supply stable within the Island, including three solar farms in Daanbayan, Dumanjug, and Toledo as well as the expansion of Therma Visayas Inc., (TVI) coal-fired in Toledo City.

Aside from ensuring enough power supply, Garcia also emphasized that the establishment of solar power plants within the province could also lower the electricity rates in Cebu.

In October last year, the Cebu Provincial Government has signed a Memorandum of Understanding (MOU) with Spain-based Acciona Energia Global, S.L. and Makati-based Freya Renewables Inc., to build a 150-megawatt solar power plant in Daanbantayan, northern Cebu.

According to Garcia, the Business Process Outsourcing (BPO) industry, and other investments, which consume a high amount of power requirement, 'need not worry.'

Recently, business leaders in Cebu expressed apprehensions that if Cebu will not be able to speed up its efforts in putting additional power supply contracts, it may lose its attractiveness to investors.

'The lack of cheap, reliable, and abundant electricity poses a major challenge and risk to the dream of Cebu. A global center for high technology and innovation is always largely dependent on the electrical grid, especially with the emergence of energy-intensive - AI technologies and data centers,' said Mandaue Chamber of Commerce and Industry (MCCI) president Marc Ynoc.

According to Ynoc, Cebu's looming power shortage is a serious concern as this also impacts other sectors of society with several multiplier effects due to the potential weakening of its entrepreneurial ecosystem.

'Venture Capital Investors or Foreign direct investors have matrices to determine which country has the best potential for investments. Electricity rate always remains as the top key attraction in the list,' Ynoc explained.

As a basis, electricity costs account for nearly 40 percent of the whole operations cost in the manufacturing industry.

Likewise, business leader Steven Liu warned that the power situation of Cebu will be part of the consideration of any new direct investment into Cebu.

'We should continue to be allowed to invest and build new baseload power plants to cover our medium-term energy requirements,' stressed Liu.

According to Liu Cebu's economy relies more on BPOs(Business Process Outsourcing) manufacturing, tourism and industries. These industries continue to provide for its constituents. 'Hence, a stable and sufficient power supply is a must for its survival.'

The Department of Energy (DOE) projects that energy demand for Cebu Province will reach around 1,400 MW in the next two years and will outpace supply by 2027 unless new baseload power plants are constructed.

Visayas has a generating capacity of 2,454MW and a system peak demand of 2,153MW or a margin of only 239MW as power reserves.

Cebu province accounted for half of the region's total demand and within Cebu, Metro Cebu, falling under the Visayan Electric franchise area, contributed to over 500 megawatts, representing more than half of the province-wide demand.

The record showed that Central Visayas is the fastest-growing regional economy in the Philippines, with a growth rate of 7.3 percent in 2023, or an estimated P1.38 trillion, up from P1.29 trillion in 2022.

Early this year, Garcia expressed her support of the plans to put up baseload power plants in Cebu underlining the island's need for sufficient and reliable power to support its robust economy and growing population.

The Governor, on the other hand, is counting on the upcoming power plants to bolster the dwindling power supply on the Island. With the combined generating capacity of the new solar and baseload power plants, Cebu might even be able to export electricity to neighboring provinces.