Power outage woes: Philippines faces P556 million economic loss in five hours

A five-hour power outage in the country results in about P556 million in economic losses.

If this remains unresolved, the Philippines stands to lose more as the energy sector continues to face challenges such as insufficient power supply, congested transmission lines, and recurring damages from disasters, according to energy experts in a recent webinar organized by the Philippine Institute for Development Studies (PIDS).

Anne Estorco Montelibano, president of the Philippine Independent Power Producers Association (PIPPA), said the economic consequences of a power interruption is measured by the value of lost load (VoLL) or the monetary indicator expressing the costs of interruption of electricity supply on a macro level.

“In 2020, the country’s VoLL was at P20.65 per kilowatt hour. To put this into perspective, for every five hours of no electricity, our country loses about 500 megawatts, which equates to P556 million in economic losses. It’s a hefty amount to lose for a developing country,” she said.

Department of Energy (DOE) Undersecretary Rowena Cristina Guevara, who also served as a webinar discussant, added that insufficient power is a “confluence of several things”, such as supply and system issues and barriers preventing entry of private companies or potential generators.

To mitigate the losses, Montelibano shared that the energy sector can determine the acceptable number of hours of power interruption, known as loss of load expectation (LOLE). The Philippines’ LOLE is 10 days a year, significantly higher than Singapore’s one hour in 10 years.

“If we aim for a LOLE of one day in a year, then our required capacity addition must be at least 1,164 MW of energy to serve 250 hours in a year. Will generators agree to supply, build, and operate that capacity? The short answer is no because we need to address several factors,” Montelibano said.

She said the PIPPA has also repeatedly emphasized the need to address transmission lines issues.

“Our main highways (of electricity) first need to improve, so when they traverse our local grids, energy delivery also improves. From Luzon to Visayas and vice versa, the lines are utterly congested. Undersecretary Guevara has said (before) that without the congestion of the transmission lines, we may see a vast improvement and a decrease in power interruptions,” Montelibano said.