Tuesday, October 25, 2016

Some Insights on Lifecycle Costs Related to Power Generation Systems

One cannot overstate the importance of electricity in people’s lives today. We all rely on electricity for a wide range of reasons, and we expect nothing but an uninterrupted supply of electricity that meets our power requirements. Thus, power utility providers strive to produce electricity not only consistently, but also efficiently in order to provide the most cost-effective solutions to their customers.

Even as power plants, temporary or permanent, differ according to several factors, they all need to be designed, operated and maintained properly, because even a minute irregularity in their operation will result in a dramatic change in their overall output. Poor power output, then, leads to lower efficiency, which in turn, brings higher lifecycle costs.

A close look at lifecycle costs

Any costs related to the operation and maintenance of the power plant during its lifetime are included in the lifecycle costs. Part of this are expenses related to fuel, scheduled and unscheduled maintenance, labor, and lubricant oil, among others. It is advisable to have a thorough upfront planning for the aforementioned costs in order to effectively mitigate the risk of the occurrence of any unplanned costs.

Several factors contribute to the lifecycle costs of a power generation system. Costs, like operation- and maintenance-related expenses, can be anticipated and, thus, must be taken into consideration at the nascent stages of the project. On the other hand, unanticipated costs are harder to predict, so proper planning is required to minimize their impact. Having a proper preventive maintenance program, conducting regular emergency training and setting solid contingency plans are vital to preparing for both anticipated and unanticipated costs of power generation systems.

Fuel Costs

Experts agree that even as fuel constitutes the highest lifecycle cost, it is the easiest to foresee and calculate. Fuel costs are related to the specific fuel oil consumption (SFOC) at different loads, the operating profile of the plant and the fuel price. Other factors that affect fuel costs include efficiency degradation and the wearing of engine components.

Maintenance Costs

Another important lifecycle cost is maintenance. It is helpful to note that some engine and auxiliary equipment parts, like fuel injection nozzles, piston rings, and bearings, are designed to be wear components. Thus, they need to be replaced based on the standard component life or, in some cases, if wear limits have already been exceeded. Therefore, close monitoring of such components is vital, because when a component’s useful life has been reached, the risk of system failure notably increases.

Equipment operators and maintenance specialists have to be aware of notorious contributors to premature component wear, which include dirty lubricant oil or fuel of inferior quality. In this light, it is important to have a proper predictive maintenance program to early detect problems.


Labor is another lifecycle cost to be considered. Labor costs vary according to local labor rates and regulations, operation profile, plant availability requirements and required skill level. Whoever is in-charge of plant staffing should take these factors in consideration in preparing a manpower strategy. Experts suggest that the planning team should keep abreast of current local standards and practices to correctly forecast labor costs.

While some costs are inevitable over the course of a power generation system’s lifecycle, an efficient predictive and preventive maintenance program is key to reducing unnecessary costs. But lower costs is not the only benefit of properly planned and implemented maintenance programs: They can also reduce the risk of a major system failure while increasing system efficiency. As the experts say, the goal of a power plant operator is simple: Operate effectively for as long as possible while reducing costs and maximizing profit over the duration of the power generation system’s lifecycle.


Steffens, David. “Lifecycle Cost Considerations when Choosing a Power Generation System”. Caterpillar Power Generation Systems. February 2013.

Altaaqa Global
Tel: +971 56 1749505

Saturday, October 22, 2016

How Caterpillar is Capturing the Imagination of its Customers

What do Snapchat and Caterpillar have in common? You could argue that both have unmistakably established their brand with that familiar yellow. However, one particular trait the social media phenomenon and the heavy equipment manufacturer share may not be as obvious: their unique uses of Augmented Reality to enhance and ultimately transform a user’s experience.

In simple terms, AR allows virtual objects to appear in front of you, as though they are in the real world. So, what’s the benefit for Caterpillar?

This technology is being deployed as a new way for operators to receive and communicate critical information and standardize complex processes through the use of sensory inputs such as sound, video and graphics.

While wearing a pair of AR glasses, job site information delivered becomes interactive and able to be digitally manipulated by an operator.
“Just think about sitting in your car, and no longer having a physical dashboard. Then, when you put on the AR glasses, all of that information – dashboard gauges, radio, switches, etc. – appears along with the ability to interact with it,” says Lonny Johnson, a senior engineer at Caterpillar.

By superimposing the right information in the right place at the right time, Caterpillar can simplify the overall electrical complexity of a machine’s cab. AR glasses also allow the operator to customize his or her machine interface.

For less experienced operators, a pictorial map can be especially helpful. “It allows operators to experiment with radically different interfaces, and receive guiding commands about those interfaces,” Johnson said.

By investing in this technology, Caterpillar is able to reduce costs, increase efficiency and enhance job site experiences.

“Caterpillar embraces parts, pieces, and products that are part of 21st-century life. In doing so, we are no longer confined to the area of the display,” Johnson said.  

Whether you are using Cat® yellow iron to move dirt, or just snapping yourself next to it, AR technology is dramatically changing the landscape of its respective industries.

*The article was originally published in Caterpillar's website: http://www.caterpillar.com/en/company/chi/ciw-ar-cab.html?utm_source=facebook&utm_campaign=CaterpillarInc&utm_term=sf50356728&utm_medium=social&utm_content=innovation_Customer/Dealer/Product&sf50356728=1

For more information on temporary and rental power technologies: http://www.altaaqaglobal.com


Altaaqa Global
Tel: +971 56 1749505

Wednesday, October 19, 2016

Safety Tips to Avoid Electrocution at Work

Most of us must have seen videos of people around the world who can conduct electricity through their body and survive unscathed. A tenth of an amp is enough to kill an ordinary human being, but these people can survive several amps of electricity without suffering any bodily harm. They don’t shoot lightning bolts or anything like it, but they can power up light bulbs and other household appliances by allowing massive amounts of current to pass through their body.

See this man featured on a magazine show in the Philippines: https://youtu.be/eOPMI7kJCbs

These people are admittedly outliers, as they can do things that normal people, like you and me (I don’t know about you, though), won’t ever dare try. Electrocution causes death and is among the leading causes of fatalities in the workplace. So, for the rest of us who don’t possess the “super-powers” that they have, we try our best to avoid electrocution, be it at home or at work.

Here are some safety steps to avoid electrocution at work, for example in a construction site or a power plant:
  • Keep Distance 
OSHA (Occupational Safety and Health Administration) requires a worker to stay at least 10 feet away from overhead power lines with up to a 50,000-volt current. (Even the “super-humans” won’t survive that!) For lines that exceed 50,000 volts, one is required to add a distance of stay of at least 10 feet, plus four additional inches for each additional 10,000 volts of current above 50,000 volts.

  • Double Check 
If a worker will be working around electrical circuits or parts, he or she has to ensure that the machinery and power tools are properly grounded and that all power cords are in good condition. If one needs to inspect or repair machinery, he or she has to ensure to pull the plug first.

A worker’s PPE is the last line of defense between him and any hazards he may face. One has to make sure that his or her PPE is approved for the type of work performed and that it is in good condition. Attention! PPE should be comfortable, as uncomfortable equipment can cause distraction and make one vulnerable to an accident.

Many accidents related to electrocution appear to occur because of the workers’ lack of basic electrical knowledge. The safety steps I provided above seem to be common knowledge, if not passé, but these steps are oftentimes overlooked due to their apparent simplicity. Electrocutions can be avoided, and it is not worth finding out if you yourself have the “super-power” by risking injury or, worse, death.


Altaaqa Global
Tel: +971 56 1749505

Monday, October 10, 2016

Temporary Power: Keeping the Cold Chain from Breaking

The cold chain plays a vital role in the global production, trade and delivery of food and pharmaceutical commodities. The increasing market demand for safe, quality food and pharmaceutical products has heightened the importance of keeping them at the optimal temperature, from manufacturing to consumption. Food and pharmaceutical companies strive to ensure the integrity of their refrigerated products, yet real instances of temperature abuse along certain points of the cold chain threaten to compromise their safety and quality.

In the food industry, keeping products in refrigerated storage facilities is one of the most extensively practiced methods of controlling the growth of microbes in perishable or potentially hazardous foods. Although the microbial flora of food products is affected by many factors, the length of storage time and the temperature at which food commodities are kept have been proven to have the greatest impact on their safety and quality. Therefore, food manufacturing and storage companies, together with their allied entities like grocery stores and hypermarkets, have to constantly monitor and maintain the required temperatures throughout the food continuum – from processing to storage and distribution.

Over at the pharmaceutical front, manufacturers and health professionals around the world have striven to develop the pharmaceutical cold chain to ensure that critical medicines and vaccines, among other essential health-related requirements, are safely and readily available. Medical and pharmaceutical products, just like food, require constant temperature control throughout the production and distribution chain. Vaccines, for instance, are sensitive to both heat and cold, so they need to be kept at precise temperatures from manufacture to the point of use. Blood has to be properly refrigerated and stored to remain usable, while HIV rapid test kits, pediatric ARV drugs and other testing reagents must all be stored in climate controlled conditions to remain effective.

The real threat of power interruption and consumption limitation
The demand for electricity has been steadily increasing all around the world. Owing to the continuous growth in population, expansion of industrial activities and improvement in the standard of living, many countries have been seeing a remarkable spike in energy requirements, particularly during months of extreme temperatures and/or peak industrial production. While a surge in power demand may be indicative of an active and growing economy, it can rein in the economic and industrial progress of a country if the existing power infrastructure is not able to keep up with the electricity requirement – a scenario usually witnessed in emerging regions. When the electricity demand consistently outstrips the supply, power facilities may become overburdened, and, as a consequence, load shedding, electricity outage or total blackout may ensue.

The cold chain will be adversely affected by load shedding and regular power interruption. Without a constant and reliable supply of electricity, food and pharmaceutical manufacturing, storage and distribution facilities will find it challenging to maintain the optimal temperature required to deliver safe and quality products. Procedures carried out in the manufacture and storage of food and pharmaceutical products involve highly precise temperature requirements that even a momentary power outage will render an entire batch unsafe and unusable. When the quality and integrity of food and pharmaceuticals have been compromised, they will have to be disposed of than pose health risks to consumers, resulting in financial and operational losses in the area of millions of Dollars.

Food and pharmaceutical manufacturing, storage and distribution facilities have attempted to lobby for the exemption of their industries from load shedding or peak lopping. However, in light of a highly limited power supply, governments and utility providers have found it difficult to grant them their request, since any additional power supplied to the food and pharmaceutical industry would be at the expense of households or other industries.

Several food and pharmaceutical entities have endeavored to work around the problem by employing local electricity generation systems within their facilities. Unfortunately, the local power sources were not always able to sufficiently produce for the extent of the production load, and are thus incapable of supporting the operations of large-scale manufacturing, storage and distribution facilities.

Instances of load shedding, power interruption or consumption limitation can occur at any time, hence food and pharmaceutical facilities will need large-scale supplemental or back-up power systems that will be able to generate the required electricity at any given moment. They will find benefit in employing power generation systems that will seamlessly supply power to their industrial operations as soon as the electricity from the grid is interrupted, so temperature abuse at any point of the cold chain can be averted. When the safety and integrity of food and pharmaceuticals are ensured, consumers will be spared from health risks, and companies will be able to run operations as usual and avoid losing millions in revenue.

The benefits of rental power to the cold chain
When the power supply is unstable, and when instances of power interruption are unpredictable, food and pharmaceutical companies can find huge benefits in espousing a proactive stance and hiring the services of temporary power providers. Electricity plays an undeniably vital role in the climate control of production, storage and distribution facilities, and rental power plants can provide the necessary electricity without the need for food and pharmaceutical companies to spend scarce CAPEX. Instead of pouring a sizeable initial investment in permanent power infrastructure (which can take several years to complete) or in local power generation systems (which cannot always guarantee the precise amount of electricity required by large-scale facilities), food and pharmaceutical companies can pay for the electricity produced by hired power plants from their operating revenues. During peak production seasons, food and pharmaceutical companies will also be able to add power modules that will increase the rental power plant’s generation capacity.

The large-scale rental generators that make up the temporary power plant are modular and containerized, and can be rapidly delivered to and installed anywhere in the world, and can support the requirement of even the largest production, storage or distribution facilities. They are fully able to function even in remote locations, and in sites where traditional power infrastructure is outdated, damaged or absent.

The investment required to set up a rental power plant has been proven to be marginal compared to the cost of foregone opportunities, wasted man-hours, discarded products or lost lives.

Keeping the cold chain intact
The safety and quality of food and pharmaceutical products largely depend on the integrity of the cold chain. Instances of temperature abuse at any point of the cold chain could bring about serious health risks to consumers and calamitous financial and operational losses to food and pharmaceutical companies. In times of load shedding, peak lopping or unpredicted blackouts, rental power plants, either as a stand-alone solution or support to conventional or local power systems, can guarantee a reliable and continuous supply of electricity, so food and pharmaceutical manufacturing, storage and distribution can conduct business as usual.


Altaaqa Global
Tel: +971 56 1749505

Sunday, October 2, 2016

Powering Douala: The 21-Day Installation of a 50 MW Natural Gas Power Plant that Added Reliable Power to Cameroon’s Grid

*On August 24, 2016, Altaaqa Global CEO Peter den Boogert presented at the Power-Gen Natural Gas conference in Ohio, USA. He spoke about the technology and innovations of the company's 50 MW natural gas power plant project in Douala, Cameroon. Here are the highlights of his talk.*

Altaaqa Global’s project in Douala, Cameroon is the fastest completed 50 MW natural gas power plant (in two sites, combined capacity) in the history of the energy industry. Installed, commissioned and powered on in only 21 days, the project was completed and delivered ahead of the target 30 days.

Background of the Project:

Douala, Cameroon’s largest city, was facing challenges in meeting the electricity demand of its residents, businesses, and industrial operations. Douala’s existing power infrastructure was unable to cope with the increased demand for electricity in the city. As a result of this, long hours of load shedding was implemented in the city, bringing inconvenience and health & safety risks to residents, and financial & opportunity losses to businesses and industries. 

In recognition of the urgency of the situation, the government of Cameroon and Eneo, the country’s integrated utility provider, sought for immediate solutions while long-term energy plans were being carried out.

Altaaqa Global, together with global natural gas supplier Gaz du Cameroon (GDC, a subsidiary of Victoria Oil and Gas) approached Eneo and presented a case for temporary power solutions. Recognizing the potential of the proposal to immediately resolve the power shortage in the city, Eneo decided to hire the services of Altaaqa Global.


The natural gas power plants had to be operational within 30 days from the time the equipment and engineering teams arrived at the site. In order to meet this deadline, installation procedures had to be done right at first instance, and the power plants had to be urgently installed and directly connected to the existing grid. 

Here are some of the highlights of the project:

Power plant design

For the power plant sites, Eneo provided locations that were already confined and that had specific dimensions and area limitations. Owing to this, the power plants should be specially designed to fit in the constrained space at the indicated sites. 

One of the major factors that contributed to the success of the power plant designs was the use of containerized, compact and modular power equipment. The fact that the equipment only required a minimal amount of space made it possible to provide ample clearance for the natural gas piping in the designs. 

Owing to this, we were able to fit the 20 MW and the 30 MW natural gas power plants in spaces approximately 30% smaller than the usually required. 

Logistical and manpower management

As the project involved the simultaneous installation of two separate power plants (one in Ndokoti (Bassa), and another one approximately 25 km away in Logbaba), it naturally required two contemporaneous shipments of equipment and deployment of two teams of personnel.  

It called for concurrent shipments of large-scale power equipment, including generators in 20- and 40-ft containers, transformers, switchgears, and medium-pressure gas trains. Two separate engineering teams comprising in-house and local engineers also had to be assembled and deployed. 

Despite the aforementioned complexity and the large number of equipment and personnel, the materials and the people safely arrived at the sites at the desired time, thanks to the collaboration among the different project stakeholders and support from different Cameroonian government agencies.

Connection to Douala’s grid

In order to work around Douala’s ageing power infrastructure, the power plants had to be able to directly connect to the grid despite the latter’s age, condition or quality. This was made possible by the technologically advanced transformation and switching equipment used in the project. 

Furthermore, the power plants did not require the construction or refurbishment of any sub-station before they can function. The power plants were able to “assume” the role of a sub-station, and directly connect to available overhead lines or transformers, particularly advantageous if sub-stations are not available. 

Environmental stewardship

The natural gas generators installed for the project comply with Caterpillar’s worldwide emission standards.  

Scalability and flexibility

Eneo required that the power plants should be able to uninterruptedly produce according to the changing electricity demand during the dry/low-rain seasons. Temporary power technologies proved to be the perfect solution to this requirement. 

Comprising high-efficiency generators, the installed temporary power plants were able to be ramped up or scaled down as the power demand increases or decreases. Owing to this, Eneo could easily choose to add or subtract power modules to the plant as necessary. 

Fast completion and urgent operation

Eneo set a strict delivery time of 30 days after the equipment and the people arrived at the site. In order to meet the deadline, the project had to be installed following a precise three-shift schedule that allowed for a 24/7 operation at both sites. The project management team, and both in-house and local engineers ensured that installation procedures were done right at first instance, to avoid redundancy and wasted man-hours. They, moreover, paid extra attention to the safety of the work area, in order to prevent injuries/casualties and, thus, lost man-hours.

The generators used for the project were configured as plug-and-play, and can be simply connected like Lego pieces. This allowed the engineering team to proceed to commissioning and testing, and power-on, ahead of schedule. 

Constant communication was also maintained with Gaz du Cameroun to guarantee the prompt delivery of the natural gas that would power the two power plants.

Impacts of the Project

Environmental impact

•Natural gas project in Douala, Cameroon is sustainable and energy efficient 

Economic impact

•Completed on budget and ahead of schedule
•Eneo did not need to spend scarce financial resources on capital expenditure or building or refurbishing permanent power infrastructure
•Utilized and monetized Cameroon’s unused natural gas reserves 
•Project represented a major gas supply contract to GDC
•Businesses and industries were again able to operate for longer hours, contributing to their productivity and profitability

Social impact

•Douala residents were supplied with electricity to carry on with their normal daily activities
•Schools, hospitals, clinics and other establishments were able to continue providing services to the people of Douala
•Job opportunities for local engineers and technical professionals
Training for the locals, transferring valuable engineering knowledge and know-how through Caterpillar University


The project has set a standard in the energy industry by proving that large-scale power plants can be installed and delivered in record time with technical expertise, appropriate technologies, and military-precise project execution. It has furthermore demonstrated that power plants can be both reliable and environmentally friendly. Altaaqa Global believes that the project will continue to be an industry benchmark, as more emerging markets require sustainable and environmentally conscious large-scale power solutions.  

The power plants have been consistently delivering electricity to Cameroon’s national grid. Such a boost in the electricity supply allowed Eneo to bridge the power supply deficit in Douala, benefitting its residents and businesses.

“Our services may be called temporary, 
but the effects of what we do last for generations”


Altaaqa Global
Tel: +971 56 1749505

Tuesday, September 13, 2016

Insights on the Power Rental Market in the Middle East

The performance of the power rental market in the Middle East remains strong, riding high on the region's continued economic growth and sustained industrial and infrastructure activities. Peter den Boogert, CEO of Altaaqa Global, shares the company's perspectives on the road map ahead of the temporary power market in the Middle East.

Which factors are leading to the rise in power rental market in the Middle East region? 

The power rental market has been constantly growing in the Middle East, owing to the region’s continuous economic growth, sustained industrial and infrastructure activities, rapid growth in population, improvement in the standards of living, occasional utility shortages in key areas, and observed unreliable electricity connection in various cities and provinces. 

The above mentioned factors lead to the requirement for alternative power sources, such as multi-megawatt temporary power plants, to support the region’s existing power infrastructure. For instance, the intense industrial and construction activities, coupled with a massive electricity requirement on the part of residents especially during summer months put a heavy load on the region’s utilities, so that occasionally they are unable to supply the required power. This is where turning to temporary power becomes beneficial, particularly in maintaining the productivity of construction or industrial operations, and in avoiding power interruptions, load shedding or peak shaving.  

Furthermore, temporary power plants are also employed to bring electricity to areas where power connection remains unreliable or absent, like in remote locations or mountainous regions. 

Which is the biggest genset market in the region? Recent reports suggest Saudi Arabia, the UAE and Qatar are leading the way. What are the countries, you think, follow the list?

We observe that Saudi Arabia, UAE and Qatar remain the biggest markets for multi-megawatt temporary power solutions in the region. 

Although the decrease in oil prices has had, to some extent, an effect on the economy of Saudi Arabia, economic experts agree that it has not restricted the country’s investments in various projects. The experts recognize the country’s extensive cash reserves for the continuous development in Saudi Arabia’s public infrastructure, utilities, healthcare and education, to name a few. Thus, the sustained construction and industrial activities in the country, coupled with a constantly increasing electricity demand from its residents and businesses, are spurring the buoyancy of the power rental market in Saudi Arabia. In fact, market research firm 6W Research estimates the CAGR of the power rental market in Saudi Arabia to be at 12.6% from 2015-2021.

Similarly, the demand for electricity has, over the years, tremendously increased in the UAE. The constantly increasing public and private infrastructure, together with an expanding population, has caused the country’s electricity requirement to surge in the last decade. The same research firm predicts the CAGR of the temporary power market in the UAE to be at 16.8% from 2015-2021, taking into keen consideration the upcoming World Expo 2020, during which about 25 million tourists are expected to visit the country. Preparations for the global event, including the construction of trade centers, hotels, hospitals, rail networks and airports are seen to be driving the growth of the rental power sector in the country.

The rental power market in Qatar is heavily influenced by the country’s preparations for the upcoming FIFA World Cup 2022. The increasing infrastructure development (building of eight new stadiums, renovation of three existing stadiums, establishment of Lusail City), expanding transportation network (building of Doha Metro Rail and expressways), surging public and private investments, rising hospitality sector and continuous economic reforms are driving the growth of the temporary power business in the country. Research firm 6W Research pegs the growth of the rental power sector in the country at 23.3% from 2014-2020. 

Other significant markets for multi-megawatt rental power solutions in the region include Kuwait, Oman and Bahrain, which are also economically and industrially viable countries.

It is worth noting that temporary power solutions can also prove beneficial for countries that may require infrastructure rebuilding and rehabilitation, or re-establishment of a reliable power connection, like Yemen, Iraq and Syria. As the governance of these countries become more stable in the coming years, we believe that they will represent excellent market opportunities for temporary power providers.

Between gas and diesel gensets, which has a better growth prospect and why? With solar generation being tapped in a big way today especially in Saudi Arabia, the UAE and Egypt, do you think it may affect the genset industry?

It is expected that the diesel generator market will continue to grow in the next several years, owing to easy availability, safety and economy of fuel, and ease of installation of diesel equipment.

However, we are noticing a gradual increase in the requirement for natural gas and dual-fuel power generation technologies, largely influenced by the increasing availability of fuel resources and government initiatives towards reducing carbon emissions. 

In the past, fuel availability and the costs of installing safe and reliable fuel delivery infrastructure have been limitations on the growth of the natural gas generator market. Today, however, gas is becoming increasingly available and gas generation technologies are progressively finding application in bigger and longer-duration projects, making the upfront investment for the gas infrastructure economically sensible. The availability of dual-fuel generators (which significantly simplifies the transition from diesel-run to gas-run generators), is also helping overcome these obstacles.

As for the observed gradual shift in solar and other renewable power generation technologies, we see this as a welcome development in increasing the availability of electricity in areas that require it, and in diversifying the energy mix to encourage long-term energy security. 

Multi-megawatt temporary power technologies are primed to work in tandem with renewable energy sources to help surmount issues of power supply unpredictability and intermittency, especially in power-intensive industries like oil & gas, construction, and utility power generation, transmission and distribution.  

Temporary power plants can also provide supplemental power to renewable energy facilities during planning, manufacturing, installation, commissioning, operations and maintenance. Temporary power plants can help ensure that renewable energy plants are constructed and delivered on time and as planned, and that they remain efficient, reliable and in optimum condition at all times.

What are the preferred ranges that are most popular in the region and the industries that are catered to? Which are Altaaqa Global’s most popular genset ranges and contracts it has been awarded in the region?

The amount of required power vary from industry to industry. For instance, construction projects may require a few hundred kVA during the building phase to a few MW during the commissioning stage. Refinery maintenance and rehabilitation often requires several MW of power. The utility industry has the biggest demand, usually requiring power plants of tens or hundreds of MW to provide supplementary power to the grid. 

For our part, we provide multi-megawatt temporary power plants, focused on utility markets, extractive industries such as mining and oil and gas, large process industries and major construction infrastructure projects.  


Altaaqa Global
Tel: +971 56 1749505

Sunday, August 28, 2016

Déjà vu: A Solution to the Philippines’ Looming Power Supply Crisis

The Philippines has achieved impressive economic growth numbers in recent years and has further reinforced its status as one of the major economies of Asia. Now, the country finds itself amidst a power crisis that may portend a pronounced economic slowdown.

In spite of the slow global economic growth, the Philippines remained a strong economic performer in Southeast Asia. A recent World Bank communiqué substantiates this when it reported that the Philippines’ near-term economic growth was likely to remain strong, and was projected to accelerate to 6.4 percent in 2016, before slightly tempering to 6.2 percent in 2017.

Despite the positive economic outlook, there is a persistent power shortage being experienced in key industrial and commercial areas in the Philippines threatening to fade the lights on this promising growth story. The power supply shortage is most pronounced during peak summer months when hydropower is reduced from the seasonal dry spell, and when a random shutdown of a power plant on the grid can initiate a disastrous widespread power outage. Yes, the Philippines is still grappling with rolling power outages similar to what bedeviled the country in the 1990s.

The Philippines has an enormous energy potential to free itself from the shackles of the power supply conundrum, given its notable geothermal energy capacity, if not for a slew of transmission and distribution limitations, inadequacy in domestic energy production and a challenging geography. Other aggravating factors include the country’s observed dependence on imported fuel, non-subsidy of fuel on the part of the government, high electricity tariffs, and aging existing power infrastructure.

While the Philippines has managed to continually achieve impressive economic growth rates in the face of its power supply challenges, the need for a resolution is growing ever more urgent. The country’s economic expansion, among other factors, has prompted a spike in its requirement for electricity, and now the Philippines’ electric power systems are struggling to keep up. The onus is now on its leadership and on key power industry stakeholders to prevent a power crisis that can negate the economic successes that the country has achieved in recent years.

A turning point

Industry and economic experts opine that the power supply shortage in the Philippines is part of a decades-old chronic insufficiency in the country’s power sector. They point to the country’s mothballing of its sole nuclear plant in 1986 as a vital reason why the Philippines is still struggling to satiate its national electricity demand. Because no new capacity was introduced to the country’s power network, what ensued were sustained day-long power outages that fended off foreign investment, suppressed the growth of various heavy industries and stalled the country’s economy. The incoming government of President Ramos (1992-1998) resolved the power challenge through emergency powers granted by the 1991 Energy Crisis Act to conclude contracts for new power generation. The country was, then, afforded some breathing room.

Now, 18 years on, the Philippines has come full circle and is again confronting a potentially debilitating power crisis.

What is being done?

One of the country’s foremost, albeit stop-gap, response to the power supply shortage is the “Interruptible Load Program”, which entails large establishments, such as shopping malls, office buildings, and factories, to voluntarily switch their power source from the main grid to their proprietary generators when a shortage is impending. It is a program established by the Department of Energy and the Energy Regulatory Commission to help ease the energy supply deficiency in the country until new capacities are introduced to the grid. As of press time, even as details of compensation are yet to be finalized, a number of large firms have already pledged their participation.

There has also been an interest on the part of the government to review, revise and reinforce the Electric Power Industry Reform Act (EPIRA) of 2001, which mandated the privatization of state-owned power enterprises in the hope of encouraging the availability of affordable electricity and fair market competition. The government intends to amend the EPIRA to allow it to intervene in the power sector as need be. For instance, the government proposes to have its own power generation facilities so that it is able to instantly fill in the power shortfalls. Nevertheless, the project still remains to be cost-prohibitive.

The country’s energy department estimates that, with the current economic trajectory, the Philippines’ power demand will balloon to approximately 29,500 MW in 2030. The country’s power generation capacity in the same year, however, is only predicted to be at 26,500 MW – 3,500 MW short of the requirement. Here’s the caveat: In order to bridge the power supply gap, the Philippines reportedly needs USD 46 billion to set up modern power generation facilities in the country. The government is thus taking a proactive stance to woo power investors to invest in the country and help increase its generation capacity.

Not helping this effort, however, is the country’s observed excessive bureaucracy and adherence to official rules and formalities. The energy department itself estimates that it takes approximately 165 signatures and a minimum of three years only to secure the necessary permits for a permanent power plant project. Further delays may ensue in case of an eventual judicial dispute. Other processes like finalizing financial concerns, signing off project designs, sourcing equipment and materials, securing allied service providers, let alone constructing the permanent power plant also take a considerable amount of time. Thus, many foreign power companies have expressed dismay over the situation, saying that the requirements have been a deterrent to entering a market demanding a sizeable initial outlay and a commitment of at least 20 years.

There is no better time

There is no better time for the Philippines to resolve its power challenges than now. The country cannot afford to invalidate its economic achievements of recent years by risking going through a similar power crisis that reined in its economic and industrial growth. If the country wishes to go on living its Cinderella story, the Philippines should do what it can to erase serious concerns about its economic and social sustainability.

While permanent power solutions require a substantial capital outlay, temporary power technologies do not involve capital expenditure. In fact, the government, power utility providers, and other interested industry holders can pay for the rented electricity from their operating incomes. Temporary power solutions may represent a short-term restorative measure, but when employed in crucial times like this, they can be the difference between a calamitous economic collapse and a momentous economic feat.

While the government is revisiting the EPIRA, and while concerned agencies are working to streamline their regulatory processes, the Philippines can readily benefit from the temporary power solutions, which can be swiftly delivered to the Philippines and installed and powered on in as little as days. Contrary to permanent power plants that require long lead times to be completed, rental power plants can immediately supply electricity as soon as the equipment arrives at site owing to its inherent ease of installation and grid connection.

Though recent governments have made great strides in the resolution of the power crisis, there are more to be done to ensure that the Philippines’ power-generation facilities are adequate to cope with the country’s increasing demand for electricity. Until the government and the relevant industry stakeholders encounter an appropriate solution to the persistent power supply challenges, the Filipino will continue to struggle with what has notoriously become a staple of life in the Philippines.


Altaaqa Global
Tel: +971 56 1749505