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Top 10 energy stories of 2020

Here is my modest list of the top five international and top five national energy stories last year.

1. Global lockdowns and drastic cut in oil demand and prices. From the all-time high of $165/barrel in June 2008, oil prices slumped to -$38/barrel on April 21, 2020. Travel restrictions cut oil demand and storage was filled. Many who had contracted their oil supply could not find enough storage for their excess production, so some producers were temporarily pricing negative — they would pay, not charge, people to get their oil.

2. Natural gas prices also were at all time low, coal prices were not. From an all-time high natural gas price of $14/million British thermal units (BTU) in September 2005, the COVID-19  lockdowns and the cut in electricity demand led to natural gas prices shrinking to only $1.4/million BTU on June 25, 2020. Coal prices also declined but did not break the all-time low of $48/ton in January 2016.

3. “Decarbonization” and coal cuts in the West offset by high coal demand in Asia. In June 2020, the BP Statistical Review of World Energy (SRWE) was released and it compared data from 2000 to 2019. The increase in coal consumption in exajoules (1 EJ = 277.8 terawatt hours, TWH) of China and India combined was almost six times the decline in US coal use. The increase in use of coal in Vietnam and Indonesia combined was 2.4 times higher than the coal cut in France, Denmark, Germany, and Italy combined.

4. Countries which have the highest solar and wind generation also have the highest electricity prices in the world. From the Strom Report 2020: comparing electricity prices (in Euro cents/kwh) one saw that Germany’s cost 30.88 Euro cents/kwh and Denmark’s was 29.84 Euro cents/kwh, versus only 9.97 Euro cents/kwh in Bulgaria (which had the lowest wind+solar generation) and 17.65 Euro cents/kwh in France (which derives about 75% of its power from nuclear power plants).

5. Countries that grew fast also have fast growth in electricity generation and high coal, fossil fuel consumption. I got the top 40 countries with the biggest GDP size in 2019, and I computed their average GDP growth from 2000 to 2019. Nigeria is No. 4 but it has no data on electricity generation so I replaced it with No. 6 Indonesia to have consistent country comparisons. Countries that had slow growth in electricity generation and lessened their coal use have low, anemic growth (see Table 1).

6. Philippines coal power generation rose to 55% of total. In May 2020, the Department of Energy (DoE) released Power Statistics 2019. In terms of installed capacity, coal and gas comprised 57.5% of the total, but when it came to electricity generation, they comprised 75.7% of the total. Geothermal and hydro are the most useful renewables, contributing 17.7% of total power generation.

7. Solar, wind, and biomass remain nearly insignificant contributors to power generation. Despite so many fiscal and non-fiscal incentives given to them, including assured price and profit for 20 years via feed in tariff (FIT) under the RE law of 2008 (RA 9513), the three renewables contributed only 3.2% of total power generation. It is expensive and pampered power yet it is nearly insignificant.

8. DoE moratorium on greenfield coal-fired power plants. On Oct. 27, 2020, Energy Secretary Alfonso Cusi declared a moratorium on greenfield coal-fired power plants. One result of this will be the drastic reduction in additional coal power from 2031 to 2040 to only 1,500 MW under the Clean Energy Scenario (CES) vs 12,570 MW under the Reference (REF) scenario. Large-scale favoritism will be given to solar power generation with an additional 23,580 MW from 2020 to 2040, and also more LNG power from 2031 to 2040 (see Table 2).

9. Natgas shrewdly sneaks in as a “renewable” in GEOP. The Green Energy Option Program (GEOP) under RA 9513 encourages energy consumers to choose the renewable (RE) they want. But under DoE Department Circular (DC) 2020-04-0009, Operating Permits for RE Suppliers under GEOP, there is a two years transitory provision that allows the use of indigenous power sources even if they are not renewable — meaning gas from Malampaya, Palawan and, somehow, coal from Semirara, Antique. A sneaky and shrewd scheme.

10. Rising competition under RCOA, more choices for consumers. The retail competition and open access (RCOA) provision under the EPIRA law is indeed beautiful. From 2018 to September 2020 in the Luzon-Visayas grids alone, the number of generation companies (gencos) rose from 114 to 135; Retail Electricity Suppliers (RES) from 30 to 33; and contestable customers from 1,178 to 1,452.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers

minimalgovernment@gmail.com

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