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The government of the Philippines is preparing the legislative groundwork for a probable nuclear future. With electricity prices approaching those found in California, it finds itself at a competitive disadvantage to its ASEAN neighbours in capturing businesses leaving China. The non-nuclear options appear to do little to remedy that economic handicap leaving the global nuclear power industry with the questions – how many, when, and what size?
The grids
The Philippines Archipelago has 7,000 islands, about 1,000 of them inhabited, and stretches over 1,000 miles north to south with over 140 million inhabitants. Given this dispersion, one could say they have 139 separate electrical grids but it is more useful to think of three major, loosely connected main grids with 136 separate micro-grids for those islands or locations too expensive or difficult to connect to the major grids.
First, the three major grids. The largest by far is the main island of Luzon at the north end where the capital city of Manila is located with 70% of the nation’s economic activity. The second grid covers the smaller middle islands, the Visayas, while the most southern of the three is the large southern island of Mindanao, still relatively undeveloped and long considered a “frontier” by Filipinos. It has no current power connection to the other two grids. This fact limits the application of conventional large light water reactors (LWRs.)
The markets
The Philippines once had an electric system largely owned and run as a government-integrated monopoly known as the National Power Corporation (NPC or “Napocor”). This system was largely privatised in the 1990s into the “Genco/Transco/Disco” model. Except for a number of major hydroelectric projects and the diesel plants of their “Missionary Electrification” programme on micro-grids, NPC sold off all its generation assets while the government retained ownership of the transmission system.
Generation not treated as “legacy” and still owned by NPC is privately owned. Prospective generators need certification by the Department of Energy before arranging power purchase agreements with Discos or ancillary services contracts with the Transco and then making arrangements for eventual grid connection.
The transmission system is now operated as a 25-year concession under the winning bidder, the National Grid Corporation Philippines (NGCP). They operate the system, maintain it, and expand it. Expansion to connect new generation is planned on five-year development cycles and the O&M plus new capital costs are charged, after a rate case review by the Electricity Review Commission (ERC), as a separate charge on ratepayer monthly bills. The government retains ownership of the hardware and the land it is on.
The end-users interface with the local distribution outfits, or Discos. The largest by far, Meralco, serves the Manila metro area with several other load centres also retaining privately-owned discos. Most customers outside the big cities are served by coops. The Discos usually arrange PPAs directly with specific Gencos, although NGCP also operates a five-minute spot market for the Luzon and Visayas grids.
Nuclear market penetration
Given the long-lead transmission planning publicly available, nuclear power plants fit in doing what they do best – base load. The Philippines is one of the fastest growing economies on the planet with electrical load demand growth to match. The Department of Energy (DoE) published demand estimates out to 2040 which NGCP then designs their grids to support. That demand is growing at 6 to 7% per annum.
The specific demand forecasts through 2040, shown in Table 1 below, reveal the gaps between forecast capacity needs and current projects. Some new generation is considered “committed” in that the project is certified by the DoE, has a PPA, and has been financed. In addition, the Bataan Nuclear Plant (630 MWe) looks like the first nuclear plant to come online, following a restoration, probably between 2028 and 2030.
The gap therefore represents the new generation capacity that is not yet “committed” and needs filling by 2040. Can nuclear help fill the gaps?
That question can be approached in two ways. First, by checking on grid size limitations and NGCP suggested connection points. Once practical considerations are covered, it is possible to postulate two scenarios – one with a 20% market share for nuclear and a second for a 40% market share. From there it is then possible to estimate what type and what number of reactors will fit where.
The Luzon grid has a 500 kV line stretching from Lingayen Bay and the Sunl 1,200 MWe coal plant on the north down to the east side of Manila before curving back west to Cavite on the south shore of Manila Bay. This is called the “Luzon Backbone”. Future plans will extend a branch of the 500 kV line to the northeast from Lingayen Bay to pick up future generators on Northern Luzon and also a run down the west coast of Zimbales to complete a loop circuit of the province and back to Manila.
NGCP’s planning document shows the recommended generator connection points. There are only two planned 1,200 MWe connection points and a single 1,000 MWe connection point. However, private communications suggest that up to a four-unit LWR plant could be accommodated on the 500 kV backbone circuits with adequate lead times for planning.
While smaller SMRs (small modular reactors) of the 300 MWe class could be accommodated, the economics of scale suggest that larger LWR reactors would have a lower levelised cost of power if the grid could handle the power. The traditional operating criterion of a grid not having a single unit greater than 10% of grid demand would currently be satisfied for any single 1000 to 1,400 MWe LWR unit; further demand growth would further satisfy that rule of thumb.
The Visayas grid is much smaller and, worse, more disbursed. While the total grid could take an LWR, each island presents too small an individual load and the inter-island underwater ties limit transfers between islands. Ergo, SMRs are a much better fit for this grid. Assuming that an SMR is a nominal 300-ish MWe unit – as are the offerings of the current apparent market leaders NuScale and GE-Hitachi BWRX – other sizes could fit, like Holtec’s 160 MWe unit or a Westinghouse AP600.
There are opportunities for about 17 units considering 300 MWe class reactors in single or dual unit sites on the Visayas grid. It’s fair to assume that not all the sites on an island can be populated with SMRs at the same time. Further, some nuclear-specific siting limitations could exclude some or many of these possible connection points. Some may be too close to one of the archipelago’s 24 active volcanos or several active faults, for example. Local electrical supply and demand balances or inter-island connection limitations could preclude others.
The third main grid, Mindanao, has the advantage of being largely a single island so inter-island connections are not a constraint as for the Visayas grid. However, its internal grid is weaker and the some regions of the island have experienced historical political instability. The planned connection points could accommodate nine SMRs, with the same provisos as applied to the Visayas grid.
Large grid projections based on market share
This analysis of load demand growth, transmission development plans, and operational factors gives some upper bounds on nuclear penetration in meeting expected demand. However, the Philippines is unlikely to be able go the way of a nation like France that strove to approach a 100% nuclear grid. Better to select two more realistic penetration goals for the further analysis of the Philippines – 20% and 40% nuclear market shares per the main grid. Assuming that the 630 MWe Bataan Nuclear Plant Plant (BNPP) restart is a done deal and it reduces the gap for Luzon only it will not be credited against the 20% and 40% additional nuclear capacity.
Micro-grids
When future civilian markets for micro-reactors are discussed, many first think of the Philippines archipelago as a natural fit. While most of the population, industry, and generation are connected to one of the three main grids, the geography of the country has precluded the main grids from economically serving many individual islands and some remote areas on larger islands. The government attempts to reach these groups with the “Missionary Electrification” programme run by NPC. Essentially, NPC provides and operates diesel-electric plants that serve local coops and distribution companies that directly serve the customers. The local entities receive the power as discos and maintain the distribution lines and provide meter reading and billing services.
There are 136 or more of these micro-grids as of 2022 although the number is expected to fall as NGCP extends transmission lines to provide main grid power. Early market development of micro-reactors appears to focus on two nominal sizes – 1 MWe and 5 MWe. The announced intentions of most of these developers are to offer portable units, requiring minimal infrastructure. Remote manual operation with minimal local staffing without extensive technical training is also mentioned. These design goals of output and operations appear to match well with replacing or supplementing some of the diesel generators on the micro-grids.
To see how many micro-reactors might be accommodated on the country’s micro-grids, the government database for those existing micro-grids shows where the average micro-grid demand was 5 MWe or above. The thinking was that the minimum grid demand would likely require load following on the part of the micro-reactor and peak demands over 5 MWe would be met by the existing diesel plants. The cost of pulling an expended unit and replacing it with a fresh packaged unit, as well as the more expensive SWU requirements of the fuel, suggest that lower capacity factors for micro-reactors would have less of an economic penalty compared to large LWRs.
To provide an economic ceiling on micro-reactors to provide developers with a levelised cost reference, the government’s rate case filings of current “true cost of generation” for each micro-grid in pesos per kW-hr is multiplied by a 90% capacity factor and a nominal 5 MWe net output, although customers are charged a lower, subsidised rate. In one case, a nominal output of 4 MWe was assumed since this better fit that one specific grid. Converting into annual revenue (in USD at 55.65 pesos per dollar), reveals the maximum cost of diesel power that could be displaced by installing a micro-reactor.
Using these search rules, four micro-grids exist today where a 5 MWe micro-reactor might fit. Note that site characteristics that might prohibit a nuclear installation were not considered. The specific names of the four micro-grids are withheld due to possible political sensitivities. Some of the specific data cells in the published data are questionable and are highlighted in yellow and otherwise ignored in this survey. However, these questionable data points don’t affect the overall conclusions.
A similar survey was performed but using a nominal 1 MWe reactor baseline. For three grids, the average load suggested that additional 1 MWe units should considered and displaced revenue calculated. In two cases, only 800 kWe was used for base-loading.
The nuclear opportunity
This analysis gives us an early estimate of the potential Philippines nuclear power market to 2040 as a first-cut survey using various assumptions of market penetration, load growth, product availability/performance, and capital availability.
Will these estimates withstand future events and come to pass? That will depend on the efforts of nuclear designers, power industry financiers, and the Filipinos.
Acknowledgements: The author, Joseph Somsel (BSNE, MBA), would like to thank Christopher Groff, Gabor Solomon, and Dan Yurman, for contributing to this article.
This article first appeared in Nuclear Engineering International magazine.