A unit of the Fitch organization predicts that the country’s electricity intake will be minimized by 5. 9% and coal production by 14% this year due to the effect of the 2019 coronavirus disease crisis (Covid-19) on them.
“We expect the Covid-19 pandemic to continue to weigh heavily on the electricity and renewable energy sector in the Philippines in the short term, and we have made additional down revisions to our forecasts,” Fitch Solutions said in a report Thursday.
Fitch’s macroeconomic studies branch believes recovery at this time of year is “unlikely” because it hopes that “the [country’s] recession will weigh highly on demand and electricity production through extension. “
The Philippines sank into a technical recession after the economy went through a record 16. 5% in the current quarter and 0. 7% in the first quarter.
Fitch Solutions also stated that the country’s coal-fired power generation will be subject to the “highest pressure” of declining electricity demand due to “a combination of several reasons, adding the nature of the coal base load, which is sometimes used to balance fluctuations in electricity demand and the presence of CAE [electric power acquisition agreements] paid for fuel turbines and a policy of ” ensure continuous production of sources of choice. »
According to the Fitch Unit, the independent operator of the Philippine electricity market had reported interruptions in the supply of coal-fired power due to the tightening of quarantine measures in force from April to June, which affected shipments from Indonesia and general customs clearance of Customs Shipments.
Worse, coal-fired power plants have already been forced to close temporarily, Fitch Solutions said, adding that this can lead to a 14% drop in coal power this year, to its forecast of 8. 4% in the last quarter and early quarter. Expansion projection of 5. 1% before the pandemic.
The Philippines is also expected to have difficulties in terms of energy development in the short and medium term.
“We believe that the government faces increasingly stringent monetary constraints as the pandemic continues. This will divert more budget from infrastructure spending to other immediate considerations such as the labor market and family support through subsidies and wage subsidies,” Fitch Solutions said.
The country’s inability to involve Covid-19 can also reduce foreign direct investment and the dynamics of structural reforms to attract them in the long run, he added.
“Recently structured projects will also likely delight in delays due to supply chain and labor disruptions due to ongoing constraints. “
Despite this, Fitch Solutions is confident that the demand for electricity will recover “strongly”, which would require further growth.
“This is due to strong macroeconomic and demographic growth, as well as the government’s goals of achieving an electrification rate of one hundred percent through 2022 under the overall electrification program, which will increase demand for electricity over the next few years,” he said. .
“We that President [Rodrigo] Duterte [probably] returns to his infrastructure strategy and builds, builds, builds a crusade after the stage improves, which will provide mandatory assistance to the electricity sector,” Fitch Solutions added.
He said the expansion in energy consumption could increase by an average of 4. 6% between 2020 and 2029, while electricity capacity would accumulate through a net capacity of approximately 8 gigawatts (GW).
The Department of Energy estimates that another 44. 8 GW of new capacity would be obtained up to 2040 from thermal and renewable energy sources, while it would move to nuclear power in the longer term.
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