Boston, MA -- (SBWIRE) -- 12/26/2012 -- A prolonged dry spell and ageing infrastructure have led us to revise down our 2012 power generation forecast for the Philippines. Over the longer term, we expect generation and consumption to grow modestly, as the country experiences economic and population growth. We expect a substantial rise in gas production in the Philippines, and we predict that its share of total electricity production will increase from an estimated 37.4% in 2012 to 43.9% by 2021.

We forecast electricity generation in the Philippines will grow by 4.0% in 2012 to reach 69.2 terawatt hours (TWh). This is a downward revision from our previous forecast of 71.7TWh, due to the continued power shortage occurring on the island of Mindanao. Electricity output from hydropower plants in Mindanao have fallen over 2012, mainly due to ageing infrastructure.

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Between 2012 and 2021, we forecast growth in electricity generation to average 4.3% per annum, underpinned by similar increases in electricity consumption. We expect to see the share of natural gas in total electricity generation increase from 37.4% in 2012 to 43.9% in 2021, as the country seeks to exploit its natural gas reserves and lower electricity generation costs. However, we highlight that the country's power situation will remain tenuous for the foreseeable future, due to the numerous challenges standing in the way of private investment.

Key trends and developments in the Philippines' electricity market:

- The government is looking to convert oil-fired plants to gas while expanding the country's geothermal capacity.
- An initial assessment by the Philippines Department of Energy (DoE) has placed the country's total wind potential at 76 gigawatts (GW) (across a 10,000 square kilometre area). Other DoE estimates of renewable energy potential in the country are: 4.41GW from geothermal energy; 147MW from hydro applications in Visayas; 1.78GW from mini-hydros from 888 sites; and an annual potential average of 5.0-5.1kWh/m2/day from solar power.
- Thanks partly to the forecast steady rise in net power generation, which falls slightly short of the underlying demand trend, we do not expect the Philippines to develop a significant power supply shortfall during our 10-year forecast period, with some scope for a limited generation surplus. We note, however, that in order to avoid any shortages or an import requirement, investment commitments need to be met in full. We expect better technology and more efficient distribution lines to result in an overall trend of lower transmission and distribution losses (from an estimated 12.5% in 2011 down to 10.5% in 2021). We do in fact see potential for exports in the long-run.

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