SPONSORSHIP SPEECH
Senate Bill No. 1928 / Committee Report No. 145
An Act Promoting the Use of Microgrid Systems for the Total Electrification of Unserved and Underserved Areas
Monday, December 7, 2020
Senate of the Philippines

Delivered by the Honorable Win Gatchalian, Senator of the 18th Congress:

Mr. President, one of the key energy policy thrusts of the Department of Energy is to achieve the total electrification of all Philippine households by 2022. 100% electrification will have an enormous impact on reducing energy poverty and helping improve the overall quality of life of millions of Filipinos living in far-flung rural areas. Realizing the importance of achieving this ambitious energy policy goal, the Senate Energy Committee has dedicated significant attention to tracking the progress of the executive branch in implementing its various electrification programs.

Data from the Department of Energy show that the number of unenergized households on the Luzon, Visayas, and Mindanao grids combined has decreased from 2.78 million in 2017 to 1.4 million in 2020.¹ However, almost a million of these unenergized households are located in Mindanao -- where roughly one out of every six households are considered unenergized. Overall, Mr. President, the data suggest that there is much more work left to be done.

Nakakalungkot isipin na sa panahon ng makabagong teknolohiya, marami pa rin ang napag-iiwanan. Ilang beses na tayong nakakita ng viral posts sa social media ng mga batang pilit na tinatawid ang kanilang pag-aaral gamit ang gasera o sa ilalim ng poste ng kuryente, lalo na yung mga nasa kanayunan.

Allow me to discuss briefly a few specific challenges that must be addressed as we strive to achieve total electrification.

The first challenge is that the consistently rapid growth of the Philippine population and economy make total electrification a moving target. As our communities grow, the number of households that need to be electrified grows as well. For example, the Department of Energy states that the number of unenergized households nationwide actually grew between 2016 and 2017 from 2.1 million to almost 2.8 million, fell to around 900 thousand in 2018 but once again increased to 1.6 million in 2019. Second is the traditional mindset that electrification should be done through grid extension, which has constricted the pace of electrification due to funding limitations. Just to illustrate, according to the National Electrification Administration, there are 12,672 unelectrified on-grid sitios as of 30 June 2020. For FY 2021, the proposed budget for NEA's sitio electrification program is Php 1.728 billion covering around 1,153 sitios. If the same amount is given by the national government every year, then it would take close to ten years to electrify all these sitios. Meanwhile, the number of these sitios will continue to increase due to population growth. Third, there seems to be a disconnect between the official government definition of 'electrification' and the actual state of electrification at the household and community levels. Many communities considered as 'energized' by the government on paper suffer from unstable and unreliable power supply characterized by frequent rolling brownouts, and there are those in the off-grid areas which, due to power generation limitations, only have 8 to 16 hours of electricity. Since the 17th Congress, the Senate Committee on Energy started to refer to these places as "underserved" areas, or those that do not enjoy 24-hour access to electricity due to various reasons, which should be included in the "total electrification" program of the government.

Fourth and last, we must also consider the primary challenge that has stood in the way of achieving total electrification throughout our sprawling archipelago -- figuring out how to service remote and far-flung areas where it is commercially unviable for the distribution utility to provide consumers with power through grid extension. As of November 2020, NEA identified 5,261 off-grid and remote and unviable areas for electrification. Realizing the difficulty in providing power to these areas, the Electric Power Industry Reform Act of 2001 or EPIRA mandates the electrification of these areas either through the National Power Corporation - Small Power Utilities Group or NPC-SPUG or through qualified third parties or QTPs. These QTPs are private entities which usually build microgrids to provide an integrated generation and distribution system for the supply of electric power to these areas.

What is a microgrid? It is a group of interconnected loads and decentralized power generation with clearly defined electrical boundaries that acts as a single controllable entity with respect to the distribution, sub-transmission, or transmission grid, as the case may be. Conceptually speaking, it is exactly as the name implies - a miniature-scale version of a large main grid such as the Luzon grid, for example, without incurring the expensive cost of connecting to the main grid. It is for this reason that microgrid systems are well-suited to electrify unserved areas as well as underserved areas in the absence or insufficiency of main grid connections. Furthermore, it allows the optimization of local energy resources for power generation such as solar, wind, and even biomass.

Unfortunately, the establishment of microgrid systems have been few and far between over the past two decades. As of September 2019, there are only six QTP microgrid projects that service less than 7,000 households nationwide. Meanwhile, an additional 8 microgrids operated by various entities such electric cooperatives and private corporations are serving around 4,000 households.

Mr. President, against the backdrop of our goal of 100% electrification and the identification of microgrid technology as a power tool to achieve this goal, I am proud to sponsor Senate Bill No. 1928 or the Microgrid Systems Act. This legislation seeks to address the challenges above by promoting the development of microgrid systems as a means to provide quality, reliable, secure, and affordable supply of electric power in unserved and underserved areas nationwide as we seek to accelerate total electrification and power rural development and poverty reduction. Allow me to discuss briefly some of the measure's salient points.

Under this bill QTPs will now be known as microgrid systems providers, whose mandate is now expanded to both underserved area and unserved areas, the latter to include off-grid and remote and unviable areas. Essentially, this means that microgrid systems providers will be allowed to operate in any area where there is either no electricity access at all, or where the power connection does not provide 24/7 electricity supply -- thus expanding the potential scope of operations to the 12,672 unelectrified on-grid sitios and 5,261 off-grid and remote and unviable areas nationwide.

One way to speed up the development of microgrid systems and electrify these unserved and underserved areas as soon as possible is to cut red tape. In line with this, our bill simplifies and expedites the government permitting process for microgrid systems as compared to the already-accelerated permitting timeline under Republic Act No. 11234 or the Energy Virtual One Stop Shop Act. The applicable permitting time frames are cut in half for microgrid systems under this legislation.

Meanwhile, this Act also provides for the conduct of a Competitive Selection Process, which can be an auction or Swiss challenge, among others, to ensure that only the most proconsumer microgrid service provider service contracts are awarded. Preference will be given to sources of energy which are low-cost, indigenous, renewable, and environment-friendly, which are Php 0.75 to 1.00 per kilowatt hour cheaper compared to pure diesel systems.

Hindi maikakaila na malaki din ang naging epekto ng pandemya sa hangaring mapailawan ang buong bansa. Dahil sa ipinatupad na enhanced community quarantine sa maraming lugar, nahinto rin ang serbisyo ng pagkakabit ng kuryente. Pinalala pa ang sitwasyon ng nagdaang magkakasunod na bagyo na nagpatumba ng ilang poste ng kuryente.

Ginoong Pangulo, hindi natin maatim na hayaan na lang na nangangapa sa dilim ang marami sa ating mga kababayan. Kaya't minarapat nating isulong ang panukalang ito nang sa gayon ay mapabilis ang paglalagay ng mga istraktura sa papapailaw sa kasuluksulukan ng bansa.

In sum, Mr. President, this legislation seeks to empower the private sector as a valuable partner in the government's quest for total Philippine electrification by expanding the scope and reach of microgrid systems and their service providers. This expansion is based on two decades of experience under EPIRA, with its modest achievements and clear shortcomings with regard to third-party operations. 2022 is fast-approaching, and along with it the Department of Energy's self-imposed deadline to achieve 100% electrification for all Philippine households. It is a daunting task, indeed, but one which would become significantly more feasible with the passage of this legislation. Based on the foregoing, Mr. President, I humbly enjoin our esteemed colleagues to join me in advocating for the swift passage of this important energy legislation.

Thank you, Mr. President. I yield the floor.

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¹Data is based on the DOE Submission as of 4 November 2020.