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Product Market Study

Electricity

According to the Global Energy Statistical Yearbook, global electricity consumption per capita
and global electric production per capita has been generally increasing through the years as seen in
Figure 1.

Global electricity production and
consumption per capita from 2010 to
2016
3500 Production
Electricity (kWh per capita)

3300 Consumption
3100
2900
2700
2500
2010 2011 2012 2013 2014 2015 2016
Year

Figure 1. Global electricity production and consumption per capita from 2010 to 2016

A small decline was experienced in 2015 because the global coal consumption fell by 1.8% in
2015 according to the BP Statistical Review 2016. This decline is due to the retirement of several coal-
fired power plants in China and USA since natural gas, nuclear power, and renewable energy were used
as replacement. This action translated to a 12.7% decrease in coal consumption in USA, and a 1.5%
decrease in China, which are two of the major coal-sourced electricity producers ("Global Coal
Consumption Fell in 2015; Oil’s Market Share Rose to a 16-Year High - IER", 2016).

Electric production remains greater than consumption because some sources of electricity such
as solar, wind, and hydro are unreliable, thus there is a need to produce more electricity from other
sources which causes the supposed surplus. It should also be noted that changes in electricity
generation do not directly reflect changes in electricity consumption and vice versa as both are also
affected by changes in the supply and prices of the different sources of energy used production and by
changes in electricity imports and exports ("Electricity production, consumption and market overview -
Statistics Explained", 2017).

An analysis of the increase in power production comes from the idea that electricity is the
backbone or the key driver of a nation’s progress. An increase in a nation’s population tends to bring
about an increase in the energy demand and consumption. However, factors such as raw material prices
and supply also affect the energy production and consumption (Marketrealist.com, 2014). Figure 2
shows the relation of the global population growth to the power consumption growth. Although the
population growth rate is almost constant through the years, the electricity production and

and it has now increased in 2016. Nevertheless.5 1 Electricity Production Growth 0.5 Electricity Consumption 0 Growth 2011 2012 2013 2014 2015 2016 -0. Population. This is due to the large number of coal-fired power plants present in China alone.5 2 Population Growth Growth Rate 1. and electricity consumption growth rates from 2010 to 2016 2.5 Year Figure 2. the electricity production and consumption growth rates follow the same trend. and electricity consumption growth rates from 2010 to 2016 Taking a look at the regional segmentation of the global data in Figure 3 and 4. we could see that Asia-Pacific Region has the highest electricity consumption and generation out of all the regions of the world. electricity production. Global Electricity Consumption by Region from 2010 to 2016 .consumption growth rates vary due to the previously mentioned factors. Global Electricity Production by Region from 2010 to 2016 30000 Electricity Production (TWh) 25000 Middle East 20000 Africa Pacific 15000 Latin America 10000 CIS 5000 Europe North America 0 2010 2011 2012 2013 2014 2015 2016 Asia Year Figure 3. electricity production. Population.

However. it would be seen that power shortages do occur. as seen in Figure 5. after power is generated it would be transmitted and distributed towards the users. Global Electricity Consumption by Region from 2010 to 2016 25000 Electricity Consumption (TWh) 20000 Middle East Africa 15000 Pacific Latin America 10000 CIS 5000 Europe North America 0 2010 2011 2012 2013 2014 2015 2016 Asia Year Figure 4. the data from the Department of Energy shows that the total power generation in the Philippines is balanced by the total power consumption. Global Electricity Consumption by Region from 2010 to 2016 In the manufacturing process of electricity. Total Electricity Generation and Total Electricity Consumption in the Philippines from 2011 to 2015 85000 80000 Power (GWh) 75000 Total Electricity 70000 Generation Total Electricity 65000 Consumption 60000 2011 2012 2013 2014 2015 Year . while power surplus occurs when generation is greater than consumption. Looking at the country as a whole. Power shortage occurs when generation is less than consumption. when generation and consumption are viewed per grid. indicating that there is no power shortage if both generation and consumption are viewed as that of the whole nation.

Total Electricity Generation and Total Electricity Consumption in the Philippines from 2011 to 2015 As seen in Figure 6. Leyte and Naga. electricity supply can be boosted by reducing costs of production. The current administration has also stated plans of heavily integrating the Mindanao grid to the Luzon-Visayas grid since the former is heavily dependent on hydroelectric power plants which are known to be unreliable (SunStar. there is really a need to generate more electricity. With this. The connection is the HVDC Leyte–Luzon which is a high voltage direct current transmission link between geothermal plants in Ormoc. increasing power consumption increases the gross domestic product (GDP) as given by the GDP equation. but it should be noted that unreliability of its plant sources causes shortages in this grid. . In Figure 7. improving agricultural and industrial productivity. Mindanao grid’s production is offset by its consumption. while the Visayas grid experiences power surplus. thus increasing power generation (Eldis. Aside from this. This link aims to feed the grid in the Manila region where the industrial. Figure 5. and residential consumption sectors are highly concentrated. power outages are not that frequent in Luzon because the Luzon and Visayas grids are connected to each other. commercial. Electricity Generation and Electricity Consumption in the Philippines per grid from 2011 to 2015 Even if the grid data shows this. An increase in GDP allows for investment in technologies and equipment that would make processes more efficient. Consequently. or increasing investment. Camarines Sur. The Luzon grid supposedly experiences power shortage. 2017). and from 2013 to 2014 are similar in trend. enabling economic activities. increasing electricity production will be beneficial to the country.org. 2016). and the growths from 2011 to 2012. Electricity Generation and Electricity Consumption in the Philippines per grid from 2011 to 2015 70000 60000 50000 Luzon Generation Power (GWh) 40000 Luzon Consumption 30000 Visayas Generation 20000 Visayas Consumption 10000 Mindanao Generation 0 Mindanao Consumption 2011 2012 2013 2014 2015 Year Figure 6. the growth of GDP is plotted against growth of power generation. With the growing electricity consumption and population.

Some electric utilities generate all of the electricity that they sell using the power plants they own. and independent power producers or from a wholesale market organized by a regional transmission reliability organization. 20. transmission is done by the National Grid Corporation of the Philippines (NGCP). Gross Domestic Product Growth vs Total Power Production Growth in the Philippines from 2011 to 2015 Power generated by power plants enter the grid. Origin of the electricity that consumers purchase varies. lower voltage electricity is safer for short distances such as usage in homes and businesses. and transformers until it reaches the end-user. NGCP operates on 21. The electricity that power plants generate is delivered to customers over transmission and distribution power lines. Other utilities purchase electricity directly from other utilities. and move through a complex system of electricity substations. NGCP also acts as a system operator and balances the supply and the demand of power to maintain the electricity quality through the grid. and 140 substations. 2017). . Conversely.000 circuit kilometers of lines. Transformers at substations either increase or decrease voltages to adjust as needed (NGCP. power lines. NGCP has the crucial role of connecting power generators from power plants to distribution utilities in order to deliver electricity where it is needed. Local grids are usually interconnected for reliability and commercial purposes. This forms larger networks and enhances the coordination and planning of power supply. power marketers.000 transmission towers. high voltage transmission lines are used to carry electricity. In the Philippines. Higher voltage electricity is also more efficient and less expensive for long distance electricity transmission. Gross Domestic Product Growth vs Total Power Production Growth in the Philippines 8 7 6 Percent Growth 5 4 Power Generation 3 GDP 2 1 0 2011 2012 2013 2014 2015 Year Figure 7. For long distances.

Oil’s Market Share Rose to a 16-Year High . How Electricity Is Delivered To Consumers ._consumption_and_market_overview Global Coal Consumption Fell in 2015. electric bills have been mandated to present an unbundled list of charges and service costs. 2016).eu. These companies and cooperatives are in charge of distributing electricity to the end-users.asp SunStar. In Negros. and yet it is the largest distributor of electricity in the Philippines. DOE: Mindanao grid connection with Luzon-Visayas grid priority. Since the passing of the EPIRA Law. where our plant location will be.Market Realist. Generation charge refers to the cost from the cooperative’s purchase of power from its suppliers. Your Guide To Understanding Energy . It is also the task of NGCP to ensure that the transmission assets of the country are in optimal condition to ensure that electricity transmitted is safe. (2016).europa.php/Electricity_production. which will be discussed in the next section. reliable. Retrieved 2 October 2017.eu/eurostat/statistics- explained/index.eldis. Ec. Retrieved 2 October 2017. Retrieved 2 October 2017. NGCP’s networks serve as the pathway for electricity to travel from the power station to the distribution utilities and electric cooperatives until the electricity consumers. (2017). (2017). from https://www.cfm?page=electricity_delivery Eldis. and a total of 120 cooperatives recognized by the Energy Regulatory Commission.WMO7D9KGPDd. References Eia.ph/operations. (2016).Energy Information Administration.org/analysis/global-coal- consumption-fell-2015-oils-market-share-rose-16-year-high/ Marketrealist. (2014).org/go/topics/resource- guides/climate-change/key-issues/pro-poor-electricity-provision/how-does-increased-electricity-supply- and-usage-affect-economic-growth#.Statistics Explained.Energy Explained. In Metro Manila.com.38 per kilowatt-hour. Retrieved 2 October 2017. Retrieved 2 October 2017. from http://ec. from http://instituteforenergyresearch.gov/Energyexplained/index.sunstar. and of high quality. Electricity production. and clearing of obstructions are done to fulfill this.com/2014/10/why-electricity-demand-is-linked-to- gdp/ NGCP (2017). (2016). They are localized and specific to the grid that they are located (Eia.gov. Retrieved 2 October 2017 from http://www. IER. consumption and market overview .gov.eia.ngcp. from https://www. How does increased electricity supply and usage affect economic growth? – Eldis. from http://marketrealist. As of 2012. Why electricity demand is linked to GDP . http://www.org. Manila Electric Company (Meralco) is the only electric power distributor. the generation charge is Php 5. Regular inspection and repair of lines and substations.europa.ph/manila/local-news/2016/07/20/doe-mindanao- grid-connection-luzon-visayas-grid-priority-486418 . there are a total of 19 private-investor owned electric distribution companies in the Philippines.IER.com. Retrieved 2 October 2017.