CHALLENGES OF DEVELOPING

MICROGRIDS IN THE PHILIPPINES

Meralco’s experience on Cagbalete Island and Isla Verde

RAMON L. ASAÑA Jr.

Head, Network Technology Strategy and Architecture
Manila Electric Company (MERALCO)
Outline
▪ MERALCO Company Profile

▪ Overview on Rural Electrification in the Philippines

▪ Overview on Microgrids

▪ MERALCO Microgrid Implementations

▪ Key Challenges of Developing Microgrids in the

Philippines based on Meralco’s Experience on
Cagbalete Island and Isla Verde

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 We are the largest power distribution company in
the Philippines, serving close to 27 million Filipinos in 111 cities
and municipalities, and in a franchise area of over 9,685 km2.

We serve the country’s social, political, and economic centers

where 50% of our GDP is produced.

We are US$7.4 billion* company, serving our customers for the

past 115 years, with the commitment to be
the total energy solutions provider of choice in the Philippines.
_________________
7,399 MW peak demand (2018 YTD)
41,389 GWh energy (output) sales
120 substations / 17,795 MVA substation capacity

*Market capitalization as of end 2017

 Overview on Rural Electrification in the Philippines
As of 2017, only 90.65% of the households in the Philippines and
97.73% in Meralco’s Franchise Area have access to electricity

Distribution of Unserved
HH Population Household Households
Distribution Unserved
Projected Served HH Electrification
Utilities (2015)
HH
Level (%) Meralco
6%
Other DUs
9%
Electric
13.34 11.72 1.62 87.92
Cooperatives

MERALCO 7.00 6.84 0.16 97.73%

Electric
Cooperatives
Other 85%
Distribution 2.29 1.95 0.34 85.05
Utilities

Grand Total 22.63 20.51 2.12 90.65%

Notes:
• The Household Population number was projected and provided by NSO based from the 2010 Census
• Served Household figure was sourced from the consolidated Distribution Development Plan (DDP)
2015-2024 of all the Distribution Utilities (DU) and National Electrification Administration’s (NEA) Status
of Energization Reports

Source: NEA Updates on Rural Electrification Program; 2016 Year-end

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 Overview on Rural Electrification in the Philippines

Rural Areas Electricity Service Hours

• The Philippines is an archipelago of 7,641 islands

• About 2,000 islands are inhabited; hundreds of

small islands have limited or no access to
electricity

• These islands are usually powered with diesel

generator sets only

o Only 18 out of 287 areas (or 6.2%) have 24/7

electricity; Source: MEDP – DOE 2016-2020

o 84 out of 287 (or 29.3%) have 10-22 hours;

o while the rest (64.2%) have less than 10 hours

of electric service

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Overview on Rural Electrification in the Philippines

Philippine Rural Electrification Target

The 100 percent electrification of targeted and

identified households accessible to the grid is
target to be attained by 2022,
while the 100 percent electrification of household
in off-grid areas are expected in the long term
period (2023-2040).

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Overview on Microgrids

Key Components of a Microgrid

A microgrid is a localized energy grid aimed to achieve

specific grid objectives, with the capability to Key Components:
Non-exhaustive
disconnect from the traditional grid and operate
autonomously 1
Distributed Generation
Fossil Fuel, Renewable Energy

2
3 Controls
EMS, DR, Dynamic Pricing

3
Energy Storage
Utility Batteries, Electric Vehicles
4
4
1 2 Electric Load
Single, Multiple, Distributed
*Microgrid designs vary based on the scope of work and the complexity of the objective

Source: HOMER Energy Page 7

Overview on Microgrids

Distributed Energy Resources Types:

Small Wind
Solar PV
Turbine

Combine Heat Micro Hydro

and Power

www.energids.be
www.homepower.com

http://www.seao2.com
www.eneria.fr

Biogas Generator Tidal Energy Generator Diesel Generator

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Page 10
Overview on Microgrids

Integrating Intermittent Energy Sources in Microgrid

Intermittent + Energy Storage = Stable Power

Intermittent + Dependable Supply = Stable Power

Intermittent + Energy Storage + Dependable Supply = Most Ideal

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Overview on Microgrids

Energy Storage Technology in Microgrid

Lead Acid Battery

Vanadium Redox Flow Battery

Lithium Ion Battery

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Overview on Microgrids

Microgrid Modes of Operations

Parallel/Grid-tied
▪ Operating connected and synchronized
to the main grid
▪ Power may flow in and out of the
microgrid
University of California San Diego Microgrid (USA)

Island/Isolated
▪ Operating independently
from the main grid

Miyako Island Microgrid (Japan) Camiguin Island

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 Overview on Microgrids
What are the Use Cases of Microgrids?

Economics Achieve incremental income / cost

• Self-Consumption
• Diesel Optimization savings for the end-user by creating
1 • Battery Arbitrage an optimal energy mix in both
• Peak Reduction
• Net Metering supply and demand side
• Facilities Upgrade Deferral

Ensure business continuity to end-

Power Quality and
2 users by increasing quality of
Reliability electric service

Market Participation Participate in the Electricity Energy,

3 • Energy Reserve and Ancillary Services
• Reserve
• Ancillary Services market

Provide electricity to off-grid

4 Electrification communities

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MERALCO Microgrid Implementations
Meralco’s Microgrid Implementations
APPLICATION
✓ Microgrids for the electrification of households
located in remote islands and far-flung areas
✓ Hybrid energy system composed of solar PV,
battery storage, and diesel gen-set to replace
full diesel gen-set scheme as power source
CAGBALETE ISLAND
LOCATION
Cagbalete Island is situated
in Mauban, Quezon and can
be accessed via 1-hour boat
ride from Mauban Port. It is
a booming tourist attraction
because of its beautiful
white sand beach.
CUSTOMERS
There are about 887
households in the island that
currently have no access to
electricity.
ISLA VERDE
LOCATION
Isla Verde is situated along the
bodies of Verde Island Passage
between the Luzon main island
and Mindoro. It lies south of
Batangas City and is composed
of 6 barangays.
CUSTOMERS
There are about 1,990
households in the island that
currently have no access to
electricity.
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MERALCO Microgrid Implementations

Current Power Supply Situation

EXISITING POWER SOURCE AVAILABILITY

DIESEL 6pm – 10pm

GENERATORS
Sizes range from 5 – 30 KVA daily operation

Few residents with their own diesel generators Note that not all households have access to
are also selling electricity to neighbors electricity

DISTRIBUTION SYSTEM POWER QUALITY

Low quality of power due to:

230V • high voltage drops
• overloaded generators
single-phase system
(evident on the flickering of the lights)

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MERALCO Microgrid Implementations

Objectives of the Pilot Projects

❑ Evaluate the feasibility and sustainability of using Microgrids for

island electrification in providing reliable, affordable, sustainable, and
clean 24/7 electric service
• Demonstrate stable system operation with high RE penetration
• Prove financial viability (least cost option)
• Develop a sustainable O&M scheme
• Develop a communications plan for the residents to boost awareness

❑ Gain actual learning experience from planning to operations and

maintenance of Microgrids

❑ Prepare Meralco for future Microgrid installations

• Replicate to other areas for electrification

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MERALCO Microgrid Implementations

Resource Assessment Cagbalete Island

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MERALCO Microgrid Implementations

Load Curve Estimation of Cagbalete Island

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MERALCO Microgrid Implementations

Proposed Microgrid Scheme for Cagbalete Island

Monocrystalline
Prime Polycrystalline Consumption
Flow
Back-up Thin Film Curve
Lithium Based

Load

CAPEX/OPEX

• Hybrid Optimization Modeling Software used for designing and analyzing hybrid
power systems

• It allows the user to input hourly power consumption profile and match renewable
energy generation to the required load allowing a user to analyze microgrid
potential, peak renewables penetration, ratio of renewable sources to total energy,
and grid stability

• Additionally, It contains a powerful optimizing function that is useful in determining

the cost of various energy project scenarios. This functionality allows for
minimization of cost and optimization of scenarios based on various factors.

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MERALCO Microgrid Implementations

Proposed Microgrid Scheme for Cagbalete Island

60 kWp 150 kWh 2 x 30 kW

Solar PV Battery Storage Diesel Generator
S Y S T E M I N T E G R AT I O N

AC
DC DC

PV Inverter Battery PCS Generator Controller

AC AC AC

communication communication communication

Micro-Grid
Loads
Controller

30 kW
(200 HH)
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MERALCO Microgrid Implementations
APPLICATION: ISLAND ELECTRIFICATION CAGBALETE ISLAND
MICRO-GRID SLD

230 V Line to Ground 3PH 4W

Load

Gen-Sets
Master Controller Micro Grid
Controller

Isolating
Controller Controller
Transformer

AC AC
Inverter PCS
DC DC

DC Line
AC Line
Communication Line
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Key Challenges of Developing Microgrids in the Philippines

Daily Generation Profile (Illustrative)

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Key Challenges of Developing Microgrids in the Philippines

Key challenges in developing Microgrids in the Philippines

Affordability Regulatory Policies Logistics

Choice of Technology & Scalability Sustainability

System Optimization
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 Key Challenges of Developing Microgrids in the Philippines
Key Challenge: AFFORDABILITY OF ELECTRICITY

Rates imposed in Cagbalete Island

FLAT RATE PER
METERED RATE • Very high electricity price is
APPLIANCE
(Peso/kWh) currently imposed in the island,
(Peso/day)
about 7 times more than in the
• 1 light bulb – P 10.0
mainland
• 1 Radio – P 10.0 P 31.00 – 36.00
• 1 TV – P 15.0 per kWh • If rates are subsidized, effectively
• 1 Ref – P 20.0 bringing down electricity price
close to mainland rates, customers
COMPARIS ON OF in the mainland will be burdened
ELECTRICIT Y PRICES PER
KWHR • Microgrid developers for rural
Island Mainland* electrification must be prudent
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and exert considerable effort in
minimizing the amount of
subsidies yet providing the same
10.50
quality of service to island
customers

*latest 3-month average of a residential customer consuming 0 - 50

kWh; includes cross-subsidies Page 25
Key Challenges of Developing Microgrids in the Philippines

Key Challenge: REGULATORY POLICIES

• DUs, who have the resources and the to

serve the islands, have no access to
missionary electrification fund to cover
the difference between the Full Cost
Recovery Rate (FCRR) and Subsidized
Approved Retail Rate (SARR).

• The process of waiving of franchise

rights, QTP accreditation, approval of
subsidized rates, and all other
permitting and processing until the
Microgrid is in operation entails
significant effort and resources (may
even take a few years)

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 Key Challenges of Developing Microgrids in the Philippines

Key Challenge: LOGISTICS

• Cagbalete Island and Isla Verde Docking of boat going to Verde Island (no port)
have no ports which makes
transport of equipment (e.g.,
poles, transformers, generators,
fuel) difficult

• Large boats are not regularly

plying to/from the island to
transport heavy equipment

• MERALCO estimates a 7 - 9
multiplying factor on manual Mini Port (made of wood) in Cagbalete Island
hauling and installation costs
incurred during construction of
island microgrids*

• Hauling costs add not only on

construction cost but also on
O&M costs
*based on a time-and-motion study conducted on similar installations Page 27
Key Challenges of Developing Microgrids in the Philippines

Key Challenge: LOGISTICS

Narrow and steep road network Heavy vegetation

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Key Challenges of Developing Microgrids in the Philippines
Key Challenge: CHOICE OF TECHNOLOGY AND SYSTEM DESIGN
OPTIMIZATION

• Slowly gaining expertise in running initial

simulations to determine optimal system
Optimization
size and architecture (lowest LCOE & NPV) Software
• Lack of tools and knowledge in conducting
detailed engineering to ensure stable
Microgrid operation with high RE
penetration
• Frequency control
• Right sizing of BESS energy capacity and
power rating (power to energy ratio) and
appropriate technology (li-ion vs. redox
flow vs. lead-acid)
• Optimal diesel operation considering
efficiency, reliability, and asset life

• Identification of appropriate technical

specifications considering the prevailing
environmental conditions such as high
ambient temperature, humidity etc.
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Key Challenges of Developing Microgrids in the Philippines

Key Challenge: SCALABILITY

• Initial electrification initiatives usually do not

achieve 100% electricity access
• However, most of the systems are not scalable and
normally implemented through various
independent grids
• Initial system voltage is 230V single-phase
• Only tree branches or bamboo stems are used for holding
the lines No provision for MV
• If poles are installed, they are usually not sized to support distribution system
primary line devices such as distribution transformers,
insulators, and alley arms.

• Forecasting methods specifically for island

microgrids must be established. Demand increases
significantly shortly after system commissioning.
• Interoperability of systems (protocols, BMS)
• Proper master planning (ultimate scheme) must be
established Need to replace with poles
that can carry primary lines
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Key Challenges of Developing Microgrids in the Philippines

Key Challenge: SUSTAINABILITY

• In the Philippines, most of the

existing off grid electrification
which are not under SPUG and
QTP schemes, are not
sustainable.

• Generation systems, such as Defective diesel generator in Cagbalete Island

diesel generators or small solar after only 4 years (~5,000 hrs) of operation
home systems, usually fail after a
few years of operation due to
poor product quality or lack of
maintenance.

• Hence, after an area has been

electrified, the same effort is
needed to re-electrify them again
due to rapid deterioration of
facilities. Solar panels installed in a house in Isla Verde now
mounted on the roof using ropes only
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Key Challenges of Developing Microgrids in the Philippines
Cagbalete Microgrid Project - Progress

SUSTAINABILITY?
• Service Commitment
• Good Maintenance Plan
• Competent Service Provider
• Remote Monitoring and Supervision
• Quality Products
• Community Partnership-Load
Management

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Key Challenges of Developing Microgrids in the Philippines

Summary

• Microgrids are relatively new to the Philippines. Gaining of technical

expertise and experience has just started. Economies of scale,
particularly for battery storage, must be achieved in order to bring
down the overall cost.

• Benchmarking with other Microgrid developers from other countries

will help increase know-how. Engaging with technology partners are
likewise important and beneficial.

• A lot of learning based on actual experiences will happen in the next

few years as Microgrid deployment advances.

• The Government is a critical role player in expanding Microgrid

implementations specifically in setting appropriate regulatory policies
and building the necessary infrastructures.

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 STRICTLY CONFIDENTIAL: FOR INTERNAL USE ONLY

End of Presentation
16 November 2018