Technological Institute of the Philippines

College of Engineering and Architecture

1338 Arlegui Street, Quiapo, Manila

In Partial Fulfillment of the Requirements for the Subject

Power System Reliability

EE-E1/EE51FA1 – 2nd Sem

Philippines Power Economy

Effects Of Energy Demand During Covid-19 Pandemic

Submitted to:

Engr. Jayson Cordero

Submitted by:

Mr. Jason Jasper Malutao

8 JUNE 2020
 Introduction

Following the outbreak of coronavirus disease 2019 (COVID-19) which started in Wuhan,
Hubei, China, the Philippine government confirmed the country's first case of the disease on
January 30, 2020, when the virus was detected in a Chinese national who traveled from Wuhan,
China and Hong Kong. On March 16, 2020, the government of the Philippines under President
Rodrigo Duterte imposed an enhanced community quarantine (ECQ) in Luzon (including its
associated islands), which is effectively a total lockdown, restricting the movement of the
population except for necessity, work, and health circumstances, in response to the growing
pandemic of coronavirus disease 2019 (COVID-19) in the country. Additional lockdown
restrictions mandated the temporary closure of non-essential shops and businesses. The ECQ came
in after two days of the implementation of the community quarantine in Metro Manila. The ECQ
caused the mobilization of Philippine government agencies and local government units as well as
the passing of Republic Act No. 11469 or the "Bayanihan to Heal as One Act" in order to resolve
the COVID-19 pandemic in the Philippines. The economic, environmental, political, social and
cultural impact of the lockdown affects around 57 million people under quarantine.

The Covid-19 pandemic is causing far-reaching economic hardship for consumers,

businesses and communities all over the world. As governments enforce social distancing and
lockdowns to impede the spread of the virus, uninterrupted power supply is crucial to keep people
connected at home and to run life-saving equipment in hospitals. Thankfully, no power outage
occurred during the monthlong implementation of the Luzon-wide enhanced community
quarantine (ECQ). Thanks to the utility companies that continuously keep us connected to the
outside world, enabling employees to work from home, and helping students to continue learning
even though schools are closed. At the initiative of the Duterte administration, around 3 million
poor consumers of electric cooperatives nationwide will have free electricity for two months.
 Impact of Covid-19 Pandemic on Philippine Power Economy

The Philippine government announced the entire country will be placed under a state of
calamity for a period of six months. The power industry is among the sectors affected and has
already felt the impact of Covid-19. The outbreak has contributed to a dampened demand for
electricity, resulting in plummeting prices. In a January assessment of the 2020 supply situation,
the Independent Electricity Market Operator of the Philippines Inc. (IEMOP), the operator of the
Wholesale Electricity Spot Market (WESM), warned that electricity market prices would increase
in 2020 after doing so dramatically in 2019 due to tight supplies. Another concern is the impact
of the reduced demand on utility companies’ cash flows and the spillover effect this has on the
energy sector.

Construction of new energy facilities and infrastructure delayed or stopped

Many companies across different sectors globally have ceased or decreased capital
expenditures where possible, and the energy sector is no exception. Covid-19 is having an
especially negative impact on the renewables sector. One of the main problems relates to the
delayed production and deliveries of equipment. Renewable energy companies are not able to
comply with deadlines for equipment installation due to lockdown.

Default of payment
Customers have been advised by energy regulators and governments to delay the payment
of utility bills. Defaults on payments cause cascade effect and impact the whole sector. Although
there is widespread tolerance of non-payment by end-users, policymakers did not explicitly define
if leniency towards non-payment would be applied further along the supply chain. So far, none of
the Contracting Parties of the Energy Community have explicitly defined who will bear the costs
of financing this debt.

Response of policymakers, regulators, and market participants

Countries around the world are taking steps to support the energy sector and to mitigate
the negative effects of the crisis. There are myriad challenges that policy makers, regulators, TSOs
and DSOs need to address to ensure energy security.
 Energy Industry in the “New Normal”

For companies in all parts of the energy, utilities and resources sectors, it will be vital to
combine effective scenario-planning with an examination of how different developments could
affect their business in the short, medium and long term.

Companies will therefore need to build a high degree of flexibility and continued
resiliency into their short- and medium-term strategising. They will need to be ready to adjust
operations up and down and not assume that recovery will be a continuous and linear process.
Consideration should be given to which aspects of the strict separation, hygiene, control and
business resilience measures adopted at the height of the crisis need to be maintained and
stepped up or down as needed.

Security of supply, a familiar theme in the energy and resources sector, has much wider
relevance in a world living with COVID-19. As the crisis unfolded, companies had to move
quickly to secure supply chains and manage component inventory. As the outbreak begins to be
contained and economic activity revives, many will be re-evaluating their supply chain
resilience.

As a minimum, companies should use their pandemic experience to inform wide-ranging

reviews of their business continuity and crisis management strategies. Some companies will
need to go further and implement structural measures to reduce risk. In the oil and gas sector, for
example, high cost producers that have been left exposed by the collapse in the oil price may
need to turn to collaborative partnerships or consolidation as way of bringing costs down.
 Summary and Conclusion

COVID-19 has reminded the world of its vulnerability and heightened the awareness of
the public and wider society to global risks. This in turn could have an impact on discussions
about other threats such as climate change. Across the board, companies will want to examine
their approach to risk with a fresh eye and consider what measures are needed to derisk their
business models. Keeping the power flowing and the lights on during the coronavirus crisis is
the number one challenge for power and utility companies. Pandemic protection measures have
reduced workforce availability and necessitated strict hygiene and separation protocols to
maintain operations. Reduced demand has brought its own technical challenges with system
operators needing to manage voltage and consider the implications for forecast algorithms as
well as managing reactive levels to avoid dangers such as reactive shunts at distribution levels.

As the crisis evolves, power utility companies need to ensure they have plan-ahead
strategies in place to examine various scenarios that might unfold in different timeframes so that
the organisation is ready for fast decision-making. Business continuity and preparedness plans
will need continual review to ensure that operations and infrastructure are properly supported.
More than ever, it will be important to work closely with governments and regulators to consider
the implications for energy affordability, sustainability and security of supply.

On a wider level, policy-makers and the public will reflect on the impact of lockdowns
on reduced traffic, pollution and CO2 emissions. In many regions, they will have seen how
renewable sources of electricity were able to supply 100 percent of demand. In others, it might
be clear that the economics of individual power plants may no longer be viable. Will these
experiences give added momentum to moves to deliver energy transformation? Or might a
global recession push climate change and sustainability down the list of concerns?