Background and Rationale
The establishment of SPI’s Mindanao Power Plant was in response to the power crisis that hit Mindanao in the early 1990s. It was identified as an important component of the Philippine’s Power Development Program. According to the Philippines Department of Energy, Mindanao needs an additional capacity of at least 850 MW for the period 2006-2014. Prior to the commissioning of the project, the Mindanao electricity grid was characterized by an installed capacity of approximately 1,700 MW only, of which almost 1,000 MW was hydro, about 100 MW was geothermal, and the balance was oil/diesel fired.
The high demand growth and a large proportion of generation being hydro based, resulted in power deficits especially during dry years. As a result of this there was a clear imperative to put up cost effective thermal power plants operated at a lower fuel cost than the oil/diesel plants and with more reliability than hydropower.
The Mindanao Power Plant Project has fulfilled this objective. With its timely operation beginning 15 November 2006, the Mindanao Power Plant helped stabilize supply of electricity in Mindanao. Furthermore, the systems reserve margin increased from a critical level of 13% prior to start of operation to 24% after start of operation. The required systems reserve margin for Mindanao at that time was 21%.
SPI’s power plant is considered as the most modern in Mindanao. After three (3) years of construction, the power plant began supplying Mindanao’s electricity needs in November 2006 just in time when the island was bracing for a looming power shortage. It is located within a 55-hectare lot at the PHIVIDEC Industrial Estate in Misamis Oriental. The plant was constructed through the Build-Operate-Transfer (BOT) scheme with a 25-year cooperation period with the National Power Corporation (NPC).
For the period 2007-2011, the power plant accounts for about 20% of the island’s total electricity supply and has thus far contributed stability and supply reliability necessary to sustain Mindanao’s economic growth and development.