Sustainability & CSR
Cable to the Philippines? Dream vs reality
Initially panned as too expensive and impractical, installing an electric transmission cable from the Philippines to Taiwan is technically and economically feasible. However, there are regulatory and geopolitical factors that must be considered.
By Bart Linssen with contributions from Raoul Kubitschek
The proposal for an electric transmission system between Taiwan and the Philippines arises from Taiwan's pressing need to secure renewable energy sources amid growing domestic demand, particularly from its semiconductor industry. As Taiwan faces challenges such as land constraints and policy uncertainties that hinder local renewable energy development, JW Kuo, Minister of Taiwan’s Ministry of Economic Affairs, suggested establishing power plants in the Philippines to generate green energy, which could be transmitted back to Taiwan via undersea cables. This initiative aims to alleviate Taiwan's energy shortfall and support its net zero goals, although it requires a thorough feasibility assessment due to significant technical, financial, and policy hurdles associated with such cross-border energy imports.
Technical feasibility
The technology to connect electric grids over long distances has existed for some time. Following the minister's proposal, scepticism arose regarding costs and cable losses, which were deemed unsustainably high. These estimates were based on AC cable technology which has losses of 6-10% per 1,000 km. However, High Voltage Direct Current (HVDC) cables have much lower losses, around 3% per 1,000 km.
HVDC transmission technology is a method of transmitting electricity over long distances using direct current (DC) instead of the more common alternating current (AC). HVDC technology allows for the connection of different power grids that may not be synchronized, enabling the transfer of electricity between regions operating at different frequencies. The system typically involves converting AC power generated at power plants into DC using rectifiers at one end, transmitting it through overhead lines or cables, and then converting it back to AC with inverters at the receiving end for distribution to consumers. This technology is especially beneficial for integrating renewable energy sources, such as wind and solar, into the power grid, making it a crucial component of modern energy infrastructure. There are many global examples of cable connections over distances similar to the proposed 250-350km cable between Taiwan and the Philippines.
Cable Link |
Voltage (kV) |
Length (km) |
Capacity (MW) |
Year of operation |
Type |
North Sea link |
515 |
720 |
1400 |
2021 |
HVDC |
Nordlink |
500 |
623 |
1400 |
2021 |
HVDC |
NorNed |
450 |
580 |
700 |
2012 |
HVDC |
Bordbalt |
300 |
400 |
600 |
2016 |
HVDC |
Shetland |
600 |
260 |
600 |
2018 |
HVDC |
Western |
600 |
422 |
2200 |
2017 |
HVDC |
Maritime link |
200 |
170 |
500 |
2017 |
HVDC |
Nemo link |
400 |
140 |
1000 |
2019 |
HVDC |
Neptune cable |
500 |
104.6 |
660 |
2007 |
HVDC |
Japan has several notable HVDC connections, primarily aimed at enhancing interconnectivity between the islands. These include the HVDC Hokkaido-Honshu Link, an HVDC line that connects Hokkaido and Honshu. It has a total length of 193 km (120 miles), consisting of a 149 km (93 miles) overhead line and a 44 km (27 miles) submarine cable. It was commissioned in 1979 and has a power rating of 300 MW. The Hokuto-Imabetsu HVDC Link connection started operations in March 2019 and spans approximately 24 km, and the Shin-Shinano Frequency Converter Expansion connects the east-west grids operating at different frequencies (50 Hz and 60 Hz). The total interconnection capacity has been increased by 900 MW.
Cost
The additional cost per kilowatt-hour (kWh) for electricity transported through a subsea HVDC cable over several hundred kilometres can vary based on several factors, including the distance, cable technology, and infrastructure costs. Generally, the power loss during transmission is estimated to be around 3% per 1,000 km. For a typical subsea HVDC connection, this loss translates into an estimated cost increase of approximately NT$0.15 per kWh due to energy losses per 1,000 km. Furthermore, the capital expenditure (CAPEX) associated with installing these cables can significantly impact the overall cost structure, potentially adding another NT$0.1-0.3 per kWh per 1,000 km depending on the specific project parameters and installation costs.
In total, stakeholders should anticipate that the additional cost per kWh for electricity transmitted via a 350km subsea HVDC cables through the Luzon Strait at around NT$0.1 per kWh considering both transmission losses and infrastructure investments. This cost will be influenced by the actual length of the cable, the technology used, and any operational expenses incurred throughout the cable's lifecycle. As such, careful feasibility assessments are essential to ensure that these costs remain manageable for end-users, particularly in energy-intensive industries such as semiconductor manufacturing in Taiwan.
We assume that the connection is meant to be connected to Philippines’ grid and that onshore wind capacity in the Philippines will become available for purchase by Taiwan customers. Early reports after the minister’s announcement indicated a cost per kWh of NT$8 or more, an amount that offtakes would not be willing to pay. However, this is an exaggerated estimate when considering that with onshore wind or hydropower, energy production costs would be less than NT$2 per kWh. Add to that NT$0.1 in transmission costs, and you have competitively priced energy to sell in a market that is now used to paying up to NT$5-6 per kWh for renewable energy.
The best wind conditions in the Philippines are in the north, at the point closest to Taiwan, with windspeeds comparable to those in the Taiwan Strait and a location that will facilitate easy grid connection to the HVDC line.
As of early 2024, the energy mix for electricity generation in the Philippines was primarily dominated by fossil fuels, with the following breakdown:
- Coal: Approximately 57.2% of the total electricity generation.
- Natural Gas: Around 20%.
- Renewable energy: Contributes about 22%, which includes hydropower, geothermal and of which only 2.5% was contributed by solar and wind.
The Philippines government aims to shift this mix significantly, targeting a 35% share of renewable energy by 2030, and ultimately reaching 50% by 2040.
Figure 1: Wind conditions Philippines - source Wikipedia
Challenges
Installing an HVDC transmission cable between Taiwan and the Philippines to import onshore wind energy presents several risks and concerns. One significant challenge is the technical complexity associated with constructing and maintaining an undersea HVDC cable, which requires advanced technology and expertise. The harsh marine environment can lead to potential damage from natural events such as typhoons or earthquakes, which are common in the region. In addition, the installation process itself can be costly and time-consuming, potentially leading to delays and budget overruns.
Another major concern is the regulatory and geopolitical landscape. Navigating the legal frameworks and securing permits in both Taiwan and the Philippines can be complicated, particularly given the differing energy policies and regulations in each country. There are also risks related to financing, as large infrastructure projects often depend on stable economic conditions and investor confidence. Fluctuations in currency exchange rates could impact project costs, especially if significant foreign investment is involved. Moreover, ensuring a reliable power purchase agreement (PPA) that protects against curtailment or changes in law is crucial for attracting investment. These factors collectively pose challenges that need careful consideration to ensure the successful implementation of an HVDC connection for wind energy importation.
In addition, several factors have hindered the development of onshore wind farms. One significant challenge is the high upfront costs associated with setting up wind turbine infrastructure, which can deter potential investors. Add to this the fact that bureaucratic hurdles and unclear permitting processes can delay project approvals. Reports indicate that overlapping requirements from various government agencies complicate the development timeline, leading to frustration among developers and potential investors.
Furthermore, the current state of the Philippine energy grid poses challenges for integrating new wind capacity. The grid requires modernization to accommodate additional renewable energy sources, which necessitates further investment in infrastructure. The dominance of a single utility company, Meralco, in the energy market also raises concerns about whether they will support the necessary investments for renewable capacity.
A major obstacle may be political, however. The grid in the Philippines is 40% owned by China’s state Grid Corporation, and there are no bilateral relations between the Philippines and Taiwan. Recent acts of sabotage around Taiwan and Europe, where ships have dragged their anchors across the seabed, also highlight the vulnerability of these underwater cable connections.
Conclusion
In conclusion, while importing onshore wind energy from the Philippines to Taiwan via an HVDC cable presents a potential, cost effective, solution to Taiwan’s renewable energy needs, a thorough feasibility assessment is crucial. The technology for HVDC transmission is well established, with successful examples worldwide, and could offer competitive energy prices for Taiwan. The Philippines has strong wind conditions, particularly in the north, which would facilitate connection to the HVDC line. However, several challenges need to be addressed. High upfront costs, bureaucratic hurdles and grid limitations hinder onshore wind development in the Philippines. The technical complexity, potential for natural disasters, and geopolitical considerations add further risks to the project. Careful planning and collaboration between Taiwan and the Philippines would be necessary to mitigate these challenges and ensure the successful implementation and long-term sustainability of the project.
Bart Linssen is the Director of Renewable Energy at RCI Engineering
Raoul Kubitschek has worked in Taiwan’s renewable energy sector since 2008 and is currently the Taiwan Country Manager for NIRAS. He is concurrently Co-Chair of the ECCT’s Energy and Environment committee.