I.

OWNERSHIP OF DMCI IN THE POWER INDUSTRY

(13 % Share based on # of Powerplants in Luzon)

II. KEY MACROECONOMIC FACTORS

A. PHILIPPINE GROSS DOMESTIC PRODUCT

The Philippine GDP grew by an annual average of 6.3 per cent during the Aquino
administration (2010-2016). The Duterte administration (2016-2022) is projecting growth rates in
the range of 6 per cent-8 per cent/year. Economic growth and the growth in electricity services
are mutually supportive. Economic growth creates demand for more electricity, while higher
electricity use propels more economic growth.

Electricity has already become the most common source of energy for Philippine
households, according to the 2011 Household Energy Consumption Survey (HECS). About 87 per
cent of the country’s 21 million households used electricity from March to August 2011. The other
sources included fuel wood, charcoal, liquid petroleum gas and kerosene, with at least one-third
of the total households using one or more of these types of fuel in 2011.

In 2011, electricity was the most common source of power. Electricity was used for
lighting by 74 per cent of households, while kerosene was used by 30 per cent of households.

Higher household incomes lead to higher electricity consumption for two reasons: (1) the
households can afford to buy more electrical appliances (refrigerator, electric stove, rice cooker,
water heater, washing machine, etc.) to substitute for non-electrical ones, and (2) they can afford
to pay for more kilowatt-hours per appliance. The expected growth in the electric vehicle market
will be another huge driver of demand for electricity.
 B. POPULATION
To any country, it is widely evident that the population of a given nation would widely
affect the amount of energy demand. As more individual are added, more people would consume
more energy.

In the past years the Philippines’ population has shown tremendous growth and such
growth comes with it an increase in households, condominiums and other residential housing.
The result would therefore hold that more and more power would be needed to supply such
increase in housing. The following below shows the increase in population with the increase in
electrification of households in the Philippines

III. TRENDS IN MACROECONOMIC FACTORS

A. PHILIPPINE GROSS DOMESTIC PRODUCT:

The World Bank expects the Philippines to sustain robust economic growth in the next three years
even as public investments are seen slowing down. The World Bank projected the Philippines’
gross domestic product (GDP) to grow 6.7 percent in 2018 and 2019, before growing at a slightly
slower rate of 6.5 percent in 2020.
However, ESCAP flagged several risks facing the region, such as “growing financial vulnerability
and rising private and corporate debt, particularly in China and countries in South-East Asia, falling
or low reserves in a few South Asian economies and uncertainty concerning trends in commodity
prices.” Our policy simulation for 18 countries suggests that a $10 rise in the price of oil per barrel
would dampen GDP growth by 0.14 — 0.4 percentage points, widen external current account
deficits by 0.5 -1.0 percentage points and build inflationary pressures in oil-importing economies.
Oil exporters, however, would see a positive impact

B. POPULATION
From only four in 2010, the number of Philippine cities projected to have population of
more than one million is expected to nearly double by 2020 and nearly triple by 2025, a new
report by global property platform Lamudi showed.

Lamudi Philippines said the population in seven cities in the country are expected to
breach the one million mark by 2020, while of 11 cities are seen housing a population of over one
million by 2025. Lamudi Philippines said Manila, for instance, would be overtaken by Caloocan
and Davao by 2020.

“These two cities’ populations are growing rapidly and are predicted to surge to 1.88 and
1.83 million, respectively, while Manila’s is predicted to increase to 1.72 million. According to the
data from the PSA, these three cities’ populations grow on average 2.37, 2.36, and 0.44 percent
per year, respectively,” the property portal said.

Aside from Quezon, Manila, Caloocan and Davao which already had over a million
residents each as of 2010, cities like Zamboanga, Cebu and Antipolo are seen joining that list by
2020.

By 2025, the cities of Dasmarinas, Taguig, Bacoor, and Pasig will bring the country’s total
number of cities which have a population of more than one million to 11.
 According to the report, it is safe to assume that the cities’ respective population growth
will behave the same way even though the 2010 annual growth rates are expected to change after
the results of the 2015 Population and Household Census are made available in early 2016.

Jacqueline van den Ende, managing director of Lamudi Philippines, said the findings of the
report revealed cities which are growing fast are those also popular with online property-hunters
or where massive real estate projects are currently underway.

IV. TECHNOLOGICAL DISRUPTIONS

1. BATTERY TECHNOLOGY
New developments in battery technology has Manila Electric Company (Meralco) worried
about its dominant position in the country and could drive it to introduce similar technology to
the country. Tesla’s recent launch of Powerwall, a cost-effective home battery that stores
electricity charged from solar panels or when utility rates are low, has Meralco particularly
worried. The American firm, famous for its electric vehicles, bills it as a game changer as it offers
consumers independence from the utility grid

Energy experts said these storage batteries are expected to solve a problem – reliably
storing energy from renewable sources – which the power industry has so far failed at.

When asked how these storage batteries can affect the way Meralco does business in the
country which, for now, relies heavily on grid power, Meralco's top official expressed concern.
“We were quite concerned about the Tesla announcement recently. The ability of solar panels to
be stored in batteries could disrupt traditional business model of Meralco,” said Meralco
Chairman Manuel V. Pangilinan. Meralco, he added, could also offer the same in the future.

HOW WILL IT DISRUPT THE INDUSTRY?

Batteries are being used alongside other emerging technologies in areas such as robotics
and renewable energy. Research is underway into how batteries can be used to store energy to
balance out the intermittent output of renewable energy plants. For example, BP has launched
its first battery storage project with Tesla at one of its wind farms in the US to look at how the
facility's energy can be stored and then used when not being produced.

2. BIG DATA TECHNOLOGY

During the summit, Meralco Senior Vice President Alfredo Panlilio emphasized how the
electric industry needs to embrace technology.

“Technology has always been a change driver but with that comes disruption. Traditional
businesses die out or are forced to change their model as new technology innovations re-shape
the way we do things and open up new possibilities,” he said.The electricity industry is no
exception, he added.

“A new wave of disruptive technologies is upon us. This includes distributed generation
and the emergence of internet technologies,”Panililio noted. Meralco officials present during the
summit said that the utility firm would develop its own algorithm for big data, with an end view
of being able to analyze its customers better. “We have to get into big data. There’s a lot of raw
information within Meralco itself. Raw data that can be gathered and processed and curated, to
be able to know better the consumers. All of us, when you use your cellphones, leave digital
footprint, that sometimes is called digital exhaust,” said Pangilinan.

3. OTHERS:
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-
cons-tech-trends-power-utilities..pdf

REFERENCE:

https://www.doe.gov.ph/electric-power/2016-philippine-power-situation-report

http://library.fes.de/pdf-files/bueros/philippinen/14215.pdf

https://www.doe.gov.ph/list-existing-power-plants

https://pdfs.semanticscholar.org/c438/f8ac3e20cd61098bbb3f25cc46305b6ceeb7.pdf

https://c.ymcdn.com/sites/psme.site-
ym.com/resource/resmgr/technical/REVIEW_ON_ENERGY/Dir_Aquino_PEP_2017-2040.pdf

https://www.rappler.com/business/industries/173-power-and-energy/97753-tesla-powerwall-
meralco-disruption-technology

https://www.bcg.com/publications/2017/energy-environment-how-batteries-and-solar-power-
are-disrupting-electricity-markets.aspx