Different Factors Affecting Energy Costs in the Philippines

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It may come as a surprise that the Philippines is one of the most energy consuming countries in the world. One factor is that we are located in a tropical location where the sun hits directly at those countries. The use of electrical fans and air conditioners are widely consumed in order to ease the heat. 

No doubt electricity must be generated and delivered through equipment that operates on fuel and requires building and maintenance costs. When the prices of these things increase or decrease, so does your electricity bill. In actuality, prices change every minute depending on the demand of energy but as customers, we are charged based on seasonal demand.

These are the factors affecting the energy cost in the Philippines that determines the price of electricity:

  • Cost of Fuels

Fuels and electricity go hand in hand in terms demand and supply. For electricity, it has to be generated and delivered and in order to process it is to be supplied by fuels. Whenever the fuel prices vary, it affects the cost of electricity in return.

  • Power Plant Costs

The use of power plants has to be built and maintained. With the impact of electricity, it needs to operate to supply the needs in our household. These will affect the prices in energy consumption.

  • Transmission and Distribution System Costs

Just like power plants, distribution and delivery systems also need to be built and maintained. This added consumption to the use of electricity that will take effect in price demand.

  • Weather

Electricity costs when inclement weather happens. Rain can provide cheaper hydropower generation while wind keeps turbines spinning. Worst case scenario will approach when extreme weather happens. This means the demand for electricity increases and makes it more expensive.

  • Regulations

Regulations vary per location. Some service or utility commissions controlling costs and others implementing both unregulated and regulated prices.

  • Seasons

Seasons affect us greatly during the summer where the demand of electricity is high. When more people need more power, the need to efficiently generate and deliver electricity increases, along with the cost.

  • Location

From the factors mentioned, no doubt that it comes no surprise that location greatly affects electricity demand. Factors like power plant availability, local fuel costs, and regulations all impact the cost of electricity depends on where you live. 

  • Type of Consumer

Customers who live in industrial type of home usually pay less per kilowatt hour (kWh) than those who live in commercial and residential. This is because they can be supplied a larger amount of electricity at one time, making delivery and generation quicker and cheaper. However, getting power to consumers who use smaller amounts takes more effort, time, and money. Think of it as buying in bulk for wholesale pricing versus getting a little at a time.

Energy consumption is very much important in our everyday activities. From a simple need of electricity to our appliances to providing large amount of energy that can light up a town, all can be done with proper usage but with the right demand. With the help of the Envision Monitoring System, you get access to an intelligent system with real-time and historical energy data for your needs that is both easy-to-use and accessible. Learn more by visiting our website at envision-monitoring.com/.

The Effect of Coronavirus (COVID-19) on Energy Consumption

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Due to the outbreak of the coronavirus (COVID-19), energy demand in the market is affected worldwide. In China, as energy consumption is correlated to economic performance, the economy is hit by the viral outbreak as well. Less oil and natural gas are imported and consumed, fewer planes are being used, and fewer factories are operational.

It is expected that the global oil demand will fall through and drop by 4%, with the yearly demand for oil to fall by 435,000 barrels per day during the first quarter of 2020. The demand for China’s liquefied natural gas is also down, and despite being the largest importer of liquefied natural gas, China suspended contracts with at least three of their suppliers because of the coronavirus.

China’s demand is important as the world’s second-largest economy, as it can determine the international oil and gas prices. With this, analysts are projecting an abundant supply of both oil and natural gas with future prices for natural gas already down by 30% in the past year which can mean more money for household savings.

As for electricity demand, a forecaster expects China’s industrial electricity demand to decline by as much as 73 billion kilowatt-hours, factoring in the lull in factory output caused by the outbreak. Even if the decline is only amounting to 1.5% of total industrial power consumption in China, it is equivalent to the power used by a smaller country like Chile.

Many other factors contribute to the lowering electricity demand in China and they include: for-year low of daily usage of coal-fired power stations, low level of oil refinery rates in Shandong province, the lowest level output of key steel products, drop in domestic flights by up to 70%, and drop in car sales by 92% in the first two weeks of February.

All in all, the measures to combat and contain the coronavirus outbreak cost China 15-40% of their output across many important industrial sectors, which also cut the carbon dioxide emissions of the country. Because economies have been linked to a wider global economy, a loss of output in a big country like China has effects in other parts of the world as well. While the drop in international prices for fuel aids customers in the short term, it hurts the producers and projections in the long term. As the situation of other countries varies with regards to the coronavirus, connections, and disruptions in the global economy can still be felt domestically one way or another.

Because the virus is still running its course and has yet to be completely contained, it is hard to tell when the economy can recover and be back to the way it is before. The impact to the energy economy is significant as energy use if usually one of the fastest indicators of economic performance as they as so closely tied to one another. At times like this, it is clear to see how closely interconnected energy consumption and economy are.


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