Wood-fired power plants in the Philippines: Financial and economic assessment of wood-supply strategies

Abstract

To help reduce its dependence on imported oil, the Philippines is constructing over 60 wood-fired electricity generating plants. Nine power plants are now operational, but financial difficulties are hindering the development of wood-supply networks. This study found that financial and economic costs of the current strategy promoting the development of captive wood supplies exceed the costs of open-market wood at a majority of the project sites. Plantation establishment and wood transport are the most costly activities associated with producing captive wood. Sensitivity analysis indicates that the total unit costs of captive wood are most responsive to changes in plantation yields. Future changes in the costs of labor (within a reasonable range) would have little impact on wood costs. Although many open-market suppliers can provide wood at a cost lower than that produced under the current approach, any policy shift favoring open-market wood procurement must include provisions to guard against adverse environmental effects.