TADI NEWS FEED
With the Department of Energy’s warning that an impending power shortage will befall the Luzon grid next year, the World Wide Fund for Nature (WWF) reiterates its call for the Philippine government to pursue more actively mainstream renewable energy (RE) solutions to meet the growing demand for electricity. Especially if we aim for enhanced national competitiveness through increased control over the supply and cost of power, RE must be integrated as the primary solution to the power development plan of the Philippines.
The conventional solution would be to inject more bunker or diesel power plants into the mix to meet demand. However, the average cost of power generated by such power plants starts at Php12 / kWh, making the cost of this electricity extremely expensive.
Peak demand periods for highly industrialized grids such as the Luzon grid, usually cover the period from 10AM to 2AM, when demand for electricity is at its highest. The optimal operating hours for certain RE options like solar correspond precisely with these periods of high demand. Relatively speaking, the installation of solar arrays takes much less time than large fossil-fuel dependent systems. They can certainly help augment power during intermediate and peak demand periods. Incidentally, this period is also called the ‘sunshine period’ for solar energy, when solar panels absorb and generate the most energy.
Other indigenous RE options like hydro and biomass can be used to complement existing base-load and intermediate power plants. This will help promote energy security, because the Philippines’ primary source of electricity is fossil-fuel, which the country has very little of. Over 70% of the electricity generated in the country comes from fossil-fuels, with 90% of fossil-fuels imported at varying prices from other nations.
“Our imbalanced reliance on foreign fossil-fuels makes doing business in the Philippines very risky. The cost and pace of national development is at the mercy of foreign interests. Energy security is going to be very important for the future of our country. Fossil-fuels are a finite and dwindling resource. Their emissions also exacerbate climate change, a needless aggravation. Do we really want to compete with larger countries like China and India for fossil-fuel resources on the world market? No, especially when we have abundant and readily available RE sources whose costs will remain stable, and well within our control,” says WWF-Philippines Vice-chair and CEO Jose Ma. Lorenzo Tan.
Renewable energy can provide a stable source of electricity at a constant price for years to come, especially with the implementation of the government’s Feed-in Tariff (FiT) system. Under this system, RE projects are guaranteed a rate for the electricity they produce per kWh that will be held constant for the next 20 years, with the Energy Regulatory Commission doing periodic reviews to adjust the rate for foreign exchange and inflation. In contrast, not a single fossil-fuel dependent power project is ready to hold their prices for 10 years, not to mention that the cost of bunker and diesel-fired plants are even higher than solar and wind power FiT rates.
This means that the price for electricity from RE can only ever go down – and will never increase. Add the fact that some RE plants can be directly embedded onto certain key areas, or economic zones, which will further reduce the cost of electricity because it will eliminate the need for transmission and possibly even distribution lines to deliver electricity from power plants to households. RE has also been given a 0% VAT rate unlike fossil-fuels, where VAT is applied to add to existing cost. In contrast, the International Energy Agency forecasts a steady increase in the cost of coal and other fossil-fuels over the next decade. This will increase the cost of living, plus the cost of doing business.
“If we are to address a power crisis within the timeframe of less than a year, then RE must really be viewed as the primary long-term solution. Solar and wind energy are the fastest power plants that can be deployed to meet this specific type of electricity demand. They offer a quick solution that can still be viewed as long term. In fact, solar power plants can take just six months to be constructed and go on-stream. These types of power plants will produce electricity at a constant rate that the Philippines can trust shall not fluctuate, unlike fossil-fuels which are affected by foreign exchange. In most cases, the cost of fossil-fuels is directly passed onto the consumer,” adds WWF-Philippines Climate Change and Energy Programme Director Atty. Angela Ibay.
Based on the provisions of the RE Law of 2008, RE plants will only receive payment for actual electricity generated. This will eliminate the costly provisions of the past take-or-pay contracts that add stranded costs to the consumer’s electricity bill, regardless of whether that electricity was used or not.
The Philippines can actually learn from its own past experiences in RE to prove that it is the best solution to the country’s power needs. The Philippines invested heavily in hydro and geothermal energy in the 1970s and today, these produce 13.67% and 14.4% of our electricity, respectively. Many RE systems can be installed quickly. They produce electricity at a stable rate. They are de-coupled from foreign supply. They are also insulated from price increases dictated by international markets.
WWF is currently working with the DOE to conduct bottom-up, localized energy planning for the different provinces of the Philippines, starting with Palawan, as part of its Seize Your Power campaign. The experience has so far shown that optimal integration of RE into the power mix of a grid simply requires proper planning so that the variable nature of RE sources is well accounted for.
“We need to stop focusing on RE as simply a generation issue. It is actually a system operation issue. If the sun doesn’t shine or the wind doesn’t blow, you can plan ahead and take that into account. We know more or less when that happens based on proper RE feasibility studies, and this is when you might run other technologies to compensate. When the sun shines or the wind blows, there is no need for diesel energy. Thus, we end up saving a lot of money. We shouldn’t be limited by such constraints. A proper energy plan just needs to be in place,” says WWF-Philippines Climate Change and Energy Programme Communicator Christopher Ng, who is working on the Seize Your Power campaign in Palawan.
If emergency powers are granted to address the power crisis, RE must be seen as part of the solution. Adding RE to the grid under a proper, comprehensive long-term energy plan based on sound energy demand forecasting by the DOE must be the primary driver for the long-term energy security of the Philippines. Concludes Secretary Petilla, “In the long-term, we hope to develop systems in order for RE to compete toe-to-toe with traditional energy resources and eventually lower the cost of electricity.”