Unfortunate But Not Hopeless

While other countries in the world are slowly shifting to cleaner forms of energy, the Philippines seems to be moving in the opposite direction.

The recent BMI Research of the Fitch Group noted that coal-fired power plants would dominate new energy infrastructure in the next 10 years. “Growth in the Philippines power infrastructure sector over the next 10 years will be driven by investment in coal-fired generating capacity as companies and the government build a slew of new power plants to support growing electricity demand,” according to the report.

Based on the group’s research, there is roughly 7,300 Megawatts (MW) capacity that is either under, approved or already for construction. Of these, 90 percent are coal-fired energy plants. Even the Visayas and Mindanao regions, which by the way have more renewable energy sources particularly, hydro and geothermal in their power mix, will be recipients of the future coal plants.

The report pointed out that the there is a price to pay for the country’s continued reliance on coal-fired plants.

One of the significant consequences is that the Philippines will have to keep fuel imports steady in the next five to 10 years when these power stations become operational.

“As the share of electricity generated from thermal — and especially coal — sources grows from 73% in 2017 to 77% in 2026, the Philippines will have to increase imports of fuels to feed newly built coal-fired power plants.”

There are various reasons why this report bothers me.

For one, we are lagging behind in our commitments to provide cleaner forms of energy given the amount that would be generated in the coming years from coal plants. While the rest of the world is moving away from coal, we are still stuck and depending heavily on this form of energy.

Again, I stress that I have no issues with coal plants per se, having built some of them during my time as Napocor chief. But the world and its needs have changed, and we need to get our energy from cleaner sources. Other countries are making drastic changes. China alone, the world’s biggest consumer of coal is shifting to RE by pouring some $361 billion worth of RE investments by 2020. Its government has also canceled roughly 150 coal projects from September last year to March this year.

Unfortunately, we are heading towards the opposite direction largely because our government regulations are not supportive of the growth of the RE sector. For one, we still have limited participation from foreign investors in the energy infrastructure, and as such, limited funds flow to build more RE plants.

Our regulatory environment is far from friendly for both consumers and RE producers, too.

For one, our regulators use an incorrect valuation for the beta by taking the value from the point of view of the generator than of the consumers for our floating Power Sales Agreements or PSAs. Unfortunately, our PSAs have pass through costs, which means power consumers pay end up paying for higher energy prices when the peso falls against the dollar and when coal and oil prices surge in the global market because of the value of the beta, which has a positive value.

As I have said previously, this is incorrect as the the consumers are the ones who are shouldering the cost of foreign exchange fluctuation as well as the fuel risks. Hence, the beta in our tariff setting should be a negative one to reflect the risks borne by consumers for both the foreign currency adjustments and world prices of oil and coal.

Plus, I have discussed in an old blog post, our regulators place an arbitrary value on the beta when it comes to cost recovery in our tariff setting. For example, a geothermal plant and coal-fired power plant will have the same beta value. This is faulty because the developer of a geothermal power plant takes more risks given the exploration cost than the coal-fired power plant developer. The incorrect application of the core concept of the capital asset portfolio model is detrimental to the development of renewables.

 

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Coal-fired plants must be a thing of the past. Renewable Energy is the future. 

 

Again, at the risk of sounding like a parrot, our energy planner belongs to the school of thought that coal-plants are cheaper the RE ones. These planners only look at the upfront cost of building power plants rather than scrutinize the risks that consumers shoulder when relying significantly on fossil fuels.

I have repeatedly pointed out that traditional sources of energy are not necessarily cheaper as we could end up paying more given our heavy dependence on imported coal. Even the above report of BMI stressed that we are importing 70 percent of our coal needs from neighbors. So, what happens when coal prices increase? What happens if importation becomes more expensive due to various factors? We have been in this situation before where our power rates have increased because getting coal abroad has become difficult.

Sadly, it is the Filipinos who are screwed with such flawed thinking as the ordinary Pinoy consumer pays for these upward price adjustments. We do, after all, have the pass-on provisions where customers pay for price fluctuation.

We have been suffering from high power rates for several decades now. And as I have been discussing in quite some posts, the key to solving high electricity prices is to one, have more renewable energy in our mix and second to have fixed-price contracts for our PSAs.

Our best bet to lower power prices is to have more RE in our energy mix. RE will be a cheaper alternative as many experts have stressed that the prices of RE technologies will continue to fall.

Regrettably, it seems unlikely that our country will shift to more cleaner form of energy soon. Understandably, moving to cleaner energy will not happen over night.

In the meantime, we must find ways to mitigate the consequences of relying heavily on coal-fired plants. I stand firm on my position that we need a greater share of renewables. But we must, at the very least, consider having fixed-priced contracts where we use a risk-free rate, the negative beta as I have mentioned above in the discount rate in computing for the tariff (reasons for this are in an in-depth discussion in my previous post.)

RE sources are in the best to position to give out these fixed-priced contracts, which do not pass-on the costs to consumers. These contracts will not burden consumers by making them pay for price fluctuation of coal importation costs since there are no import costs of raw materials in RE production.

Yes, we do need more infrastructure, particularly more power plants as our economy develops. But we must also pay attention to the welfare of ordinary Filipinos as we build for our future. Heavy reliance on coal-fired plants will be detrimental to our families as they shell out more money to pay their electric bills. I implore our energy planners to map out and scrutinize all options available as we try to meet our increasing demands for energy.

Reference:
http://beta.bworldonline.com/bmi-coal-remain-primary-power-source/

 

Empowering Small Islands

Ta'u Island

The island of Ta’u in American Samoa now running  on 100% on solar energy. Photo c/o wired.co.uk

It is indeed possible to shift from diesel dependence to renewable energy sources. Such is what happened to two islands in other regions.

The island of Ta’u in American Samoa recently made the headlines as the island was able to shift 100 percent from diesel to solar power. The Ta’u is a small island with somewhere between 200 to 600 residents depending on the season.

Last November, the island was able to go 100% renewable after Elon Musk-owned SolarCity finished the installation of some 5,328 solar panels that can generate 1.410 megawatts (MW) and 60 Tesla large batteries that can energize the island for three straight days without sunlight.

Similarly, news items also carried the accomplishment of Tilos, a small island in Greece, which is it set to become the first island in the Mediterranean to run on solar and wind energy.  Installation of a small photovoltaic park and a single wind turbine and micro-grid for generation and storage is on-going and is expected to change the lives of some 500 residents.

Currently, the island still relies on the oil-based electricity from its neighbor, Kos through the use of a submarine cable. Due to the vulnerability of the cable, power cuts in Tilos happen often.  Project proponents are hopeful that eventually, it will be Tilos that would be able to send some of its excess power to its neighbor Kos because of its shift to renewable.

These stories only prove that the shift to cleaner energy in small islands is indeed possible. There then is still hope for our off-grid islands to end their reliance on diesel and instead use renewable sources for their energy needs.

The Philippines, being an archipelagic country will benefit from looking at the above islands and working double time to power our off-grid islands with renewable sources.

A study by the Energy Economics and Financial Analysis (IEEFA) and Institute for Climate and Sustainable Cities (ICSC) has already discussed the economic benefits of using RE to supply the electricity needs in off-grid areas.

To quote the study, “Small island grids powered by solar, wind, and other renewable energy can reduce dependence on expensive imported fossil fuel generation without compromising the availability of power and grid reliability.”

Indeed, the benefits of using renewables, especially in these off-grid islands should not be ignored.

According to the report, “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids¬” the Philippines can save as much as P10 billion a year if renewables are used instead of diesel.  This is because 80 percent of the operating costs of power generation in these islands are spent on diesel costs. And as I have pointed out in several posts, reliance on fossil fuels is costly due to oil price spikes.

Research by Professor Shimon Awerbuch, a big advocate for portfolio theory revealed that the oil price spikes from years 2000 to 2004 cost the European Union some €700 billion given the region’s reliance then on oil-powered plants.

Unfortunately, our regulators have been slow in crafting policies that would pave the way for greater renewable energy use in these areas.

The study by the IEEFA and ICSC stressed that there are no incentives for island electric cooperatives to purchase cheaper energy sources given the present system where franchise ratepayers do not benefit from the cost savings as these go exclusively to the missionary fund. Both the Energy Regulatory Commission and National Electrification Administration yet have to change the tariff setting system to encourage electric coops in islands to increase their efficiency and lower their costs.

This is unfortunate. We, after all, have the resources to make the shift to renewable energy. In fact, our country can generate as much as 161.7 watts per square meter given that the Philippines is one of the sunniest countries. But we need to re-think and change our policies and regulations that hinder us from using these resources.

There is a pressing need to review our regulations to address the needs of our citizens in the islands. Hopefully, supportive policies and regulations will help us make better use of resources just like what the islands Ta’u and Tilos have done.

References:

http://news.nationalgeographic.com/2017/02/tau-american-samoa-solar-power-microgrid-tesla-solarcity/

https://www.theguardian.com/travel/2017/jun/15/tilos-greece-renewable-energy-wind-solar-power

Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids

“Green is Gold: How renewable energy can save us money and generate jobs”. Greenpeace for NREL figures

Faster Than Expected

Some experts are expecting that solar will eventually take over as the king of the energy mix. And it may come sooner than anticipated. Soon,  solar power, as well as renewable energy (RE), will dominate the power basket according to a Bloomberg New Finance outlook released last June.

The solar photo voltaic panels cost for one is expected to drop by 66 percent by the year 2040 while onshore wind power will dip by 47 percent after 2040.

The report noted that solar costs are now already just one-fourth of its prices in 2009 while onshore wind has seen a 30 percent decrease in the last eight years. Off shore wind prices are also expected to drop by 71 percent, making this RE technology more attractive.

Presently, solar costs are already comparable to new coal power plants in the United States and Germany. By 2021, the same will happen to emerging markets like India and China. By 2020s, both countries are expected to have lower power prices with the countries’ aggressive investments in solar energy. The BNEF report noted that close to 39 percent or some $4 trillion of RE investments of the world are to be poured in China and India.

“These tipping points are all happening earlier, and we just can’t deny that this technology is getting cheaper than we previously thought,” said Seb Henbest, the lead author of the BNEF research.

Due to the falling costs of the two technologies, the BNEF outlook stressed that in 2040, solar and wind power combined will account for close to half of the world’s installed generation capacity, more than four times the current 12 percent share.

Naturally, the greater share of these renewable sources will displace coal and natural gas plants. The estimate showed that roughly 369 gigawatts (GW) of coal plants projects would likely be canceled, an amount that’s equivalent to the combined generation capacity of Brazil and Germany.

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At present, solar costs are already comparable to new coal power plants in the U.S. and Germany

Even the United States where President Trump signed an executive order to “start a new era of production and job creation” especially in the coal sector, will see coal capacity drop by half in 2040.

Europe’s coal capacity is also expected to slide by 71 percent given the region’s environmental laws that will make fuel burning cost more.

The new king of the renewable mix is indeed coming.

Unfortunately, for us Filipinos, we still yet have to see a dramatic increase in the renewables’ share in our power mix. While India, has already embraced technology and the benefits that a nation can reap from harnessing its resources properly, our country has remained in the same position for years. In the last two years, the share of renewables— solar and wind combined– only accounts for one percent.

As I have been saying, our energy planners remain fixed in their incorrect thinking about how expensive RE is. While the rest of the world have been sensitive to the development of the RE sector, we still insist on having our ‘quick fixes.’ We favor the least cost in terms of capital outlay for power plants but refuse to look at the additional cost that consumers will shoulder for our heavy dependence on fossil fuels.

We only need to look at the devastating impact on energy prices from history to see the risks of relying heavily on either coal or oil plants. In the 1990s, the Gulf War, for example, brought roughly 30 percent increase in the average spot price for crude oil.  According to the average unit price of crude oil increase in the country was approximately 56.1 percent.

We don’t even have to go as far as the 1990s. Just last year, our Energy Department officials warned of a possible disaster with the news that Indonesia has extended its imposed moratorium on coal exports to the Philippines due to the kidnapping of several Indonesian sailors in the Sulu sea by the Abu Sayaff.  We, after all, get 70 percent of our coal or 15 million tons for 2015 from Indonesia. A few years before that, Indonesia also changed its rules about coal exports which led to an even higher cost of generating power from coal.

A necessary consequence to all these is this: coal and other similar fossil fuel-based technologies will increasingly have difficulties in getting financing. Not only because financial institutions will institute policies to avoid fossil fuel technologies, but if at all, banks will have to shorten the tenors it will give to coal plants. Because of the expected decline in costs of RE technologies, the competitiveness of coal plants will increasingly decline.  Therefore, banks will have to lend, if at all, at much shorter maturities.  With shorter maturities come higher annuities.  This will make financing coal plants extremely difficult and uncompetitive.

All these points to one thing: Let us be like other countries, like our Asian neighbors India and China that have embraced and capitalized on developments of the RE. And part of it is welcoming fixed contracts in our energy mix to take advantage of the falling prices of RE technologies and having the maximum levels allowed in our Renewable Portfolio Standard (RPS), where power players are required to either source or produce a specified percentage from RE

Given that our Power Sales Agreements (PSAs) are ‘floating’ where risks such as price escalations of fossil fuel and foreign exchange rates are passed on to consumers, we need to have our fixed priced contracts to at the very least soften the blow on the negative impact of the ‘pass-on costs.’ Fortunately, renewables are in a good position to hand out those much needed fixed contracts.

While the rest of the world are embracing the lower costs of RE generation, we are still stuck in the old ways of thinking that fossil fuels and fixed price contracts are the correct formulae to our power rates woes.  Let us see the economic sense in investing and helping renewable energy flourish in our rich country.

If we want to maximize our abundance of RE sources in the country, which as many have said is the key to lower energy prices, then we must consider those fixed priced contracts for RE. And if we want to truly embrace and benefit from the falling costs of RE technologies such as what the recent BNFF report has noted, then we must be quick in adopting my above proposals. Otherwise, we will be left wondering years from now how and why we failed to find a solution to what seems to be never ending high electricity prices in the country, when in fact, the answer had been quite obvious.

References:

https://www.bloomberg.com/news/articles/2017-06-15/solar-power-will-kill-coal-sooner-than-you-think

http://www.philstar.com/headlines/2016/06/27/1597092/philippine-power-supply-jeopardized-indonesian-ban

Oil Price Shocks and Devefoping Countries: A Case Study of the Gulf Crisis by Sarah Ahmad Khan

The Cost of Being Outdated

Numerous studies reveal the benefits of shifting to more renewable energy. These research papers debunk the myth that RE is more expensive and rather stresses that in the long-run, greener forms of energy may be cheaper if one is to consider many factors including cost of oil importation and effects on health and environment, to name a few.

One such study is the recently released “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids¬” by the Energy Economics and Financial Analysis (IEEFA) and Institute for Climate and Sustainable Cities (ICSC).

According to the report, the Philippines is likely to save more than P10 billion annually if we are to replace diesel-fired power plants with renewables in off-grid islands or areas that are not connected to the grid.

For these off-grid islands, energy is provided by the small power utilities group or SPUG under the National Power Corporation (NAPOCOR) or by Independent Power Producers (IPPs). According to the report, there are 310 SPUG and IPPs combined with a total dependable capacity of 267 MW with mini-grids that uses oil-powered plants. The cost of generating electricity in these islands are subsidized under the Universal Charge for Missionary Electrification (UCME) of NAPOCOR where fuel costs account for 75% of the NPC-SPUG cost of power generation.

The reliance on oil for energy needs comes at a significant cost as fuel account for 75% of the NPC-SPUG cost of power generation. The cost of generating electricity in these islands are subsidized under the Universal Charge for Missionary Electrification (UCME). The researchers point out that P60 billion are spent on subsidies even if these areas only generate 0.49% of the overall generated power in the country and 6% of the total energy demand.

With the falling costs of RE technologies, the study noted that great savings can be made A swift transition to RE for these off-grid islands is possible says the researchers, except the country’s policies and regulations, are outdated: “Barriers to small island grid uptake of modern renewable energy power include outdated regulations that have not kept up with technology.”

The researchers emphasized that the present system fails to provide incentives to buy cheaper sources of power, which unfortunately causes the slow the shift towards RE in these areas “This system tends to be biased against renewable generation because franchise managers would rather stick with diesel generation they are used to, even though more expensive.”

The authors recommend for the Energy Department to provide incentives to the SPUG to hybridize their power plants as well as for the National Electrification Administration (NEA) to order electricity cooperatives to be neutral in their purchase of energy. After all, the researchers concluded that “Small island grids powered by solar, wind, and other renewable energy can reduce dependence on expensive imported fossil fuel generation without compromising availability of power and grid reliability.”

In a previous post, I have tackled the problem of energy poverty as some 1.2 billion individuals are without electricity. Unfortunately, our country is suffering, too from the lack of access to power.  We are in fact being left behind in terms of electrification in the region.

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Photo c/o http://www.thai-german-cooperation.info

The Philippines is almost at the bottom of the list in South East Asia when we talk about national electrification rate which is at 79% while our neighbors such as Malaysia, Singapore, and Brunei have already achieved 100%. Thailand, Vietnam, Laos and Indonesia have impressive numbers at 99%, 97%, 87%, and 81%, respectively. We are at the bottom three along with Cambodia and Myanmar.

Indeed, there is a need to hasten in reviewing our policies to catch up with our needs especially since we are aiming for more inclusive growth.

The big picture is actually very simple: The Philippines should exploit and encourage the development of all renewable energy resources for the simple reason that: a) no need for fuel importation and thus saving foreign exchange; b) the Philippine economy will be shielded from wild swings in the global energy markets; and c) electricity prices will be stable over the long-term.

Clearly, falling prices of renewable energy aren’t enough for a major shift towards renewable energy. A problematic regulatory system must be addressed if we want cleaner and cheaper sources of energy.

The lack of foresight, willpower and competence can be a bane for the growth of any sector. And our power sector is one of those that stands to gain if only regulators competently enact changes needed to help our country develop.

References:

Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids

World Economic Outlook 2015 data base. International Energy Agency http://www.worldenergyoutlook.org/resources/energydevelopment

We Pay Higher With A Weaker Peso

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The Philippine Peso has been falling against the greenback in the last few weeks. Tagged by Bloomberg as Asia’s worst performing currency, our currency has lost 1.6 percent this year. Bloomberg also noted that the Philippine peso is also the worst performer among emerging markets, only next to the Argentina Peso.

Both forecasts by DBS Bank and Bloomberg also predict that the exchange rate would be P52 to a dollar by year-end, In fact, according to DBS Bank, the weak peso could continue until middle of next year.

The weakening of the peso is a result of various factors. Unfortunately, a shrinking peso against the dollar is detrimental to normal Filipinos if we are talking about their power rates. The falling peso could spell doom for many Filipinos, mainly because the lower peso would increase power prices.

As I have pointed out in previous posts, our Power Sales Agreements or PSAs have the provision for the pass-on costs where the consumers pay for the foreign exchange and fossil fuel upward price adjustments. To put it simply, the consumers will pay for the weak peso in their electric bills.

Remember December last year where the biggest power distributor announced a P0.1011 per kilowatt-hour (kWh) increase because of the upward adjustment in the generation charge caused by the significant weakening of the peso against the dollar. A news report then noted that the peso slid down to P49.73 in November from P46.59 to a dollar from August of the same year. That’s almost a three peso difference in three months, which resulted in the increased electricity bill. We have to keep in mind that the largest DU in the country sources its electricity from independent power producers, which, unfortunately, have 90 percent of their billings in dollar denomination.

As I have discussed in detail, our energy planners have favored the ‘floating’ PSAs rather than fixed ones, thinking that it is cheaper. To simplify, these floating PSAs are not necessarily more inexpensive as there are unknowns specifically fossil fuel global price spikes and falling value of the peso against the dollar. These unknowns are, sadly, inevitable.

As with our experience last year in the above example, a weaker peso resulted in higher power prices. So, we cannot say that floating PSAs are cheaper because, in the end, the poor consumers will shell out more money when the inevitable happens.

This is why we need the fixed priced contracts. Under fixed priced contracts, consumers will pay the same amount for a specified period, let us say, 25 years, for their electricity. Fixed price contracts eliminate the need for users to pay for the pass-on costs or to simplify, pay for higher power charges when the peso falls against the dollar or when prices of coal or oil in the international market increases. I’m sure our consumers would appreciate knowing how much they would be paying for their energy consumption on a monthly basis rather than be surprised when their electric bills come.

Let us see the economic sense in having fixed price contracts for the sake of the end consumers. Rather than just fret on how a weak peso could hurt us, let us make the adjustments needed to ease the burden for the Filipinos who will shoulder the cost of the falling peso when they for pay their electricity. Surely, Filipinos have other uses for their hard-earned money.

With Private Sector Doing Its Share

Reducing the world’s carbon footprint requires cooperation from all sectors. While it is the government’s job to provide a conducive environment to develop the use of renewables, the private sector must also do its share.

Gladly, large enterprises are taking on the challenge of helping the world become cleaner again through their green initiatives.

A report of the World Wide Fund (WWF) and Ceres, a non-government organization, released last April showed that more Fortune 500 companies have at least one clean energy or climate target in 2016. These firms set their clean energy or climate target either by setting greenhouse emission, renewable energy, and energy efficiency targets.

The report noted that 48% of these Fortune 500 companies are now pushing for greener practices, a figure that is five percent higher from 2014.

The report, “Power Forward 3.0 How the largest U.S. companies are capturing business value while addressing climate change” noted there has been a 10% increase among firms that committed to reducing their emissions targets. A total of 23 of the Fortune 500 companies has also committed to using 100 percent renewable energy in their operations while 51 companies have identified their energy efficiency targets.

“American businesses are leading the transition to a clean economy because it’s smart business and it’s what their customers want,” said Marty Spitzer, World Wildlife Fund’s senior director of climate and renewable energy.

The report stressed that these firms with clean or renewable targets reap some economic benefits from cost savings.  In 2016, a total of $3.7 billion were saved by 190 companies with their 80,000 emission reduction projects and were able to reduce their annual C02 emissions by 155.7 million metric tons.

Unfortunately, I don’t think there’s any study on the Philippine firms, counting how many of them have green targets either via reduction of greenhouse emissions, RE purchase or energy efficiency programs.

And even more unfortunate is the slow implementation of the Renewable Portfolio Standards (RPS). To recall, setting the RPS was included in the Renewable Act passed into law in 2008. The RPS mandates energy industry participants including generators, distributors, and suppliers to either produce or source a certain percentage of the power from renewables.

The implementation of an RPS is crucial if we want to achieve a power mix that relies heavily on RE. The report above even underscored the importance of having RPS to help private entities to in their drive to shift to greener forms of energy to power their needs: “Support state renewable portfolio standards, which have created strong marketplaces for renewable energy in which large corporate buyers can now participate.”

Sadly, despite the value of having such a standard, our government has been slow in realizing and acting on the need to have the RPS implemented. It has been almost a decade since the passage of the Renewable Act, and yet no Implementing Rules and Regulations (IRR) have been set on the implementation of the RPS.

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When it comes to lowering power rates, which way are we heading? The road to success is through fixed rate contracts and maximum level for RE in the RPS.

Recent news reports have noted that the National Renewable Energy Board (NREB) has said that it aims to pass its recommendations on the IRR on RPS to the Energy Department soon. Hopefully, the NREB can also consider aggressively pushing for higher levels of RE in the RPS as well as recommend fixed price contracts. Of course, our regulators have a role to play, too.

As I have explained in a previous post, having fixed-price contracts will lower our power rates. Fixed price contracts will have lower rates as compared to our current ‘floating’ contracts where consumers shoulder the cost of volatility of fossil fuels given the provision of the pass-on costs.  Favoring the floating contracts along with our heavy dependence on fossil fuel power plants are the reasons why our energy prices high as consumers end up paying the price for fossil fuel or foreign exchange costs increase. We must introduce as much fixed price contracts in the energy mix of the utilities

I have made a recommendation to the appropriate government agencies to review the calculations used in evaluating fixed versus floating Power Sales Agreements (PSA) to reflect the discount rates between the two. After all, fixed contracts must be discounted at the risk-free rate and floating PSAs or some of them at a much lower rate. The government agency concerned must direct Electric Cooperatives (ECs) and Distribution Utilities (DUs) to use the correct levelised cost of electricity. It should also ask the ECs/DUs to prove that they have fixed price contracts in their energy mix and for DUs to prove that there is a diversification in the risks they pass on to the consumer.

As for the RPS, we should push for higher RPS levels as renewables is in a position to give fixed price contracts. We should consider the maximum RPS allowed under the RE law to at least lessen the negative impact that our pass-on provisions have on our consumers.

Let us not lose sight of the reasons why we push for RE. Aside from helping the environment, renewables is key to lower energy prices in the country. But that can only happen if we have our fixed price contracts as well as have the maximum level allowed in the RPS.

 

 

Jobs, Jobs and More Jobs

Renewable energy development creates jobs. Recent figures from the International Renewable Energy Agency shows that. The growing investments on RE in recent years are resulting in more work for many nations.

The report, Renewable Energy and Jobs Annual Review 2017 showed that in 2016, the RE sector provided jobs to as many as 9.8 million individuals. This amount was higher by 1.1% posted in 2015. Leading the pack is solar photovoltaic, employing some 3.1 million people, a number that is up by 12 percent from 2015. Wind energy also saw a jump in the number of people it employed, providing jobs to some 1.2 million people.  The report stressed that wind and solar PV have been consistent in providing more jobs in recent years as work from these two subsectors have more than doubled since 2012.

As government’s in Asian countries take notice of the potential of RE, Asia accounted for the largest contribution to job generation in the sector, accounting for 62% of the total globally. Growth in RE jobs in this continent has been significant with its 12% increase from 2013 to 2016.

Asia has been on the rise with its new installed capacity accounting for 46% of the global growth in 2016 from a mere 40% in 2013. Thanks to China, which the study noted as one of the top countries in producing the most number of jobs along with Brazil, the United States, India, Japan, and Germany. Given China’s pivot to cleaner energy, it now provided some 44% of the total RE jobs worldwide last year. China has been employing more people as it only posted 41% in 2013.

Traditional sources of energy, on the other hand, is suffering a different fate.  Several developments such as growing use of automation in extraction, overcapacity as well as the shift to greener forms of energy of nations are causing the decline of jobs in the sector. Jobs generation from this sector has been declining all over the world for decades.

Developments in China alone are hurting traditional power industry, particularly, coal. China, the producer of almost half of the world’s coal, have already closed 5,600 mines due to the slowdown of its economy and excess supply. It is predicted that some 1.3 million coal mining work will be reduced in the country. Similarly, the world’s largest coal producer, Coal India has already decreased the number of jobs by 36% as the number of its employees are down to 326,000 in 2015-2016 from 511,000 workers in 2002-2003.

Similarly, coal-mining in Germany only employs roughly 30,000 jobs, which is a mere tenth of what it used to hire 30 years ago. The US coal mining work, too have dwindled to 55,000 jobs from 174,000 three decades ago.

And we can expect more of this trend in the coming years. Russia, for one, has recently announced its largest-ever purchase of renewable energy as it aims to award contracts to buy 1.9 gigawatts of clean energy in a bid to attract more jobs through foreign investments.

Director-general of the International Renewable Energy Agency Andan Amin has noted that this move “can significantly contribute to the country’s economic objectives such as economic growth and employment.”

RussiaRussia now joins other power nations that are seeking to invest more in renewables. Just a few months ago, the Organization of Petroleum Exporting Countries, or OPEC’s top producing country, Saudi Arabia announced that it will invest some $30 to $50 billion in renewables starting with the construction of wind and solar power plants.

As I have been saying, there are many benefits of investing in renewables. And job generation is one of them. As some of the world’s most advanced countries shift to greener forms of energy, with the exception of US, (which is a different story, by the way), we can only expect more jobs and a better (and cleaner) future, hopefully for all.

 

References:

Renewable Energy and Jobs Annual Review 2017

https://www.bloomberg.com/news/articles/2017-05-29/russia-starts-largest-renewable-energy-auction-in-bid-for-jobs