Everyone Is Reaping The Benefits of Lower RE Prices, But What About Us?

The International Renewable Energy Agency (IRENA) says that all renewable energy technologies will be at par with fossil fuel costs by the year 2020.

In its report, Renewable Power Generation Costs in 2017, the organization noted the significant drop of prices from 2010 for both solar photovoltaic (PV) power, which dropped by 73 percent and onshore wind by 23 percent.

At present, onshore wind power average cost is at $0.06 per kilowatt-hour (kWh) while solar is to $0.10. These amounts are close to the cost of electricity generation from fossil fuels, which is somewhere between $0.05 to $0.17 per kWh.

The study predicts that solar prices will trim down by as much as 50 percent by 2020 and that in the next couple of years, both RE technologies are likely to cost $0.30 per kWh.

For the director general of IRENA, these falling costs are an indication that significant changes are about to sweep the energy sector: “These cost declines across technologies are unprecedented and representative of the degree to which renewable energy is disrupting the global energy system,” he noted.

The report also stresses that soon the RE sector will flourish even without subsidies and will continue to do so with the proper government support: “Already today, and increasingly in the future, many renewable power generation projects can undercut fossil fuel-fired electricity generation, without financial support. With the right regulatory and institutional frameworks in place, their competitiveness should only further improve.”

 

solar prices

Solar prices will trim down by half by 2020. Photo c/o http://www.wsj.com

 

Fortunately for the Philippines, we have access to plenty of sunlight. In fact, one study showed that the country could generate as much as 16.17 watts per square meter of solar power. However, our regulatory framework and support for the RE sector are weak. This means we cannot hope to lower down the costs of our renewables unlike what is happening in other countries.

We have to keep in mind that traditional sources of energy continue to dominate our energy mix and will continue to do so in the next 10 years. A BMI Report said that the share of coal is likely to increase by 10 percent over the decade, “The share of coal [is]actually increasing over our 10-year forecast period—from just under 50 percent in 2017 to over 55 percent by 2027,” BMI noted.

The Fitch-owned BMI also sees that RE will contribute around 20 percent of the total power mix in 2020 and a decrease to 16 percent in 2027.

Now, those figures are alarming since the above numbers do not reflect our government’s commitment to shifting to greater use of renewables, to as much as a third of the power mix. This is a point stressed even by BMI: “However the country has released few details on how they intend to reach its target, particularly given the dominance of coal in the project pipeline,”

So, while other countries around the world are enjoying lower costs of power because of RE, the Philippines is not only being left behind but will also have to endure the complete opposite of lower costs of energy: the higher cost of power.

As I have been saying again and again in this blog, our dependence on traditional sources of power comes at a high cost because we import our raw materials, particularly coal from other countries.

The BMI estimates that the Philippines imports around 75 percent of its coal supply from Australia and Indonesia. We pay for these imports in dollars.

Let us not forget that experts predict that the Philippine Peso will be the worst performing currency in Asia this year. The head of trading for the Asia Pacific at Oanda Corp. in Singapore, Stephen Innes even described the Philippine peso as “ the local whipping boy in the region.” Just in the middle of February, the Philippine Peso hit an 11-year low as it fell to P52.12 against the United States dollar.

And as the peso falls against the dollar, we can expect higher power rates. Last February, the biggest power distributor in the country, Meralco has announced a rate hike of P1.08 per kilowatt hour (kWh). This means that the average household consuming 200 kWh per month will need to shell out additional P216 for their monthly bill for January partly because of the depreciation of the peso against the greenback.

That’s just the problem with relying heavily on coal power plants. The Filipino people end up paying more for their power consumption for things beyond their control such as the peso depreciation or increase of costs of imported coal because these two are passed on costs to consumers. We could help alleviate the plight of the Filipino consumers if we can tap our natural resources and rely heavily on them for our energy needs instead.

It is ironic and sad that the Philippines, a country that has natural resources available for more development and use of RE, has to rely on imported coal for our energy needs. Clearly, something must be done about it to help alleviate the suffering of Filipino consumers.

References:

Renewable Power Generation Costs in 2017, IRENA

http://www.manilatimes.net/coal-top-55-ph-power-mix-2027/377594/

https://www.rappler.com/business/196059-philippine-peso-weakest-p52-us-dollar

http://www.manilatimes.net/meralco-hike-rates-p1-08-kwh-feb/378957/

https://www.bloomberg.com/news/articles/2017-12-21/philippine-peso-seen-as-asia-s-laggard-for-2018-as-deficit-grows

 

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