Rebuilding by Learning 

photo c/o http://www.nippon.com

It’s the start of a new year. And given how hard it has been for the last two years because of the pandemic and the Russia and Ukraine war, we can only hope that 2023 will be much better and the start of real rebuilding. 

But real rebuilding and sustainable development for this new year can only happen if we learn from the lessons of 2022.

In the first quarter of last year, Russia invaded Ukraine, and the rest of the world suffered. As the war destabilized the supply chain, every country had to deal with inflation. The world then faced the twin problem of stagflation, slow economic growth, and high inflation

The Philippine Energy sector faced twin problems, too. We had to keep up with soaring prices and the strong dollar. And since we buy fossil fuels in dollars and global thermal coal reached record-high prices, electricity production became a lot more expensive. Our problem even was exacerbated by the fact that the majority of our power supply comes from traditional, imported sources.

Then there are the natural disasters we had to endure in 2022. Fortunately, no strong typhoon hit the Philippines last December, unlike in previous years. But we still had to contend with strong typhoons, nevertheless.

In October, we had severe tropical storm Paeng (Nalgae) the 16th tropical cycle that entered the Philippine area of responsibility (PAR). Paeng’s effects seemed ‘mild’ compared to other storms such as Typhoon Odette in December 2021.  But still, some four million Filipinos experienced power interruptions because of Paeng. 

The events of 2022 should all teach us a lesson much like previous years’ developments should.

The lessons of 2022 are too painful to ignore. Let’s just look at the effects of the Ukraine and Russia war on our energy sector. 

The cost of power generation became so high that San Miguel proposed a rate hike. When the Energy Regulatory Commission (ERC) rejected SMC’s petition, it was forced to unilaterally terminate its power supply agreements with Meralco. Now the distribution utility has to buy from the market if it fails to secure another power deal.

This will always be a problem for us because we rely on imported fossil fuels. And since coal is the king of our power mix, a geopolitical event such as the Ukraine and Russia war will leave the Philippine local power sector vulnerable. 

We can, however,  put the local energy sector at less risk by ending our reliance on imported fuels and sourcing most of our power from renewable sources.

Perhaps, the effects of Russia’s invasion of  Ukraine should make us realize the value of fixed contracts, too. These contracts will help mitigate the risks of higher global fossil fuel prices and a weaker Philippine Peso.

Likewise, let us not forget that we remain at risk for extreme weather disturbances. 

The rainy season may be many months away but we should be working toward energy resilience. In fact, we should have been working hard to achieve this many years ago.

Distributed energy is the future when we talk of disaster resilience, especially for an archipelagic country like ours. Empowering our local government units (LGUs) by allowing them to have and operate their own power distribution franchises and microgrids is key to making our energy systems more resilient.

Hopefully, the rules being crafted on this by the ERC would be fair rather than protective of the incumbent utilities.

The last three years—2020 to 2022— came with many challenges not just for Filipinos but for everyone around the world. We can only pray that 2023 will be better. And it can only be if we learn the lessons of the previous year and the ones before that to build a better tomorrow.

Happy New Year, everyone!

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