Empty Gestures

40 countries signed to stay away from coal during COP26. The Philippines, however refrained from promising to phase out coal-fired plants. Photo c/o Rappler

During the UN Climate Change Conference of the Parties (COP26), in Glasgow, Scotland, 40 countries signed to stay away from dirty coal.

However, local reports noted that the Philippines refrained from committing to phase out coal-fired power plants.

The agreement had four goals. The first is to rapidly scale the deployment of clean power generation. Second is to phase out coal power by 2030 for advanced economies and 2040 for the rest of the world. The third is to end all investments in new coal power generation both domestically and internally. Fourth is to make a just transition that benefits communities and workers.

However, as reports stressed not all signatories committed to all of the four mentioned goals. Our Energy Secretary who signed on behalf of the Philippines only endorsed goals/clauses one and four. 

A report by Manila Bulletin on this issue said that the Energy Department’s formal correspondence to the chargé d’affaires at the British Embassy-Manila, who solicited the Philippine’s support to the “Global Coal to Clean Power Transition Statement”, only said that the country only supported calls for an energy transition that will primarily be driven by more renewable energy installation and addition of energy efficiency technologies.

The said correspondence was notably silent on whether the Philippines will pull the plug on coal-fired power generation. The letter of the energy secretary instead demanded that climate justice from industrialized countries that are spewing higher scale carbon emissions. “We would like to reiterate the energy sector’s call for climate justice given that the Philippines is not a major emitter of greenhouse gases (GHG) but bear the worsening impacts of climate change,” Energy Alfonso Cusi in the letter said.

He also stressed that the country’s foremost agenda is energy security since “energy transition comes as a means to improve the lives of our people and for our country’s economic development.”

Perhaps, we should not be surprised at our government’s lack of commitment to phasing out coal completely.

During the forum on national energy security sponsored by UP Vanguard Inc. last October, most of the panelists agreed that it may not be feasible for the Philippines or the rest of the world to completely phase out coal by 2040. Mr. Gil Quinoñes the newly minted CEO of Commonwealth Edison Company, Chicago’s primary utility company said that it is more doable to achieve 80% electrification by renewable energy.

However, some of the panelists also slammed the government’s inaction in ensuring swift energy transition. One of our panelists, former Energy Undersecretary Atty. Jay Layug stressed that there has been a major decline in new renewable energy capacity addition in the last five years. He noted that there have only been 800 megawatts (MW) RE new cavity out of the 4930 MW capacity added in the last five years while from years 2010 to 2016, renewables contributed roughly 1,500 MW out of the 5180 MW of the total added capacity.

Atty Layug stressed that the Philippines cannot afford a technology-neutral policy and instead pave the way for a faster transition to clean energy.

To add to these thoughts, it seems to me that the drive for energy security is being used as an excuse for our lack of commitment to adopting more renewable energy in our power mix. Are we really achieving energy security by insisting on our reliance on fossil fuel power?

As I have discussed in a previous post, there are various definitions of energy security. For one, the Internal Energy Agency (IEA) defines energy security as “the uninterrupted availability of energy sources at an affordable price.” I have argued that energy security is difficult to define. However, I can easily tell you is that the Philippines is facing multiple risks when it comes to energy security.

Our reliance on imported coal is a source of insecurity. As I have mentioned, at the beginning of the pandemic my fear was that Indonesia, our major source of coal could close its border, which means we can’t import coal from them. 

Relying on imports also means that consumers are affected by global supply issues and pricing. Currently, oil prices are going up. Data from Energy Department showed that diesel prices have gone by Php18.10 per liter since the start of 2021 So, are we really heading towards energy security when we remain reliant on coal and oil?

If we are to follow IEA’s definition, then we are not achieving energy security as our power rates remain expensive especially when global prices go up.

I agree that we cannot fully phase out coal in the next 20 years, but the government has been quite slow in its push for renewables. This is evidenced by the downward revision of the share of renewables in the Philippine Energy Plan (PEP) 2020-2040. Recently, the Energy Department released its amended PEP 2020- 2020, which set a target of 50% renewable share in the power mix by 2040. In contrast, its previous PEP 2018-2040 set the target to a 54 % share of the power mix.

The Department did not explain why it changed its target. It’s quite baffling especially since it had already declared a moratorium on new coal-fired power plants last year.

Naturally, DOEs lack of commitment to end financing for coal or to end coal during COP 26 has been met with strong criticisms. Greenpeace Philippines Campaigner, Khevin You said that the organization is denouncing in “the strongest possible terms the Philippine government’s shameless climate hypocrisy and its lack of political will to end coal use and chart a decisive path away from dependence on fossil fuels.”

Likewise, the Center for Energy, Ecology and Development (CEED) said the government’s commitments are just an “empty gesture.” 

I again go back to what our panelists said in the UPVI forum. We have enough laws and we are not running of ideas on how fast we can transition to renewable energy but what we need is consistency in policy enforcement. We need political will and decisiveness in implementing laws. We need strong leadership to ensure a fast clean energy transition. Indeed, we don’t need empty gestures.

Leadership is What We Need: UPVI’s webinar on National Energy Security

Last October 19, UP Vanguard Incorporated (UPVI) with SMC Global Power as a major sponsor, conducted a public webinar entitled “National Energy Security: Reliability and Resiliency in the New Normal”.

We had been fortunate to have a distinguished panel consisting of two former Energy Secretaries, namely Dr. Francisco Viray and Atty. Raphael Lotilla, and outgoing Chief Executive Officer of New York Power Authority, Mr. Gil Quinoñes. The forum was moderated by Atty. Mike Toledo, Director for Government Relations and Public Affairs of Metro Pacific Investment Corporation.

One of the main discussion points in the forum was the transition to clean energy. Panelists and reactors agree that the transition to a carbon-free environment is inevitable. Under the COP 21 Paris Agreement in 2015, countries should aim to limit global warming to preferably 1.5 degrees celsius compared to the pre-industrial level. 

Dr. Viray pointed out that the International Energy Agency has recommended the complete phase-out of all unabated coal and oil power plants by 2040 to reach net-zero global energy-related carbon dioxide emissions by 2050.

He, however, sees three issues in the clean energy transition for the Philippines.

First, is that the mismatch in clean energy investments for whatever reason can impact energy security and price volatility. Second, the availability of cost of non-greenhouse gas emitting technology sharing the same characteristics of fossil fuel-fired plants and balancing the need for VRE sources may be subject to geopolitical challenges as the Philippines will just have to sit and wait on the technology made available by advanced countries. Third, he asked who bears the costs of the energy transition, especially the replacement of capacity generated by fossil fuel plants.

For his part, Atty. Raphael Lotilla said that the transition will not happen overnight and that it must be managed well. The pace of the energy transition will vary from one country to another but the end game is the same: a carbon-free environment.

He raised two points on how the Philippines can manage the clean transition properly. 

First, he noted that the upstream natural gas and petroleum industry sector has a major role to play in the Philippines’ clean energy transition and energy security. Atty. Lotilla stressed that the country needs to provide investors with clear regulatory policies.

He cited the case of the Malampaya gas field’s tax issue where the Commission on Audit’s 2011 decision reversing the rule that the government will assume corporate income tax has caused major uncertainty among investors. The potential investors, he added, need more clarity and certainty before they shell out money for exploration and development work in other service contracts.

One of the reactors, UP Vanguard, Engineer Ray Apostol who is a long-time professional in exploration work, cited alarming statistics on the present administration’s lack of exploration activities.

Mr. Apostol noted that the Philippines is at the bottom among ASEAN countries when it comes to gas exploration. He stressed that there has been no exploration well drilled in the last five and half years. Mr. Apostol recommended that the government should ramp up support for exploration activities and carefully review the bidding process and exploration contracts. Likewise, the government should opt for non-exclusive exploration activities.

There is also a consensus that renewable energy is clearly the way forward for the Philippines. According to Dr. Viray, achieving energy security requires more development of renewables but, unfortunately, our country has no full control to harness and exploit these resources.

Atty. Lotilla stressed that we must allow more foreign investors so we can develop renewable energy sources in the country. He said that the provision in the constitution referring to foreign ownership that should be limited to 40 percent should only be interpreted for finite resources. The constitution talks about “potential energy” and thus must exclude solar and wind as they can be converted immediately to electricity.

One of the reactors, former Energy Undersecretary, Atty. Jay Layug echoed Atty. Lotilla’s point of allowing more foreign investors in the renewable energy sector. 

He lamented the fact that the Philippines imported more oil and coal in the last five years as renewables only accounted for 800 megawatts (MW) out of the 4930 MW capacity added in the last five years. In contrast, from years 2010 to 2016, renewables accounted for 1,500 MW out of the 5180 MW total added capacity.

Atty. Layug stressed that the government cannot afford to adopt a technology-neutral policy. It must instead step up and be an enabler to ensure that the Philippines become more dependent on renewables instead of imported fossil fuels. He added that the country has too many laws but the problem lies with implementation, adding that the National Renewable Energy program is a “bible” that the government must follow.

For his part, Mr. Gil Quinoñes said that it may not be feasible to be 100 percent coal-free by 2050 but what is more doable is for the world to achieve 80 percent electrification from renewables.

He added that clean energy transition may be expensive but the climate crisis requires that problems be addressed as fast as possible.

Mr. Quinoñes stressed that richer countries should advance clean energy technologies that can be adopted by emerging markets like the Philippines.

Another reactor, Bill Lenihan, CEO of ZOLA Electric, a company that offers power solutions in Africa, noted that a centralized grid system won’t solve the emerging markets’ problems. He added that distributed energy and micro grid adaptation in the Philippines will differ from the ways the US and other richer countries have developed these technologies. 

For example, in the United States, micro grids are necessary backups but they can afford to have them as mere backups as they have well-developed grids. On the other hand, the Philippines will need to make distributed energy resources (DERs) and microgrids as the primary source of power in many areas of the country.

In the end, Dr. Viray summed up the Philippines energy security problem best when he said that “We are not lacking in ideas and laws. What we need is to synchronize… Leadership is what we need.”

Energy Security Series Part 2: Energy Poverty

Some 840 million people worldwide don’t have to electricity. Photo c/o WEF

Energy poverty can be defined in several ways. In its simplest definition, energy poverty is the lack of access to energy services.

The World Economic Forum (WEF) defines it differently. For the WEF, energy poverty is “the lack of access to sustainable modern energy services and products.”

In his encyclical letter entitled Fratelli Tutti, Pope Francis touched on energy poverty, stressing that “forms of poverty are emerging.” He calls on us to to view poverty differently since the modern world’s current criteria do not correspond to present-day realities. “For example, lack of access to electric energy was not considered a sign of poverty, nor was it a source of hardship. Poverty must always be understood and gauged in the context of the actual opportunities available in each concrete historical period.”

Data from the United Nations (UN) shows that there are some 840 million people who live without access to any electricity worldwide. 

In the Philippines, some 1.62 million households still don’t have access to power. The country’s archipelagic nature makes it challenging to provide electricity for the many remote islands and communities.

We cannot talk of energy security in the Philippines without discussing energy poverty. After all, access to electricity is necessary for economic growth.

A study by the Philippine Institute of Development Studies showed that rural households and rural-based economic agents need electricity to enhance their productivity and expand home-based economic ventures. Having access to electricity is a significant determinant of agricultural productivity. Electricity enables Filipino families to operate their livestock and poultry farms as well as store their produce efficiently. Electricity is necessary for many Filipinos to engage in micro-small businesses to help them get out of poverty.

That’s the economic side. Health-wise, the absence of electricity increases the risk of premature deaths due to household air pollution as many rely on solid fuel for cooking like fuelwood or charcoal. 

The World Health Organization (WHO) estimates that roughly four million die prematurely annually e due to household air pollution from the use of solid fuel for cooking.

As we still have seven percent of Filipino households without access to electricity, what must we do?

To connect the hardest to reach and the poorest households, we must invest in off-grid solutions such as mini-grids, solar home systems, and solar lighting. It has been working for the entire world as according to the World Bank since at least 34 million people in 2017 gained access to basic electricity services via off-grid technologies. At the local level, we have been receiving grants from other countries to develop mini-grids powered by renewables.

Off-grid technologies will not only provide access to electricity to Filipinos but will help cut down electricity costs for off-grid locations.

A study conducted by the Institute for Energy Economics and Financial Analysis (IEEFA) and Institute for Climate and Sustainable Cities (ICSC) concluded that the Philippines can save as much as Php 10 billion if off-grid islands rely on renewable sources than traditional ones.

The study stressed that mini-grids powered by generators running on imported diesel and bunk oil are not only proving to be expensive but have also resulted in blackout and power outages. It noted that Filipino taxpayers are footing a huge bill by subsidizing these expensive imported fuels.

The authors of the study “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids” have called for prudent reforms where electric cooperatives and distribution utilities (DUs) will be required to procure cheaper sources to reduce costs.

Similarly, a European Union-funded program, the Access to Sustainable Energy Program (EU-ASEP) also concluded that the National Power Corporation (NPC) can also save roughly Php 2.25 million or Php 4.50 per kilowatt-hour if the agency combines renewable energy with traditional power for off-grid islands’ mini-grids.

Indeed, renewables are also the way to go in giving access to electricity to all Filipinos. 

IEEFA’s recommendation in its study echoes mine as I have been vocal in requiring distribution utilities to testify that there are no available indigenous resources in their franchise area during the procurement stage. We must change regulations as our goal is to provide electricity not regardless of the cost but to provide electricity that’s affordable. 

The DOE has already come up with rules and guidelines on renewable portfolio standards (RPS) for off-grid areas in 2018, which was supposed to be implemented this year. The department, however, has suspended first-year compliance to resolve a variety of issues.

Even if the RPS for off-grid areas is being implemented it’s not enough. I have been advocating for higher levels of renewables in the RPS. 

Our goal is not simply to provide electricity to all but as WEF said to ensure that there is access to modern energy services and products. The dominance of diesel-fired mini-grids should be a thing of the past. 

Advances in technology have driven prices of renewable energy technologies down and it’s time that we benefit from new technologies that make electricity more accessible and affordable. Modern times require us to change regulations as our goal is not only to make electricity accessible to all but to provide affordable electricity to all.

Is Power Distribution Still a Natural Monopoly?

Photo c/o https://energydemocracyyall.org

In his last State of the Nation Address (SONA), President Rodrigo Duterte asked Congress to pass priority bills including the proposed amendments to the Public Service Act.

Senate Bill No 1441 seeks to amend the Public Service Act to define the difference between “public service” from “public utility.” The amendment will lift nationality restrictions in the investment in areas of transportation, power generation, and supply, telecommunication, and broadcasting, among others. The 1987 Constitution does not define “public utility” and thus limits the allowed foreign investments in various sectors.

Under the bill, public utility will be treated as a mere subset of public service. Only three main industries will be treated as public utilities as they are argued as a natural monopoly. These three include Water Works and Sewerage, Transmission of Electricity, and Distribution of Electricity, which will be covered by the 60-40 rule on foreign ownership.

But my question is, must electricity distribution be considered a natural monopoly? A “natural” monopoly cannot be legislated by Congress. It is a market condition Legislating it as such is tantamount to legislating the law of supply and demand.

A natural monopoly exists because of either powerful economies of scale or high start-up costs in specific industries. It’s when a single entity is technologically capable of serving an entire market at lower costs rather than having multiple firms serve the same market.

According to a paper by Electricity Daily, it was more than a century ago when Samuel Insull, considered a legend in exploiting new technologies, masterfully demonstrated how a single firm could offer power at a much lower cost than the combined multiple small power companies. He invested in large turbines and boilers and connected such generators with many customers.

The paper entitled “Will distributed energy end the utility natural monopoly” stressed that natural monopolies thrived as policymakers embraced the idea of providing power at a lower cost to consumers by giving a single firm a legal monopoly and regulating power prices to recover costs. The policy was to offer exclusive rights to serve and combine it with cost-based regulation.

The study noted that the policy approach to natural monopoly is still highly recommended by economists today. I share the views of the authors of the paper when they said that we can easily confuse legal monopolies with natural monopolies. The Senate bill proposing to classify electricity distribution as a public utility is a testament to that fact. Plus, in the Philippines, only one entity is allowed to distribute in a franchise area.

The monopoly is legally created and is a clear illustration of Nobel Prize winner Vernon Smith’s point that regulators have encouraged monopoly in electricity markets. Economics professor Smith’s paper “Currents of Competition in Electricity Markets” noted that “Regulation has been applied far too broadly to the electric power industry. As a result, policies intended to restrain monopoly power have instead propagated that power.”

The past few decades have shown that technological advances are eroding utilities’ natural monopolies. Take the case of Independent Power Producers (IPPs) that are financed, developed, and operated by multiple independent companies that offered lower-cost power than a single larger counterpart. These IPPs proved that generation can be done by smaller firms at a lower cost, thus breaking the notion that power generation is not a natural monopoly.

We are now seeing the same happen on the distribution side with the emergence of distributed energy resource (DER) technologies and digital technologies.

A study published by the Massachusetts Institute of Technology noted that “DERs and digital technologies dramatically expand the number of potential investors in and operators of power system infrastructure, challenging traditional means of planning and coordinating the construction of generation, storage, and network assets.”

The study entitled “Restructuring Revisited: Competition and Coordination in Electricity Distribution Systems” stressed that there are relatively few barriers preventing investors and even consumers from adopting DERs in most developed power systems.

The authors also noted that “Indeed, many DERs (for example, “smart” HVAC units and water heaters) look more like consumer electronics than power sector resources. Consumers do not need to coordinate with the DNO/SO to install and operate these devices, despite the fact that these devices can have significant impact when considered in aggregate.”

The emergence of new technologies such as battery storage, rooftop solar, and non-wire alternatives (NWAs) are disrupting the long-held notion that power distribution is naturally monopolistic. These technologies are bringing down the fixed costs and high start-up costs in distributing electricity.

We only need to look at the case of NWAs, which use microgrids and DERs to replace the traditional “wire and poles” infrastructure in power distribution. Utilities that opt for NWAs avoid the expensive infrastructure investments.

US-based utility firm, Duke Energy makes a great case for the use of NWAs. The firm built a renewable micro gird on Mount Sterling in Great Smoky Mountain National Park and opted for non-wire alternatives in distributing electricity. The microgrid used 10kW of solar and 05 kWh of storage, allowing the firm to avoid shelling out large investments of a four-mile, 12.47 kV grid-connected distribution feeder.

Another US firm, Con Edison was able to avoid spending $1 billion for infrastructure by using $200 million non-wire alternatives under the Brooklyn-Queens Demand Management program. Con Edison opted for the combination of NWAs, DERs, solar-plus-storage microgrids to provide independent power to an area in Brooklyn while avoiding the high costs of lines and poles.

There are other new technologies available that can remove the barriers to entry in power distribution.

We also now have an Advanced Meter Infrastructure, enabling two-way communication of homes and network providers. The two-way communication allows the system to analyze data and act accordingly. Data that can be aggregated, analyzed, and communicated allows sector players to come up with services and products previously unavailable in the system.

Plus, the decreasing cost of information and communication technologies (ICT) will drive the network to improve resiliency and grid management, and increase competition. The Philippines is in a good position to capitalize on the decreasing ICT costs as the entry of the third telco, DITO will pave the way for more seamless integration of ICT and the power system.

So, must we still consider power distribution as a natural monopoly? New technologies are removing the barriers to entry, enabling more entities to enter the sector. Technological advancements allow multiple firms to serve the market more efficiently and cost-effectively than a single firm these days. Why do we insist that natural monopoly exists when there is a second or third player willing to distribute in the same franchise area?

The 1987 Constitution says that monopolies should not exist when public interest is at stake. The State after all should protect the public interest rather than the regulated or legal monopoly. Maintaining legal monopolies runs counter to what the constitution mandates as monopolies put consumers at a disadvantage. The lack of competition gives no incentive to the franchise holder to lower operating costs or provide excellent power distribution services.

We now have the opportunity to introduce competition into electric power distribution as new technologies offer new opportunities to lower power system costs. Instead, we are continuing to legally create monopolies. Smith’s assertion comes into mind “There are numerous ways to introduce competition into electric power distribution. Perhaps the most obvious is to eliminate state policies which grant distributors exclusive operating permits. Customers should have the right to bypass distributors and contract directly with generator owners.”

Power distribution is not a natural monopoly, we are only viewing it as such. Unfortunately, this view runs counter to the essence of the Electric Power Industry Reform Act (EPIRA), which was signed into law primarily to promote competition. Creating legal monopolies and protecting them also goes against our constitution. Failing to recognize that competition in power distribution exists and is possible with the right regulation is a disservice to Filipino consumers.

Energy Security Series, Part 1: High Power Rates

The Internal Energy Agency (IEA) defines Energy Security as “the uninterrupted availability of energy sources at an affordable price.” Energy security, the agency says, has many aspects. There’s short-term energy security, which the agency defines as “the ability of the energy system to react promptly to sudden changes in the supply-demand balance. There’s also the long-term energy security, primarily concerned about timely investments to supply energy for both economic development and environmental needs

There’s no better time than now to talk about energy security in the Philippines, especially as we are experiencing a lack of power supply, resulting in rotating brownouts and energy price spikes. 

And energy security in the Philippines is what I would like to discuss in this post and succeeding ones.

Personally, the term “energy security” is difficult to define. “Secure” from what? Does the concept pertain to physical threats to power supply or exposure to global prices? What sector are we referring to– transport or electricity? Does energy security pertain to the ability of power utilities to weather economic uncertainties?

Long before the COVID-19 pandemic, the Philippines was already exposed to various risks.

For one, more than 80 percent of our coal is sourced from Indonesia. And at the start of the pandemic, I was worried that our supply from our neighbor could be affected by border closures and hampered supply chain and logistics.

There’s also the big percentage of tariffs on energy regardless of whether they are electricity or fuel that are affected by global supply and prices. These risks are shouldered by consumers.

Let me start tackling energy security in the Philippines by discussing high power rates.

It’s no secret that the Philippines has one of the highest power prices not only in Southeast Asia but also around the world. A report by the Institute for Energy Economics and Financial Analysis (IEEFA) noted that our power rates are higher by Php10 per kilowatt-hour (kWh) when compared to global standards.

The report entitled “Prospects Improve for Energy Transition in the Philippines” said that our reliance on imported fossil fuel, uncompetitive market structures, and high financing costs are causing the high power rates in the country. The pass-through costs have inflated power prices in the country.

Let me expound on this as I have long been saying that the high power rates in the country can be attributed to our cost recovery mechanism in our tariff setting, our dependence on imported coal, and our energy planners’ penchant for the least-cost method.

Let’s start with the least-cost approach, which has failed to live up to its name. If anything it has driven power rates up.

The least-cost approach compares various technologies and prioritizes the “cheapest” power source to produce. It only looks at the upfront and standalone costs and fails to factor in other considerations such as risks of supply shortage, global price fluctuations, and foreign exchange.

The least-cost method favors traditional power plants as the upfront costs of building them are cheaper than developing renewable sources. However, relying on traditional sources such as coal comes with big risks. For one, they are purchased in dollars, and as we all know, foreign exchange fluctuates. Plus, there’s the risk to its supply. Had Indonesia closed down its borders due to the pandemic, then where would we source coal?

The problem with the least coach approach is exacerbated by our Power Sales Agreements (PSAs), which typically last for 25 years. Our PSAs have pass-through provisions, meaning the foreign exchange and higher fuel prices are passed on to consumers to allow power producers to recover costs. This means that for the next 25 years or as long as the PSAs are valid, the consumers are exposed to volatilities of foreign exchange global price risks. It’s what I have been calling the ‘floating contract.’

I have then argued for a fixed contract, which is possible for renewable energy sources. The consumers pay the same prices for as long as the PSA is valid. It minimizes the exposure and likelihood of consumers paying when the peso is weak or when global fuel and coal prices are up.

Some generation companies have started to offer fixed-price contracts. I am not privy on how these companies hedge the coal price and forex risks, but I can imagine that these companies play on portfolio management, tenor of power sales agreements and over-the-counter hedging instruments to allow them to offer fixed price contracts albeit for a shorter period. This augurs well for consumers in the long-run as they will be paying the same rate for a fixed period rather than shoulder the costs of a weaker peso or higher global prices.

However, let us go back to our energy planners’ penchant for the least-cost method has gotten consumers into trouble. Just take this pandemic as an example.

Another study by the IEEFA entitled “Philippines Power Sector Can Reach Resilience by 2021″ revealed the weaknesses of the Philippine Energy sector. It noted that the country’s dependence on large scale fossil plants with guaranteed contracts have resulted in grid inflexibility and price instability

Coal plants are inherently inflexible. And so as the pandemic depressed the power demand, fossil fuel plants turned to their mid-merit load factors, which are more costly to run, increasing the cost per kilowatt-hour. This is allowed as the PSAs have cost recovery mechanisms of coal plants that in the words of IEEFA are “designed to ensure IPPs can recover their capital costs and repay their loans on a timely basis. This means that neither the financial sector nor the power sector is liable for the risk they take, as these are passed on to end-users who are ill-equipped to manage such risk.”

Sadly, 80 percent of our caseload coal plants are inflexible.

Again, our reliance on coal, penchant for the faulty appreciation of the least-cost method, and our pass-on provisions are causing consumers to pay more than what they should. All these have caused price instability. Our regulations allowing pass-on costs to consumers are a disservice to the Filipinos. I am happy to note, however, that there are now concrete plans to put up new gas-fired generation plants. Adding gas-fired power plants will allow the entry of more intermittent renewable energy projects. This, partly addresses some of the issues causing high power rates.

Aside from batting for more fixed-price contracts, we should also push the government to order the immediate development of indigenous sources along with making changes to procurement rules. The Energy Regulatory Commission (ERC) does not differentiate imported energy from indigenous ones. 

The commission should require distribution utilities during procurement to testify that either there are zero offers from indigenous power producers or there are no available indigenous resources in their franchise area.

When we talk about energy security, particularly energy prices then we should look at how favoring the least-cost approach has led us into more trouble. IEEFA in its report said it best “Power sector planners assumed that a large system lock-in such as coal would lead to the least-cost system. Unfortunately, this lock-in for countries that import coal has led to inflexibility, price instability, and high prices.”

Additionality: A Concept Often Overlooked in Local Geothermal Energy Development

Photo c/o https://climatographer.com/

The term “additionality” is often used in the climate change space, pertaining to when greenhouse gas projects’ impact exceeds their initial targets.

Cambridge Dictionary defines the word “additionality” in two ways.

In an environmental context, additionality according to the Cambridge dictionary is when there is “the reduction in the amount of carbon dioxide gas released into the environment that happens only as a result of trading carbon credits.”

The Dictionary’s other definition is finance-related, with additionality being described as “the situation in which a government or organization is able to get money from another government or organization especially the European Union, only if it pays for most of the project itself.”

The Organisation for Economic Co-operation and Development (OECD) has identified three kinds of additionality in impact investing, namely financial additionality, value additionality, and development additionality. It is financial additionality that I would like to focus on in discussing the problems in our local renewable energy development

According to the OECD, financial additionality “describes a private-sector investment that otherwise would not have happened.”

Energy consultancy group in the Asia Pacific, Lantau Group has a simplified definition, describing the term additionality as “when someone takes an otherwise non-viable project and makes it happen anyway.”

We can take the concept of additionality and apply it to our local geothermal energy development conundrum.

Local geothermal energy development has been stagnant as very few private entities are willing to undertake exploration risks. Previously, the government shouldered the cost of the preliminary surveys of geothermal areas. Those days are gone now since after the passage of the Electric Power Reform Act or EPIRA, geothermal power exploration and development are left entirely to the private sector. The exploration costs are assumed by the private developer. So, we can say that private firms offer financial additionality when they embark on geothermal exploration and eventually development.

The Lantau Group stresses that additionality implies a premium, and “is clearly a requirement of the economic concept of making something happen that would not otherwise have happened. “

The research group further added that risk is an important element of additionality as investors typically spot an opportunity that looks attractive in current market conditions “but if that value proposition is incomplete or could deteriorate in the future, the investor has to consider risk.”

And there lies the problem with our renewable energy projects, particularly geothermal energy development. Unfortunately, our regulators fail to realize that additionality is about premium. Local regulators have such little appreciation of the risks being assumed by private geothermal developers. This can be seen in our current tariff setting.

I have discussed this lack of appreciation in a previous post. To recap, our tariff setting uses the Beta in computing for the cost of the equity under the Capital Asset Pricing Model or CAPM. The Beta determines the return on equity for any project.

Given the risks being assumed by the private sector in geothermal energy development, one would think that Energy Regulatory Commission (ERC) would offer a premium for the risks of geothermal energy development. Sadly, our ERC uses the same Beta across all power projects, failing to consider the risk profile of each power plant project. The CAPM is being incorrectly applied in our tariff setting.

So, as with the concept of additionality, why should investors put their money into developing geothermal resources when there is no premium to make something happen that would not otherwise happen? Geothermal greenfield exploration costs a lot of money. And one study done by the International Finance Corporation some years back showed that worldwide, only 60 percent of the explored holes turned out to be successful.

It’s clearly easy to see why investors are shying away from geothermal energy development as they are assuming high risks of exploration but won’t be properly compensated for assuming those risks. Again, for investors, a premium is needed to make something happen that would not otherwise have happened.

Revisiting the problems in geothermal energy development in the Philippines is not just timely but also necessary. For one, we are now experiencing rotational brownouts as of this writing given the lack of supply as more people turn on their cooling device this hot season.

For the entire first week of June, red and yellow alert statuses were raised on the Luzon grid. The grid operator was projecting a power supply deficiency of around 201 megawatts. The long-term solution, National Grid Corporation of the Philippines (NGCP) says is to add to the current power supply as demand continues to rise.

The NGCP has warned us of an impending power supply shortage in Luzon as early as March saying that operating margins were forecast to be thin from April to August this year. The grid operator called on policymakers and power industry players to address the impending shortage.

It was a warning that was downplayed by the Department of Energy (DOE) claiming that supply and demand projections don’t indicate any possibility of a red alert, although the Energy Secretary did admit in a Senate Energy Committee that a power generating capacity supply shortage does exist.

The current power supply and demand situation highlight the Philippines’ problem with energy security, particularly energy power supply problems.

More so, since there has been a moratorium on new coal power plants. Banning new coal-fired plants is a step in the right direction but without proper planning, the moratorium also leaves the country in a more vulnerable position. We are left with very limited options for baseload power plants, namely diesel, gas, and geothermal.

Geothermal power can act as a baseload plant, which is why it’s a great substitute for traditional sources of power. We can use geothermal to replace coal-fired plants.

Plus, new geothermal technologies are emerging. For example, there’s Google’s partnership with Fervo and Dandelion energy.

Fervo is developing the world’s next geothermal project, which will offer an “always-on” carbon-free resource. The company is working on how to use advanced drilling, analytics techniques, fibre-optic sensing, artificial intelligence and machine learning. Fervo aims to use AI and machine learning so the geothermal plants are more effective in responding to energy demands while fiber-optic cables can collect real-time data on temperature and flow of the geothermal resources so the best existing geothermal resources can be identified.

As for Dandelion, it’s making home geothermal heating more accessible. So far, the firm has installed hundreds of geothermal heating sites in New York and is currently improving its drilling technology to make residential drilling and heat pump installation easier and also more competitive with the current fossil fuels.

All these new technologies and developments in geothermal energy development should bode well for us as the Philippines have massive geothermal energy sources. Addressing the challenges hindering the growth of geothermal energy development in the country swiftly will go a long way in providing more baseload power and more alternatives for the consumers.

Thus, it’s important for us to review the concept of additionality and how our failure to provide investors with a premium is keeping us from using other sources of power for baseload. Our regulators need to incentivize investors. The government can no longer engage in exploration and development so it’s up to the private sector to make something happen that would not otherwise have happened or simply put help make more geothermal power more available.

Revisiting the Role of Battery Storage in Renewable Energy Development

According to the annual report of the International Renewable Energy Agency (IRENA) entitled “Renewable Capacity Statistics 2021” more than 80 percent of all new electricity capacity added in 2020 was renewable. In contrast, total fossil fuel additions fell to 60 GW fin 2020 for the 64 GW recorded in 2019, which as the report noted stresses the continued downtrend of fossil fuel expansion.

IRENA Director-General Francesco La Camera says that “2020 marks the start of the decade of renewables” since costs continuously falling, and clean tech markets are growing. It’s an unstoppable trend but more needs to be done if the world is to achieve the Paris Agreement goals of bringing C02 emissions close to zero by 2050.”

Another IRENA report entitled “World Energy Transitions Outlook” says the world needs more technology and innovation to advance the energy transition. The world will have to increase investments in the energy transition by 30 percent to a total of $131 trillion from now to 2050

It’s a conclusion that Morroo Shino president and CEO of Marubeni Asian Power echoes. The head of the Japan-based independent power producer sees two categories that will accelerate our shift from fossil fuels to sustainable, clean power. The first category is investments in proven technologies like wind, solar, and energy storage. The second is increasing investments in rolling out new technologies that can help overcome current challenges in RE development such as solutions for baseload power.

Indeed, more investments are needed to store renewables as only geothermal energy can act as a baseload plant. Energy storage plays a crucial role in our electricity grid and will pave the way for increased renewable energy generation.

Let us keep in mind that most electricity grids virtually have no storage capabilities. In the Philippines, we have the most mature and common storage facilities, that is pumped hydropower, where two reservoirs with different elevations can store extra power. The Kalayaan pump is an example, except it was not originally intended to store renewable energy and presently provides ancillary services to the system.

Recently, San Miguel Corporation’s power arm, SMC Global Power Holdings Corp announced that it will be spending more than a billion dollars to build new battery energy storage facilities with a rated capacity of 1,000 megawatts (MW). SMC said that 31 new battery energy storage units are already underway with some storage facilities already in the advanced stages of completion.

SMC Global Power is building battery energy storage facilities to help address power quality issues. Photo c/o https://www.sanmiguel.com.ph/

The company said that the immediate goal of building the facilities is to address power quality issues as the projects will be used as a regulation reserve ancillary service by our grid operator, National Grid Corporation of the Philippines (NGCP).

Having more battery energy storage systems (BESS) bodes well for the Philippines. BESS stores energy during off-peak times while the battery supplies power during peak periods, thus providing frequency regulation and voltage control to the power system. This is over and above its use as a generation resource. Because of its nature, it can provide energy at 100% capacity factor. Think of your mobile phones – even if the charge goes down, it still delivers the same energy and capacity. Of course, eventually, you will need to recharge the battery of your phone.  This is the same what happens when batteries provide energy to the grid.

BESS is also the optimum solution to problems of storing energy from renewable sources as it can also discharge when more power is needed in central, de-central, and off-grid situations. It is exceptionally useful for our faraway provinces or off-grid areas.

Plus, battery energy storage also reduces the need for both peak generation capacity and transmission and distribution capacity upgrades. It also lowers greenhouse gas emissions.

Those are just the operational benefits of a battery energy storage system. There are also social and economic benefits to be gained. For one, the ability to shift demand to off-peak results in energy bill saving and reduces the need for dispatching expensive peaking generators during peak time. There are significant savings on fuel bills In hybrid systems where diesel generating sets operate alongside BESS and renewable energy.

And more importantly, in renewable energy, battery energy storage systems address the challenges of dealing with the intermittency of renewables. In the words of ADB senior energy specialist Atsumasa Sakai,“Mega battery energy storage systems are one technology that holds significant promise for increasing the share of renewable energy available for the grid, and for energy consumers.”

Unfortunately, we lack ancillary services in the Philippines. Data from the Department of Energy (DOE) shows that a total of 2,604 MW have been identified as required ancillary service but to date only 727 MW are deemed confirmed ancillary services.

NGCP in a recent senate hearing admitted that the grid operator could not contract firm AS reserves due to the lack of available capacity. So, SMC’s foray in BESS is beneficial in closing the gap between our grid’s needed ancillary services and available capacity in the market.

It would also be helpful if we have independent platform for ancillary services. One that’s transparent and inclusive, meaning a platform that includes all ancillary services as long as they meet safety and security requirements. NGCP had plans of having its own ancillary procurement platform but it yet has to push through.

BESS has so much to offer us both on renewable energy development and the economic and operational side. But as experts have been saying, when it comes to renewable energy development, more support is needed in the policy framework. In the case of battery energy storage, much like other developing countries, we need to adopt laws and regulations that would encourage market players to provide ancillary services, or specifically a transparent procurement platform.

All Is Not Lost

The world was on its way to massive energy transitions before the pandemic came. Governments were announcing ambitious clean energy targets and banks were shying away from funding coal projects. Big businesses, too were flexing their muscles, announcing 100 percent renewable energy targets to be met in the next few decades.

However, the COVID-19 pandemic, one of the major shocks in major history, happened. It caused disruptions in every business, mobility, and everyday life. This pandemic also caused the most severe economic recession since World War II.

As the world grapples with the effects of the COVID-19 pandemic, has all been lost when it comes to clean energy transition? Are governments less keen on keeping up with their clean energy goals and Paris Agreement targets?

Not all bets are off said Boston Consulting Group (BGC) Center for Energy Impact. COVID-19 may have changed the economic calculus of many governments but these could bode well for renewable energy development.

The consulting group studied how regions around the world are adopting evolving stimulus measures that are altering energy transition plans. The study noted that Europe’s clean energy shift is likely to move forward while some hard-hit countries in South Asia, Africa, and Latin America’s ability to promote energy transitions are severely constrained. It also said that the adoption of renewable and electrification of transport in Northeast and Southeast Asia are likely to increase.

BGC said some countries are pushing forward with their clean energy plans as they have suffered less adverse health and economic impacts from COVID-19. Many leading Asian economies such as Singapore, Malaysia, China, Japan, and South Korea are in a good position to make substantial energy infrastructure-related investments required to make the energy transitions. These countries, after all, are likely to gain the most by aggressively investing in renewable energy generation. These Asian countries have also adopted policy reforms and stimulus measures aimed at increasing industrial competitiveness.

BGC also looked back at history to determine how governments’ responses to economic recessions influence the energy sector’s trajectory.

Back in the global recession of 2007 to 2009, various governments implemented green stimulus programs justifying such moves by saying that a greater commitment to renewable energy development could jolt economic development and offer long-term competitive benefits. 

Green energy policy measures back then were not entirely brought about by climate change concerns. The Paris Agreement did not exist back then. BGC stressed that the European Union and the United States governments directed stimulus spending towards renewables to generate new installation, domestic construction, and manufacturing jobs.

Governments too can bank on renewable energy development to drive economic activities during this pandemic. A report by the International Renewable Energy Agency (IRENA) released last year showed that accelerating investments in renewable energy can help economies recover as they can spur the global gross domestic product (GDP) by almost $98 billion between 2020 and 2050. Renewable energy development can also quadruple the number of jobs over the next three decades.

BGC recognized in its report that the COVID-19 pandemic and the economic recession that comes with it are quite different from the 2007 to 2009 global recession. The collapse of the economy back then required governments to stimulate and sustain new economic activity while the present recession is forcing governments to allot more resources to combat the health crisis while minimizing the impacts of unprecedented short-term employment. Governments are more focused on keeping the economy afloat given their smaller tax revenues and higher spending, rather than jump-starting new economic activity.

In the Philippines, we can expect a much slower energy transition. Aside from the fact that the government’s lukewarm reception to renewable energy before the pandemic, the Philippines also has trouble getting back to its feet economically speaking. As I write this, we are on the fifth week of the enhanced community quarantine or ECQ part 2. The recent jobs report also showed that 4.2 million Filipinos lost their jobs while 7.9 million took pay cuts in February alone. 

According to BGC, “the worse a country is affected by the pandemic, the less likely its government and businesses are to be able to focus on materially altering its energy infrastructure.” It added that energy transitions require a stable economic and social environment to pour substantial investments in energy infrastructure. As the Philippines is badly affected by the pandemic, our country’s clean energy transition will probably be slower.

But this is not to say that the Philippines is in a hopeless situation regarding the clean energy transition. There has been good news last year, after all.

For one, the Department of Energy (DOE) implemented a moratorium on the approval of new coal contracts. It was a move that surprised many as the DOE previously rigorously defended its technology-neutral stand. 

Second, Yuchengco-led Rizal Commercial Banking Corporation surprisingly declared that it would stop funding local coal-fired power projects, following the footsteps of international banks like US third-biggest bank, Citigroup, Sumitomo Mitsui Banking Corporation of Japan, South Africa’s ABSA bank, and Mizuho Financial Group. Such a bold move deserves the country’s gratitude for pioneering this much needed change in our energy landscape.

The Philippines, however, has to make some policy adjustments to attract low-cost funding for renewable energy development. As I have been saying, requiring a higher level of fixed-price contracts is long overdue. Likewise, I have been advocating for a portfolio approach to energy planning so that the tariffs are also based on this portfolio approach.

I’m not alone in these assertions. A study by S&P Global entitled, “How is COVID-19 Impacting the Energy Transition” noted that global investment appetite for green energy remains strong but sustaining appetites requires either fixed-price auctions or long-term visibility in terms of power price agreements. As I have always argued in the last, fixed price contracts will lead to lower power rates for the man on the street.

The Philippines has so much to gain in shifting to renewables swiftly. Even before the pandemic, our government was aiming to become an upper-middle-income country status by 2022. Sustaining economic growth will require more electricity, and local electricity demand is seen to increase by an average of 6.7% annually.

Plus, we need energy security. This pandemic should teach us that it is necessary to end our reliance on imported fossil fuel to power our nation. Just imagine the devastating effect had Indonesia closed its borders and decided to stop exports of its coal. Thankfully, it didn’t happen, but by now we should be working on ensuring our local energy supply.

And experts after experts predict that it would be cheaper to build renewable energy plans than continue the use of existing coal-fired plants, which eventually would become stranded assets.

We are facing monumental challenges in the Philippines as the coronavirus continues to claim lives and cause havoc in our economy. But hopefully, we continue our quest for a faster clean energy transition as more renewables will help us in our economic recovery and ensure energy security. As they say, we need to build back better.

A Stronger Case for Distributed Energy

Apart from disaster resilience, the country will do well in welcoming more distributed energy systems because of other benefits. Photo c/o http://www.advisian.com

Time and time again, thousands of Filipinos are left in the darkness after destructive typhoons hit us.

Just a few weeks ago, Tropical Depression Auring left some residents of Surigao del Norte and Davao Oriental without electricity although the outages didn’t last that long. Auring, after all, was merely classified as a Tropical Depression and didn’t wreck as much havoc as the three typhoons that we experienced last year.

In the last quarter of 2020, Typhoon Quinta, Super Typhoon Rolly, and Typhoon Ulysses battered the country, leaving massive destruction and causing major power outages. The Bicol Region suffered a total power blackout due to these typhoons. 

According to the National Electrification Administration (NEA), the country suffered some Php500 million worth of damages to the utility system because of these three typhoons.

It’s a given that the Philippines will always suffer from catastrophic typhoons given its location. On average, the country is visited by at least 20 typhoons annually, five of which are destructive. We can’t change our location but we can invest in resiliency measures.

 For the Energy Sector, this means revisiting our energy systems, and reinvesting in distributed energy and smart grids

As I have mentioned in a previous post, many countries are already moving away from traditional central power production and are moving toward distributed energy production. The Philippines must follow suit as distributed energy will bring many benefits to Filipinos.

Disaster resilience is one benefit. Our current centralized systems require power lines spanning long distances, which proves detrimental for us when natural disasters happen. Damage to a single line can leave thousands without electricity, which is why it’s hard to restore power immediately. Power distributors, cooperatives, and the transmission company will first have to assess which lines are damaged and affected. Only then can linemen start physically restoring power. Power restoration after a calamity is risky and sometimes results in the deaths of some linemen.

Apart from disaster resilience, the country will do well in welcoming more distributed energy systems because of other benefits.

A recent study in the United States conducted by Vibrant Clean Energy found out that investing in local solar and wind energy, storage, and distributed energy technologies can save the US some $473 billion in power bills from now and year 2050. This amount of savings the research said is feasible if the US invests heavily and uses solar and wind power and distributed energy to power businesses, farms, homes, and schools.

The research also revealed that investments in distributed energy and other technologies that can power 25 percent of US homes are the most efficient way of meeting the country’s climate goals while generating 2 million jobs along the way. And as I have discussed above distributed energy can also help boost the resilience of communities that are dealing with wildly variant weather patterns.

Speaking of farms renewables and distributed energy can also help our agricultural sector.

Recently the Department of Agriculture (DA) and the Department of Energy (DOE) announced that they will jointly undertake pilot renewable energy (RE) projects for the agriculture and fishery sectors in strategic areas of the country. The goal is to promote the use of clean energy in boosting food security. 

Some of the pilot RE projects will include off-grid electrification in corn, rice, and sugar cane farms and the use of solar-powered systems for aquaponics, hydroponics, crop irrigation, and poultry egg incubators and hatchers. The pilot projects will help jumpstart the Renewable Energy Program for the Agriculture and Fishery Sector (REPAFS).

The REPAFS will eventually serve as the blueprint for efficiently and effectively integrating renewables in the agriculture and fishery sector to enhance productivity and ensure sustainability and environmental protection.

The REPAFs will benefit from distributed energy and renewables. Areas that heavily rely on variable energy resources such as wind and solar are better off investing in distributed energy systems as renewable power can be deployed to help balance the grid and improve system reliability.

In this regard we are looking at off-grid solar with battery solutions to be implemented in such areas. One system we are seriously looking into will allow almost a 24-hour electrical source to power  a TV, radio, and a set of lights. And the system will cost below what it currently costs NPC to provide electricity to SPUG areas. We are also exploring collaboration with Land Bank of the Philippines (LBP) to provide the financing needed for the farmers and fishermen.

Distributed energy can also help power rates become more affordable as consumers can sell back power to the grid or receive compensation for allowing the use of their storage systems to help stabilize the grid.

Plus, distributed generation can help breakdown monopolies in power distribution. A study by the Massachusetts Institute of Technology (MIT) entitled, “Utility of the Future” noted that present electricity distribution systems create a natural monopoly as regulators tend to be clueless about the distribution utilities’ managerial inefficiencies and costs. This in turn allows DUs to justify their higher operating and convince regulators to pass the additional costs to consumers.

Distributed energy systems work differently as they bank on other advanced technologies such as advanced metering, energy management systems, and dynamic-based pricing, all of which offer more transparency on pricing.

The transmission and distribution businesses were once conceded as natural monopolies, but technological changes proved that transmission and distribution need not be dominated by a single or few players. 

The transmission and distribution businesses were once conceded as natural monopolies, but technological changes proved that transmission and distribution need not be dominated by a single or few players. Around the world, the energy sector is undergoing massive changes given the many technological advancements and the need to address climate change. It’s high time the Philippines joins other countries that are moving away from centralized distribution as Filipinos will benefit more from distributed energy.

ONE YEAR LOCKDOWN: WHAT I HAVE LEARNED

As we saunter into the second year of what may be another year of lockdowns, albeit, in varying degrees, I am compelled to share with you my friends, what I have learned this past year. What seemed to be a broad spectrum in our lives pre-COVID 19 suddenly became very narrow, concrete activities in our daily lives. In fact, for many of us, we lost a very vital aspect in our lives: livelihood. The loss of ability to provide for one’s family is so devastating that it leads one to think: can I make it through? Where can I find help…

Pope Francis in his encyclical, Fratelli Tutti, said it well when he pointed out that “the storm has exposed our vulnerability and uncovered those false and superfluous certainties around which we constructed our daily schedules, our projects, our habits, and priorities .” This hit me most especially because in my attempt to protect that ability to maintain a livelihood, a livelihood that also ensured the livelihood of many, I found there were activities I was engaged in that only led to false and useless ends.

Today, although certainly in a tighter bind than pre-COVID 19 financially, my life is, I believe, in better order. Of course, worries about the uncertainty of the future stare at my face every day. But this pandemic has taught me how to put these worries in context. One can sublimate these worries in human and supernatural terms. There are worries about the vulnerability of one’s health, especially now we are senior citizens. Again, as long as we are prudent in following health protocols and have a healthy attitude towards the inevitability of death, we should be able to sleep soundly at night. My Apple Watch tells me I sleep on the average 7-8 hours every night with 4-5 hours of deep sleep.

So what have I learned?

1. Family Matters: It is Our Basic Social Unit

As obvious as it seems, this was a fact that dawned on me a month after the lockdown started in 2020. In the beginning, everyone thought that the lockdown will be for 30 days. So, I took it for granted that my entire family — down to my grandsons — were with me when the government first announced the lockdown period last March 15, 2020.

However, as the days went into months, and now the months may turn out to be a year, I feel really blessed to have been locked down with my entire family. I found out it is not healthy to be alone. Man, psychologically and physiologically, needs to have that face-to-face contact that is currently being restricted by the pandemic.

This pandemic has taught us that it’s not our officemates who will ultimately determine our surviving this pandemic. It’s not our drinking buddies, and it’s not even our business partners.

This pandemic has made my resolve to protect the family as our primary social unit even more vital. While our constitution protects this basic concept, there are attempts these days to redefine what “family” means. For those surviving this pandemic, there is no other way to define what “family” means — a mother, father, children, and grandchildren.

2. Social Interaction with Friends and Colleagues Matters

Over this last year, I lost 15 friends to COVID-19. Except for one to whom I could send a taped message even when he was intubated, I was never able to visit or talk to the others. I am told of the solitude of those who die from the disease. I am informed of the pain they suffer alone without being able to feel the touch of a loved one or hear the consoling whisper from a spouse, child, or even just a friend.

This is why I feel it is essential to reach out to friends and colleagues. I have regular chats with friends, former classmates. We have no particular agenda, just sharing experiences and reminiscing our past. Of course, we do have regular “ZOOM” meetings with our business colleagues, but just being able to talk will surely help.

You and I, we are all suffering in the strictest sense of the word. Suffering because we cannot do what a normal human being, a social animal, a social being, was designed to do. Therefore, we should reach out to whoever we can. This will help our mental and physical health.

3. Physical and Mental Health Matters

We are lucky to live in a gated community that eventually allowed its residents to use the subdivision roads to walk, run, or simply exercise. Otherwise, we would have been relegated to a small gym and just our room. As the doctors recommend Vitamin D to get from the sun, a year without the sun would have been disastrous. While this may be an exaggeration, one gets the drift.

Regular exercises have kept my body active daily. It’s a daily mental struggle to go out and sweat. The Activity app of my Apple Watch helps, of course. The challenge is finding variety in the activities that I do. After running throughout the village, I often itch to go out of the subdivision and run the way I used to run — in faraway places like the UP oval!

While watching Netflix or Apple TV+ can tend to be addicting, with some self-control, this activity helps balance off my day. I tend to watch crime whodunit series– it makes my brain work, and documentaries to find out more about events and people worldwide.

I have grabbed a couple of books from my library of never-read books. I do not know, but I had this habit of buying books that I never ended up reading at all. This pandemic has forced the issue — what else is there to read except the books I never read?

4. Wine and Music Matters

Some wine and music at the end of the day have kept the doldrums out of our lives this past year. Whether it’s just Joy and me or with the kids, we find every reason to sit back and listen to a Diana Krall or some excellent soothing jazz album. It’s that time of day when she and I can either just throw out nonsense at each other, like daydreaming of traveling soon or seriously talking about our future.

We would sit in different parts of the house to mimic the “tapas crawl” we miss. While enjoying a bottle of Ribera del Duero, we would put on a Bebo and Cigala album to bring us back when we were strolling along the Plaza Mayor of Salamanca. Or maybe a bottle of Chablis or Pouilly-Fumé that can invoke those nostalgic memories. We talk of the times we would walk along the Seine to go to Robert e Louis, a traditional restaurant in 64 rue Vieille du Temple, in Paris.

For the music, I can stream from Qobuz, Tidal, Spotify, or Apple Music. As a platform, I can stream through Roon, Sonos, or Apple Homepods. So between those apps and speakers, my music choices are almost limitless.

I limit myself to classical music as background to my working time: Bach, Mozart, and Chopin are my favorites. I often leave the easy track and dabble with Rachmaninoff, Dvorak, and Tchaikovsky. Then try some unknown composer to test my mental ability to focus on whatever it is I am working on.

As for jazz, I start off late in the afternoon with vocal jazz, then progress into heavier bebop as the night gets late. Often I would go for Bossa Nova. Sometimes I jump into completely unknown artists suggested only by the AI of my streaming apps.

Finally, I have gone back to my guitar playing, and I have learned to play the piano again. All these help me keep a balance during these days of the pandemic. Indeed, music and wine are the two elements of life that translate into the soul’s language. As one writer puts it, “sipping wine while listening to music can be an intense experience that fills our hearts and tickles our minds.”

5. Spiritual Health Matters

From almost the first day of the lockdown, our family started to pray the Holy Rosary every evening. One of the more painful realities of this daily routine is we literally witnessed the demise of the stalwart of the family. As the pandemic days wore on, his ability to pray with us became increasingly difficult for him until we lost him last August. However, as a family, we are grateful that he was with us in prayer until he breathed his last.

This is why during this pandemic, our spiritual life is the most essential aspect of our existence. I have realized that nothing on this earth worth anything. Our branded shoes, our expensive cars, our jewelry, all our wealth, all these mean nothing in the face of this pandemic. When COVID-19 hits you, you die, and you die alone without any strapping of your wealth.

This pandemic and lockdown have allowed us to hear Mass every day. As one writer puts it, the Holy Mass is heaven here on earth. Scott Hahn, in his book “The Lamb’s Supper,” points out the passage from Vatican II that made him realize that in the Holy Mass, we are all in heaven:

“In the earthly liturgy, we share in a foretaste of that heavenly liturgy which is celebrated in the Holy City of Jerusalem toward which we journey as pilgrims, where Christ is sitting at the right hand of God, Minister of the sanctuary and of the true tabernacle. With all the warriors of the heavenly army, we sing a hymn of glory to the Lord. (no. 1090).”

We usually go to the online Mass of the Manaoag Minor Basilica. We alternate this with the noon mass of the Manila Cathedral. In the whole year of the lockdown, we only received Holy Communion once, Ash Wednesday, and just because it was in our village chapel. I was able to go to Confession twice. This is one Sacrament the Church has not allowed to be online.

It has also given me time to do daily spiritual readings and mediation. All these have made me realize that God’s command to “love other as I love you” is a challenging task to accomplish. Given the misery surrounding us, it has compelled us to walk an extra mile in being merciful and compassionate to those around us. At the same time, this mercy and this compassion are precisely the blame that soothes our aching bodies, our tired minds, and our listless souls.

One year has passed, and while the vaccines are here, the end is still uncertain. However, these five lessons I’ve been taught by the pandemic are lessons I will pass on to my 3 grandsons: Emilio, Andres, and Alfonso. In passing on these nuggets of wisdom to the young, I remember again what Pope Francis said in his Encyclical Fratelli Tutti:

“If someone tells young people to ignore their history, to reject the experiences of their elders, to look down on the past and to look forward to a future that he himself holds out, doesn’t it then become easy to draw them along so that they only do what he tells them? He needs the young to be shallow, uprooted and distrustful, so that they can trust only in his promises and act according to his plans. That is how various ideologies operate: they destroy (or deconstruct) all differences so that they can reign unopposed. To do so, however, they need young people who have no use for history, who spurn the spiritual and human riches inherited from past generations, and are ignorant of everything that came before them.”

God bless us all.