We Need More Funding and Competition


The Senate recently approved a bill amending the Public Service Act to allow full foreign ownership in key industries like transport and telecommunication.

With 19 votes, the Upper House voted to pass Senate Bill No. 2094 which will pave the pay for 100% foreign ownership of railways, airlines, shipping firms, subways, and telecommunications. The 1987 Constitution puts a 40% foreign ownership on public utilities. The new bill is making a distinction between public utilities and public services and frees up the latter for 100% foreign ownership

Senator Grace Poe, one of the bill’s principal authors said that “The main purpose of this measure is to provide consumers with choices and I believe that, by opening our economy to a diverse set of investors, we could provide our fellow Filipinos with more and better choices,” 

The new bill still treats three main industries as public utilities as they are believed to be “natural monopolies.” These industries include Water Works and Sewerage, Transmission of Electricity, and Distribution of Electricity, and will remain subject to the 60-40 rule on foreign ownership.

I have written about this bill in the past where I have questioned why the Senate is treating electricity distribution as a natural monopoly. I have argued that natural monopoly cannot and should not be regulated as it is a market condition. Natural monopolies, after all, exist due to either high start-up costs or powerful economies of scale. Natural monopolies only exist when a single firm can serve the entire market at a lower cost instead of having multiple firms competing for the same market.

Again should the Philippines still classify power distribution classified as a natural monopoly despite the advancements in technology and global trends?

All we need to do is look at other countries. Take the United States for example where several companies heavily investing in non-wire alternatives (NWAs), which are pushing both start-up and fixed costs down. Several complines like Duke Energy and Con Edison can avoid spending billions on transmission infrastructure by investing heavily in NWAs combined with distributed energy resources (DERs) and mini-grids.

New technologies, after all, are removing barriers to entry in the distribution of electricity, which means more players can enter the market more easily given the lower upfront costs of distributing power.

What we are seeing here is not a case of a natural monopoly actually driven by the market but rather a legal monopoly created by lawmakers and regulators. This is a classic example of what Nobel Prize winner Vermon Sith pointed out in this paper “Currents of Competition in Electricity Markets” where he said 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.”

In a separate development, President Duterte has also signed an executive order (EO) 156, an electrification EO to enable electric cooperatives to pursue rural electrification. In the EO, the president stresses that underperforming electric cooperatives (ECs) and distribution utilities (DUs) are hampering the electrification efforts of the government. 

Aside from transferring the powers to take over the DU’s and EC’s operations from the National Electrification Administration to the Office of the President, the EO also ordered all DUs to submit a comprehensive masterplan for the total electrification of their respective franchise areas including a detailed inventory of all inadequately served areas and action plans to achieve complete electrification.

The EO also directs the Department of Energy (DOE) to craft procedures for the participation of local government and communities in determining whether their areas are inadequately served.

But perhaps an alternative route is to open up competition for the same franchise area. Currently, the government is only allowing a single firm for a franchise area, which means that the franchise holder does not have incentives to improve its services or to innovate. Again, our regulations are what’s creating legal monopolies as we can, in fact, have healthy competition in franchise areas only if the government allows it.

It’s great that the EO is asking the DOE to promulgate regulation for the entry and integration of DERs, microgrids, and other alternative service providers in the electric power industry, but we need as well to consider allowing more competition in the same franchise area. Otherwise, consumers will have to wait for DUs to be deemed as inadequate before they can get alternative DUs, and even then they only get served by a single company, which still will have the monopoly in the franchise area.

Plus, we can actually help solve the problem of lack of access to electricity if we do not create legal monopolies as what the Senate bill is doing to the electricity distribution. We need the technology and expertise of foreign companies in developing DERs, microgrids, NWAs, and other new tools that can easily provide power to off-grid areas.

A reactor in our energy forum sponsored by UPVI last October, Bill Lenihan, CEO of ZOLA Electric, a company that offers power solutions in Africa stressed that centralized grid systems won’t solve emerging markets’ problems. He added that countries like the Philippines must make DERs and microgrids as the main source of power in many underserved areas in the country.

However, developing these technologies will again, as I have mentioned, require funding and technologies that foreign companies can provide. To classify power distribution as a natural monopoly when it is not is like taking away the chance from Juan Dela Cruz from far-flung areas to have access to electricity and lessen his chance of improving his economic condition and that of his community at the soonest time possible. 

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.”

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.

We Lowered our Power Bill Despite Higher Consumption, Here’s How We Did It

Consumers are complaining of their energy bills these days after months of not receiving them. The mounting consumer complaints have compelled the Energy Regulatory Commission (ERC) to order the biggest power distributor, Manila Electric Company (Meralco) to explain how it billed its close to seven million customers, 92 percent of which are residential accounts.

According to Meralco, the high power bills of its subscribers are because of the higher usage of electricity at homes during the community quarantine. The summer season didn’t help in lowering power consumption either, the energy distributor says.

There’s also a problem with the meter reading. During the enhanced community quarantine (ECQ), Meralco did not send out its employees to conduct meter reading. Thus, the last three month’s average consumption was used as a basis for the billing during March and April.

There are various ways we could have avoided a bill shock.  The company says smart meters, which allows for remote meter reading, would have eliminated the need for meter readers to go door-to-door during the lockdown. Indeed, remote meter reading would have been beneficial for consumers. We are now developing a new technology that allows our personnel to read, connect, disconnect, and reconnect power remotely. We intend to roll-out this technology by year-end. 

While many consumers were shocked and left in dismay over their power bills, our household, on the other hand, has a different experience. I and other members of the family stayed at home like many Filipinos. Our power consumption is higher, too given multiple devices, gadgets, and appliances catering to our needs. But unlike most Meralco consumers, our power bill is lower despite our higher consumption. 

Fortunately, even before the lockdown, we have installed rooftop solar at our home. After all, as a renewable energy advocate, I knew that there are many benefits in investing in renewable power technologies. And indeed, our solar system installation came in very handy at a time when we all had to stay home and consume more energy for months.

Solar rooftop technology can cut electricity costs drastically. Many anti-renewables are always pointing out that the one-time investment in this technology is too expensive and might not be worth it. However, consumers have to consider that this system is a one-time investment. A household would only need to shell out money once, unlike getting electricity from a traditional distributor where they have to pay a monthly charge depending on their consumption and other pass-on costs. Consumers who don’t want to experience a bill shock would do well in installing a rooftop solar system. 

A rooftop solar system is also low maintenance since it merely requires proper cleaning from time to time, much like any appliance. There are no major maintenance costs involved in having rooftop solar at homes. Maintaining a car is way more expensive than the maintenance costs of using a solar rooftop technology.

Rooftop_Residential_Solar_Panels_Installation_Power_PV_XL_721_420_80_s_c1

In the U.S., solar panels can increase the value of a home property anywhere between 3 to 9.9%. Photo c/o Greentech Media

Solar rooftops also increase a home’s resale value. A study by Zillow, a real estate information company in the United States revealed that adding solar power at home increases the property’s sale value, similar to the effects of renovating spaces such as kitchens and basement. According to Zillow, solar panels can increase the value of a home property anywhere between 3 to 9.9%, depending on the property’s location.

Our solar rooftops are of great help at a time when we are all staying at home. This technology allows me and my family to use even high-consuming appliances like airconditioners without much guilt, knowing that our investment in rooftop solar panels is working for us. It is unfortunate that some who would like to have this technology such as those living in high rise buildings won’t be able to take advantage of this technology, for now, to help with their power bills. But for those who can, solar rooftop system is indeed a worthy investment.

When Private Sector Efforts Aren’t Enough

Recently, tech giant, Amazon announced three renewable energy projects totaling 265 megawatts (MW) that would provide power to its data centers. The tech giant said these new projects are all part of Amazon’s efforts to power 100% of its operations via renewable energy.

The three projects consist of a wind farm with a maximum capacity of 50 MW in Scotland, and two solar projects with 215 MW capacity in North Carolina and Virginia. All three projects are expected to start generating power by 2021.

Amazon’s new renewable energy is all part of the company’s commitment to helping the environment. “We are committed to minimizing our carbon emissions and reaching 80% renewable energy use across the company by 2024,” Amazon’s Director of Sustainability Kara Hurst said.

Amazon is not the lone global brand to make headlines recently for its commitment to renewable energy. Likewise, The Estée Lauder Group announced that it has already reached 100% in renewable power in the United States and Canada ahead of its target date. The brand also announced that it has signed a virtual power purchase agreement (VPPA) for wind energy. This makes the Estée Lauder Companies Inc the first prestige beauty firm to execute a VPPA.

Under the signed VPPA, the beauty company will purchase power 22 MW from the Ponderosa wind farm in Beaver County, Oklahoma owned by NextEra Energy Resource. The company says this new development is a great addition to its renewable portfolio “We’re so pleased to meet our 2020 RE100 commitment for North America early. Projects like the Ponderosa wind farm and others in our Net Zero portfolio are all significant achievements toward our commitments to address climate change,” said Nancy Mahon, Senior Vice President, Global Corporate Citizenship and Sustainability of The Estée Lauder Companies Inc.

Corporate renewable energy procurement has been aggressive in the last few years as private firms do their best to honor their commitments to zero emissions.

In 2018, corporate renewable energy deals were on a roll as clean energy contracts entered into by corporations more than doubled from 2017. There was a total of 13.4 gigawatts signed by 121 corporations across 21 nations last year.

Corporate renewable energy deals are impressive but are they enough to meet the world’s commitment of net-zero carbon by 2050?

The answer is no, since gas, oil and coal still dominate the energy mix according to Nick Butler, chairman of The Policy Institute at King’s College London and energy commentator for Financial Times. He stressed that in 2018, only $300 billion out to $1.8 trillion in investments in the energy sector went to renewables. The rest of the money went into fossil fuels, particularly gas and oil.

Butler says the established hydrocarbons for energy remain resilient since renewables only supply five percent of the global power demand. Within 10 years, renewable power is only likely to contribute 12 percent to global energy. Coal will continue to dominate in the next few decades.

This is not to say that renewables will never be the primary source of energy. Butler points out that renewables could dominate the world’s power mix but it will take more than 20 years.

The chairman says that the key to a faster energy transition is more involvement from the public sector. So far, return on investments for renewable energy is still far from the returns in oil and gas projects.

Butler proposes the adoption of a mixed economy model where the state will provide long-term capital to balance the low rate of with the value that renewable power brings to the public. He cites the cases of BP, and Equinor, formerly known as Statoil. The latter was put up by the Norwegian government as the state’s oil company and later became a major player in the gas market and the world’s largest oil and gas offshore operator. The company has rebranded into Equinor and now actively investing in solar energy and offshore wind.

For the Philippines, this will require a major shift in its energy policy.  The EPIRA clearly steered the Philippine power sector to more private investments rather than the government. Its intention was to make the power sector “market driven.”  Unfortunately the Philippine energy market is not efficient and still too young to be a reliable indicator of market prices.  Therefore relying on this current market structure will not bring in new renewable energy projects in the scale and speed at which we need to put in place in the country.

There are ways to make the shift possible even under the current EPIRA regime.  The Renewable Portfolio Standards (RPS) regulation is one way to go albeit its contribution will be very small. The issuance of a tariff policy requiring more stable power rates will help bring this surge in renewable energy investments.  There are other ways.  However, the government must first realize the need for more RE investments.  Otherwise, all its policies and directives will be palliative solutions to what is going to be a major challenge in the country’s energy security situation.

https://www.theclimategroup.org/news/est-e-lauder-companies-inc-achieves-100-renewable-electricity-us-and-canada-ahead-schedule-and

https://cleantechnica.com/2019/11/13/corporate-green-energy-adoption-flourishes/

https://www.cnbc.com/2019/10/24/amazon-announces-three-new-renewable-energy-projects.html

 

The New Age of Grids

The Philippines finally appreciates the value of smart grids.

For starters, the upcoming 200-hectare New Clark City (NCC) located in Clark’s special economic zone will boast of having the first completely smart power grid in the Philippines.  The NCC, after all, is designed to be the country’s first smart, sustainable and disaster-resilient city.

NCC’s owner, the Bases Conversion and Development Authority (BCDA) already inked a deal with the Meralco-Marubeni Consortium to be the city’s power distributor. This, after the consortium, won the bidding with their proposed tariff bid of Php 0.6188 per kilowatt-hour (kWh). The tariff rate is lower than the Php1.25 kWh tariff ceiling set by the BCDA for power distribution.  It is also cheaper than the Php1.24 kWh rate of Mactan Electric, the lowest distribution supply metering tariff under the traditional distribution system.

The smart city will have state-of-the-art facilities on par with other smart cities around the world.  The smart grid in the NCC is seen to have better reliability standards and will allow customers to access real-time information from the distribution utility. Distribution lines will be underground adding to the aesthetics of an environmental-friendly city.

Plus, just recently, the National Electrification Administration (NEA) has announced that it has piloted a smart grid technology aimed at improving the reliability of a Batangas electric cooperative’s distribution system with the help of the Japan International Cooperation Agency. The technology to be used in this pilot is the Distribution Automation System that is expected to improve the distribution system reliability as well as lessen the duration of a power outage. These are all thanks to automation.

NEA says the smart grid technology will hopefully do wonders for the operational efficiency, particularly the reliability of the cooperatives’ system reliability.

Indeed, smart grids are now making their way to the Philippines. And why not when there are so many advantages in investing in modernizing our power distribution system?

For one, smart girds, unlike the traditional grids allows for two-way communication of electricity data thus providing real-time data collection on the power demand and supply during the transmission and distribution.  This means that the electrical grid can respond quickly to changes in the power demand, thanks to the grid’s controls, automation, computation, and equipment. The said cannot be said of the traditional grid that has a one-way interaction during generation and consumption.

smart-grid-Borg-2

Smart grids empowers consumers by providing real-time data on power demand and supply. Photo c/o telecomdrive.com

 

Smart grids also empower consumers by providing them with information on when the power demand is at its lowest or highest. This information allows them to schedule high energy-consuming activities such as ironing or running the washing machine when electricity costs are lowest. Plus, smart grid coverage lets consumers purchase their electricity straight from retail suppliers.

Another benefit of smart grids is its ability to integrate renewable energy into the system.

In the case of the NCC, the BCDA plans to integrate embedded generation that has renewable energy as its primary power source. The city can also source its power from rooftop solar PVs, waste-to-energy and natural gas, among others.

Clearly,  modernizing our power system with the help of smart grids is a great way to move forward. But, of course, regulations must also be updated as we shift to the smart grid.

Currently, the Philippines has no rules concerning smart grids. The Department of Energy has said that a roadmap for smart grids in the country is underway and will be released by the third quarter of this year in the form of a department circular.

Hopefully, this roadmap will be able to address issues regarding the use of smart grids such as smart meter, real-time dynamic pricing, and grid cybersecurity, to name a few. May it will pave the way for the proliferation of smart grids so that Filipino consumers can take advantage of such technological advancements.

Finally, let me say that the advent of smart grids will lead to the integration of ICT and power systems. This will lead further to the development of data centers nationwide, increase in the number of internet exchange servers, and eventually bring down the cost of both power and telecommunication services. The distribution grids that can adapt to these developments will be those that have the 21st technologies at their disposal. This will indeed help spur the development of the country. As I said, however, only competition in the distribution sector can speed this up.

Isn’t It Ironic?

ocean

Record-breaking year for ocean temperatures in 2018. Photo c/o Business Insider

Germany recently made an announcement that it will end its dependence on coal power plants by 2038 in an effort to meet its commitment to the Paris climate change goals. Reports noted that the country intends to reduce its coal energy capacity from 42.6 gigawatts (GW) to around 30 GW in 2020 and to 17 GW by 2030.

Germany at present still sources 40 percent of its power needs from coal. Last year was a first for the country as renewable energy dominated the power mix.

Hans Joachim Schellnhuber a member German coal exit commission hailed the decision as a move that’s very much needed in this day and age “ This is an important step on the road to the post-fossil age – a step that also opens up new perspectives for the affected regions through innovation-driven structural change.”

And I agree that the move is a step in the right direction. Each country needs to make drastic actions to help keep the world’s temperature at the desired levels. After all, the United Nations recently warned us that we only have 12 years to keep the world’s temperature to a maximum of 1.5 °C. Otherwise, we will suffer from worsening of risks of floods, extreme heat, droughts, and poverty.

We are already, of course, seeing the effects of climate change.

For example, as early as November last year, experts have warned that 2018 was likely to be the fourth hottest year on record. There is no confirmation of this record as of now. But what has been confirmed is that 2018 is that ocean’s had their warmest year on record.

The study that was published in the journal Advances in Atmospheric Sciences noted that the hot record indicates the enormous amount of heat is being absorbed by the sea due to rising of greenhouse gas emission. Rising ocean temperatures are not to be ignored says, experts, since they contribute to intense hurricanes and destruction of coral reefs.

Plus, the world is likely to suffer from El Nino this year, which will make 2019 as most likely to be the hottest year on record according to the Climate Prediction Center.

These warnings, of course, are pushing many countries, like Germany to step up their fight against dirty sources of power and honor their commitment to the Paris agreement in 2015.

The Philippines, unlike Germany and other countries, are far from making waves when it comes to greater use of renewable. This is a pity since we Filipinos have more reasons to shift to renewable power.

For starters, we are a country that is endowed with plenty of natural resources. We are just the third biggest geothermal power producer in the world. The Philippines used to be second, but sadly was overtaken by Indonesia (which merits a separate article). We are also a tropical country as well. Yet here, we are a nation that has coal plants as the major source of energy.

It also makes sense for us to do our share to help the earth limit its global warming. The Philippines, after all, has been tagged as one of the most vulnerable nations to climate change. But we are a country that has pushed back its target of sourcing 35 percent of overall energy needs by 2030 to 2040.

Plus, there’s a clamor renewable power among Filipinos. A survey by Pulse Asia last year showed that 89 percent of Filipinos are in favor of renewable energy. But alas, the country will be adding some. 10,423 MW of coal power.

We have every reason to shift to renewable energy. We have the natural resources. We are a country that suffers greatly from the effects of climate change. Our citizens want cleaner forms of energy. But no, we remain a nation dependent on coal. How ironic. And sad.

References:

https://www.philstar.com/business/2018/12/26/1879827/iemop-proposes-nationwide-system-renewable-energy-development

https://www.accuweather.com/en/weather-news/2019-may-be-the-warmest-year-on-record-as-a-result-of-an-el-nino-event-exacerbated-by-global-warming/70006943

https://edition.cnn.com/2019/01/16/world/climate-2018-hottest-year-for-ocean/index.html

Good and Sad Headlines

 

re germany

Renewable Energy dominated the power mix of Germany in 2018. Photo c/o Time.com

The New Year started with news of record highs for the renewable energy sector.

In Germany, renewable energy dominated the power mix for 2018. A study by Bruno Burger of the Fraunhofer Institute for Solar Energy Systems showed that Germany is on its way to becoming less dependent on fossil fuel as renewable energy accounted for 40 percent of the country’s electricity production in 2018 while 38 percent came from coal. This is the first time renewables has overtaken coal as Germany’s primary power source. Wind power also became the second biggest power source.

Similarly, a  new record high in renewable energy use was also recorded last year by the United Kingdom (UK).

According to climate research and news site, Carbon Brief, growth in renewable energy use in the UK rose to 33 percent, a record-breaking figure. On the other hand, fossil fuel use dropped to 46 percent, the lowest ever recorded as many coal power plant closed last year. The UK has earlier pledged to phase out all coal plants by 2025.

These two countries’ achievements only show that indeed a shift to cleaner forms of energy is possible.

Unfortunately, the Philippines has not been making headlines for its use of renewable power.

On the contrary, recent headlines about the energy sector talks about the increase in power rates due to the second tranche of the Tax Reform for Acceleration and Inclusion or TRAIN law.

The second installment of the law equals an additional excise tax of Php2.00 per liter of diesel and gasoline an added 12 percent value for 2019. The total increase per liter of diesel will be Php2.24. Last year, Php 2.50 taxes were levied on diesel and bunker fuel.

Naturally, the new taxes will have a domino effect on consumer prices, transport fares, and yes, power rates.

No, I am not questioning the merits of our new taxation scheme. I leave that to tax experts and economists. What I am merely pointing out is that the new taxes also increase power rates because of the Philippines’ dependence on traditional sources of power.

Estimates by The Independent Electricity Market Operator of the Philippines (IEMOP) show that the second tranche of TRAIN law will raise electricity prices by P0.1111 per kilowatt hour (kWh). By 2020 or on the third installment, the increase would be P0.1311 per kWh. The first phase already raised electricity prices by P0.0904 per kWh. These estimates according to IEMOP are based on the assumptions of Manila Electric Co. (Meralco) related to its sourcing energy mix.

Naturally, the power rates will increase if fuel prices in the world market increase, too. In the words of IEMOP President Francis Saturnino Juan, “So, these are the incremental amounts, but of course if the price of fuel itself will increase, then that will add to this incremental increase in 2019 and 2020 because of the staggered increase in the implementation of the law,” he said.

The issue of increasing power prices is a separate one from that of volatility. Volatility itself causes over-all costs to rise because of uncertainty. Because we are dependent on global markets, necessarily we are exposed to global price swings.

We could have spared the Filipinos from this additional burden if we increased the share of renewable power in our power mix a long time ago. Why pay more for expensive sources of energy when we could have just harnessed our natural resources well? This is especially true for off-grid islands that are powered on diesel-fired generators. We have to keep in mind that 80 percent of the operating cost of power generation in isolated islands are spent on diesel. And with added taxes on petroleum products, we can expect higher prices of power generation for the off-grid areas.

That’s just the problem with our reliance on traditional sources of energy and the government’s lack of appreciation for renewables — it leaves Filipinos vulnerable to a variety of factors. Sadly, it is the consumers that suffer when there is no political will to push for a greater share of renewable energy.

References:

https://businessmirror.com.ph/after-hurdling-2018s-regulatory-crisis-power-industry-players-are-ready-for-year-of-the-pig/

https://www.independent.co.uk/environment/renewable-energy-germany-coal-power-environment-green-solar-wind-a8711176.html

https://www.ft.com/content/ea2feb40-0e8e-11e9-a3aa-118c761d2745

Survey Says

The majority of Filipinos are dissatisfied with current power prices according to a survey by Pulse Asia.

Last August, the research firm released its report revealing that around 60 percent of Filipinos are dissatisfied with the power rates. “With the exception of Mindanao, at least half of adults in the main geographic areas are dissatisfied with the price of their electricity,” Pulse Asia said.

The survey also showed that a significant majority of Filipinos or 82 percent are in favor of “having a new option for electric service provider or electric utility.” In the National Capital Region (NCR), 88 percent of adult Filipinos expressed openness to having new electric service providers. Plus, 89 percent of Filipinos also favor renewable energy.

The survey results are a testament to the growing dissatisfaction of Filipinos on our high power rates. They are also aware that there is a need for more competition in our energy sector even in the distribution segment to cut the cost of electricity. Competition, after all, will always drive down market prices. And it is not surprising that the vast majority of the survey participant for NCR is open for more distributors as the monopoly of a company in any business will never be beneficial for consumers.

Unfortunately, the passage of the Electric Power Industry Reform Act (EPIRA) did little to invite competition in the markets in the distribution side as we focused more on having more players in the generation business.

But there are steps our regulators can take to generate more players in the distribution of power. For one, we can break away from the current practice of disallowing a new distribution entity to enter the market where one DU is in place. Such practice fails to promote competition and instead allows for a monopoly to flourish.

Aside from allowing other power players to enter an already franchised service area, our regulators should also consider lifting the cap for the Retail Competition and Open Access (RCOA).

Currently, the rule says that only those with a monthly peak demand of 750 kilowatts or higher can be considered contestable customers and can choose their preferred service providers. In my opinion, this rule should be revised as anyone regardless of their power consumption should be given the option to decide where to source their power.

We have to keep in mind that contestable customers get to save on their energy bills than the captive customers or those who are required to source from their distribution utilities or electric cooperatives. In a column in BusinessWorld, President of Minimal Government Thinkers, Bienvenido S. Oplas, Jr. President of Minimal Government Thinkers notes that contestable customers on average only pay Php 6.91 per kilowatt hour (kWh) considerably lower than the captive customers who pay roughly Php 7.78 kWh.

Our government then should work on giving choices to the majority of the Filipinos by allowing them to choose their power generator or distributor rather than force them to stay with their current ones. Naturally, aside from lifting the restriction on RCOA, there is also a need to make the infrastructure and resources available to pave the way for this scenario where customers have the freedom to choose their energy type, generator, and even distributor.

DU competition

Technology will soon render the traditional distribution system obsolete according to experts. Photo c/o https://m.dailyhunt.in

We have to make these changes if we do not want to be left behind. Let us keep in mind that the technological advancements will soon render the traditional distribution system obsolete as asserted by many experts. For example, David Cane, former CEO of NRG Energy believes that the existing utility system will become irrelevant in the near future since many advanced countries are moving towards decentralized homegrown energy where home automation be of great importance. He argues that “When we think of who our competitors or partners will be, it will be the Googles, Comcasts, AT&Ts who are already inside the meter.”

Indeed, we need to create an environment that can accommodate these technologies, so we can benefit from having more options as well as cheaper power prices to consumers.

Having choices is one of the best ways to promote competition and hence lower down the power costs in the country. However, major changes are needed that require a lot of willpower. It is time for our regulators to put the interest of the Filipino consumers above anything else.

References:

https://www.philstar.com/headlines/2018/08/21/1844441/filipinos-not-satisfied-high-power-rates-poll

https://www.bworldonline.com/electricity-competition-epira-and-wesm/

A Timely Reminder

Three years ago, Pope Francis made a strong appeal to the world to address the growing problem of climate change. In his 180-page encyclical, the pope stressed that “Climate change is a global problem with grave implications: environmental, social, economic, political and for the distribution of goods. It represents one of the principal challenges facing humanity in our day.”

Pope Francis recently made the same appeal with investors, oil executives and Vatican experts during an unprecedented conference at the Pontifical Academy of Sciences.

The pontiff had stressed that climate change must be addressed soon and the world has to use a power mix that will combat pollution, promote social justice, and combat pollution. “But that energy should also be clean, by a reduction in the systematic use of fossil fuels. Our desire to ensure energy for all must not lead to the undesired effect of a spiral of extreme climate changes due to a catastrophic rise in global temperatures, harsher environments and increased levels of poverty,” the pope said.

He reminded his audience that development must not come at the expense of the environment “Civilisation requires energy, but energy use must not destroy civilisation.”

The head of the Catholic Church has never wavered in his appeal to the world to make the planet a better place by saving the environment. His recent plea is also timely as studies and reports show that the world has to do more in fighting the effects of climate change.

The recent United Nation (UN), a yearly report entitled ‘The Sustainable Development Goals Report 2018” concluded that climate change along with inequality and conflict are the primary factors in growing hunger and displacement around the world.

The figures in the report showed that the world has a long way to go in combating the effects of climate change including the health hazards. After all, the World Health Organization once tagged climate change as “the defining issue for the 21st century.”

The UN study revealed that in 2016, around the world, 91 percent of the urban population were breathing dirty air or air that failed to meet the WHO Air Quality Guidelines. What’s worse is that more than half of the said population were exposed to air pollution levels that are at least 2.5 times higher than the safety standard. It is not surprising then that around 4.2 million people died due to high levels of ambient air pollution.

The same report showed that renewable power’s share in the final energy consumption had a moderate increase from 17.3 percent in 2014 to only 17.5 percent in 2015.

That’s a sad figure, especially when the more significant use of renewable energy can save lives. Let us remember that both coal and oil power have greater death prints, or what energy expert James Conca defines as the “number of people killed by one kind of energy or another per kilowatt hour (kWh) produced.”

In fact, the mortality rate of coal, which is derived by dividing the trillion kilowatt hour of use, is 100,000 when we get 50 percent or our energy needs from this source. Likewise, oil has a mortality rate of 36,000 for every eight percent of the energy it supplies.

Apparently, the growth of renewables in the world’s energy mix had been slow and more people are literally dying because of it. Clearly, more must be done to combat climate change, which includes developing and using more cleaner forms of energy.

Let us heed the Pope’s call, shall we?

References:

https://www.theguardian.com/world/2018/jun/09/pope-francis-tells-oil-bosses-world-must-wean-itself-off-fossil-fuels

http://sdg.iisd.org/news/sdg-report-2018-finds-conflict-climate-change-inequality-hindering-progress/

https://www.forbes.com/sites/jamesconca/2012/06/10/energys-deathprint-a-price-always-paid/#16e2ea1b709b