Burning Fossil Fuels Equals Big Losses

Recent research by Greenpeace Southeast Asia and the Centre for Research on Energy and Clean Air (CREA) found that the global cost of air pollution from fossil fuels is roughly $8 billion per day or 3.3% of the world’s global domestic product (GDP). Burning fossil fuels also causes 12,000 premature deaths daily.

The study entitled, Toxic Air: The Price of Fossil Fuels is the first global assessment of the economic burden of health impacts from fossil fuel air pollution. The research showed that burning fossil fuels also resulted in an estimated 4.5 million premature deaths every year globally as toxic pollutants are causing an increase in chronic and acute diseases. This costs the world some $2.9 trillion annually as a result of non-communicable diseases and respiratory made more likely by elevated pollution levels.

Particulate Matter (the small liquid droplets and particles in the atmosphere that comes from fossil fuels) air pollution increases work absences with an estimated cost of 1.8 billion days of work absences yearly worldwide.

Plus, the research also showed that air pollution from fossil fuels is affecting children from low-income families severely. There are at a minimum of 40,000 kids who die before reaching the age of five due to exposure to particulate matter air pollution.

In the Philippines, the study noted that air pollution due to burning fossil fuels, particularly, coal, gas, and oil is causing an estimated 27,000 premature deaths yearly, which is equivalent to roughly $6 billion in economic losses annually or as high as 1.9 percent of our country’s GDP.

The study concludes that decarbonizing globally can provide rapid gains for everyone. The authors stressed that many of the solutions to address climate change are the same ones needed to eliminate air pollution. This means that replacing fossil fuels with renewable energy is crucial in limiting global warming to 1.5 c above pre-industrial level while at the same time help in the reduction of the emission of air pollutants. “A phase-out of existing coal, oil and gas infrastructure brings major health benefits due to the associated reduction in air pollution,” the study read.

The numbers presented by this recent research is alarming. Yet it isn’t the first warning the world has received about the dangers of using fossil fuels heavily for our needs.

deadly coal

Research shows that burning fossil fuels also resulted in an estimated 4.5 million premature deaths every year globally. Photo c/o theecologist.org

The recent Greenpeace study also somewhat echoes the findings of energy expert and geochemist James Conca who measured death prints or the “number of people killed by one kind of energy or another per kilowatt-hour (kWh) produced”.

Conca’s research showed that globally, the mortality rate of coal is 100,000 for every 50 percent of electricity demand sourced from coal. Oil also has a large death print with its mortality rate of 36,000 for every 8% energy sourced from oil.

In contrast, solar rooftop and wind power, and mortality rates of 440 and 150, respectively. Each power source only contributes one percent respectively to the global energy at the time of the study.

Plus, the environmental benefits of shifting to renewable energy has long been well documented. For example, a study in the United Kingdom in 2017 showed that the carbon emission of the UK decreased by 5.8 percent in 2016 as the use of coal dropped by 52 percent.

Unfortunately, our government and energy planners don’t see the risks of using traditional sources of power continuously. Coal remains the dominant power source in the Philippines, accounting for 52 percent of the total energy supply in 2018. And unlike other countries that are closing down coal power plants, the Philippines will see a massive expansion of coal plants up until the next decade. Fitch Solution’s forecast released August last year showed that coal will continue to dominate our power mix and contribute to 59 percent of the energy mix by 2028.

There was a time when I have built coal plants myself to address the growing needs for more energy but we can no longer ignore the undesired effects of relying heavily on fossil fuels. And over the last few years, I have been advocating for the shift to renewables for a long time for a variety of reasons. It is possible to plan for a renewables only future for the country.  Of course, we know that even if we go completely renewable it will not contribute much in terms of “volume” to the global need to bring down CO2 . However, as we say, a small candle lighted in the dark will go a long way in contributing to this global effort.

More importantly, as I have been saying renewable power is our best bet in getting ourselves affordable and stable power. Of course, the benefits to health and our environment are also more reasons to push for a major transition to cleaner energy as many countries are now doing. We also need to look at what climate change has been doing to our father patterns -we are one of the more disaster-prone countries in the world.

Maybe providing affordable and stable energy are not sufficient reasons for our planners and government to work double-time to fast track renewable energy development in our country. Perhaps the thought of premature deaths among Filipinos and especially among our young children less than five years of age can help convince that the time to make that big shift to cleaner power is now.

References:

https://news.abs-cbn.com/spotlight/10/14/19/ph-climate-measures-lack-urgency-despite-vulnerable-status-experts-say

 https://newsinfo.inquirer.net/1228083/dirty-air-kills-27k-in-ph-yearly-says-study#ixzz6FFbqt1dz 

PH could attract $20-B renewable energy investment

Smart Grids and Distributed Energy for Disaster Resilience

Typhoon Ursula hit during Christmas time and left several provinces devastated. Its impact includes damaged power supply structures, leaving many many Filipinos without electricity for weeks.

In Aklan, power yet has to be restored three weeks after Ursula made its landfall. According to the Aklan Electric Cooperative or Akelco, the firm is targeting normalization of power supply in some parts of the province by January 25, almost a month since Ursula’s arrival.

Unfortunately, despite round-the-clock efforts to restore electricity, only 60 percent of 381 villages’ power supply has been restored. Power restoration is a massive undertaking in the province given Ursula’s destruction. There were 1144 electric posts either damaged or destroyed. “Several of our primary and backbone lines were destroyed or damaged, that is why full restoration is taking time,” an Akelco engineer was quoted in a news report.

Naturally, being without electricity is hurting the businesses in the province. According to the Philippine Chamber of Commerce and Industry (PCCI) the micro, small and medium enterprises are the ones suffering most from the lack of electricity in the areas as generator sets needed to power their businesses cost a lot of money to operate.

ursula

Electric posts felled by Typhoon Ursula in Capiz. Photo c/o inquirer.net

Similarly, electric cooperatives in other parts of Visayas are also begging consumers for patience as restoration of power takes time. An executive from Samar II Electric Cooperative is appealing to consumers for more patience and understanding. The cooperative is being criticized for its inability of the cooperative to bring back electricity. The linesmen have been at the receiving end of harsh comments, too, prompting the executive to explain that the cooperative has to also look out for the safety of linemen as well.

“These are stories that sometimes never made it in the news. We don’t want to make grandstanding, what we want is for people to know how our linemen risk their lives just to get the power back to your respective houses and properties.” 

Unfortunately, we are a country that is and will be repeatedly hit by extreme weather events. The Philippines will always experience the wrath of natural disasters. This means that Filipinos will have to endure the effects of natural calamities like being without power. If we can recall, it took almost six months for power to be restored after Super Typhoon Yolanda devastated the Visayas region in 2013. It was reported that six linemen died in the restoration process.

For the power sector, this means investing in infrastructures such as distributed generation and smart grids. 

The traditional model of power supply and distribution is proving to be detrimental and even deadly for us Filipinos. Let us keep in mind that central power production means that energy has to be carried via power lines spanning long distances. This means any damage to a single line leaves thousands of homes without power.

In extreme weather disturbances like typhoons, dozens of power lines are compromised simultaneously. The transmission company and distributors then work double-time to determine which lines are affected and which broken ones should be fixed first. Only then can the crews and linemen start the physical side or power restoration.

This is where smart grids and distributed energy come in. Since power is produced in many places, only a handful will be affected if the facilities of a power producer are badly damaged. Even then, those being supplied by the affected power producer may not even experience a power loss. Thanks to the smart grid, electricity can be sourced from another generation node so those affected by the compromised line or power generator can be supplied by another generator.

This is the advantage of moving away from the traditional way of power transmission and generation. Distributed energy along with smart grids can make an area extremely resilient from the wrath of natural calamities.

The traditional model of central production, transmission and generation are slowly being replaced by distributed energy and smart grids. And rightly so, as explained by Josiah Nelson, Chairman, and CEO at Trolysis, a renewable energy company producing on-site, on-demand hydrogen power from aluminum and water.

“Not many people realize this, but in the majority of the country, if there’s a compromised line or a power outage, the power company has no way of knowing until customers pick up the phone and tell the utility that they’ve lost power. This is a horribly backwards way of detecting outages and is a perfect example of the decades-old technology our grid is built on.”

Aside from smart grids and distributed energy, our government should also consider underground conduits that can carry power and even telecommunication cables. Naturally, underground conduits are more unlikely to be damaged during typhoons.

We cannot change our geographical location, nor can we prevent typhoons or other natural disasters from happening. Neither can we change the fact that power restoration with our existing facilities is a dangerous task. What we can do is increase the country’s resilience against natural disasters. This means shifting away from decades-old technology and making way for new ones. Doing so requires acknowledgment of our need for such, proper regulation and more investments.

(Again) It All Boils Down to Appreciating Portfolio Theory in Energy Planning

A new study by the Institute for Energy Economics and Financial Analysis (IEEFA) foresees a record decline in coal-fired power in 2019.

The study entitled “Global Coal Power Set for Record Fall in 2019,” says that the decline of thermal power coal is likely in major markets such as the United States, China, European Union, and Japan. The slowdown in the US is a record one as coal-fire use in electricity generation is likely to fall by 13 percent. Coal power decline in the EU posted a staggering 23 percent year-on-year in the calendar year to September 2019. 

It also notes that Southeast Asia is unable to absorb the dramatic decline of coal in these markets. “At just 4.6% of the world’s total coal-fired power generation in 2019, the Southeast Asian region is not big enough to compensate for the dramatic cuts in thermal coal use in the U.S, the European Union and South Korea, and the ongoing slow decline in Japan,” explained Tim Buckley, co-author of the report and director of energy finance studies at IEEFA.

The report also stresses that around the world, investments are moving away from coal due to fear of rising stranded asset risks. It also doesn’t help the coal sector that renewables are seeing double-digit deflation annually says the report. Buckley says it is clear that we will see a steady decline in thermal coal in the coming year. “The transition away from coal is happening faster than forecasters can keep up with.”

In the Philippines, it seems like there is no slowdown in coal power use. On the contrary, coal dominates and continues to dominate the country’s energy mix. A Greenpeace recent report says that coal remains our primary energy source with a 52.05 percent contribution. On the other hand, renewable energy sources share was less than half of coal at 22.27 percent as of December 2018.

The Greenpeace study also says that in terms of proposed committed projects, coal remains the king with 80 percent shareholding in total installed capacity. The environmental group says that coal power’s share in the power mix will increase to three-fourth if all these proposed projects were to be approved. 

“We are already in a state or era of dirty energy because the majority of our power plants come from coal and there are a lot of proposed coal power plants,” Khevin Yu, Greenpeace Philippine campaigner noted.

Greenpeace also analyzed the commitments and energy portfolio of five power companies. These five firms’ portfolio when combined accounts for more than 50 percent of the present existing and proposed power projects in the country. The report pointed out that the proposed power projects of four out of five firms still have coal as their preferred energy source.

In terms of their priority, companies are focused on coal energy development. “This shows that these companies will lead us to a path that our energy system will become coal-dependent,” Yu said.

Greenpeace has recommended placing a moratorium on coal plants the soonest possible time so clean energy can flourish. The suggestion isn’t new as the Energy Secretary had already been asked in congress if he favors such move. To which the secretary replied that a moratorium would be a disservice to the Filipino people.

coal jan

Coal power is likely to contribute 75% in PH energy mix says Greenpeace. Photo c/o Optimusenergy.com.au

Stepping the brakes on the construction of coal-fired plants, and ultimately, the dominance of coal in our power mix is not a disservice to the Filipino people. On the contrary, building more coal-plants places Filipinos at a disadvantage as I have discussed before. We have to remember that coal plants are locked into long-term Power Sales Agreements or PSAs, which can run up to 25 years. This means that consumers’ choices are taken away from them in the long run, when in fact, what we should be working on allowing consumers to choose their preferred sources of power.

We can trace coal’s dominance in our energy mix to our energy planners’ skewed concept of the least cost. Again, our energy planners are using the ‘least cost method’ in terms of building costs without looking at the risks, namely fluctuation in foreign exchange rates and world prices of coal.

Perhaps our energy planners should be given a crash course on portfolio theory, developed by Harry Markowitz, a Nobel Prize winner. His theory posits that risks can be minimized at any level of expected return if the investor mixes assets in a portfolio, combining high and low or zero- risk assets. Putting this theory into energy planning, this means that we should diversify our energy sources portfolio.

Greenpeace says at the rate we are going, we are likely to end up with a 75 percent coal share in our power mix. This runs counter to what financial experts advise investors of diversifying one’s portfolio. Having three-fourths of our power come from coal means we are making our consumers more vulnerable to unpredictable global coal prices and fluctuation in foreign exchanges.

Yes, we can push for a moratorium on building coal plants. But unless our energy planners understand portfolio theory for energy planning, then we can expect them to always push for coal as they look at the least cost. We all should be very scared now if Greenpeace’s prediction that coal will contribute 75 percent and brace ourselves for possibly higher power rates in the future if this forecast comes true.

Of course, we need to reduce coal in power use significantly as we aim to meet our commitment of 70 percent emission reductions below business-as-usual-levels. We, along with other nations need to help save the environment. But another compelling reason to move away from coal is to provide consumers with more choices and reduce the risk of having them pay for more expensive electricity in the future. May our energy planners realize that their misplaced appreciation of the least cost method is costing Filipino consumers more.

References:

IEEFA update: Global coal power set for record fall in 2019

https://www.philstar.com/headlines/2019/11/22/1970979/greenpeace-companies-coal-expansion-will-block-philippines-transition-low-carbon-future

A New Hope

Nope, this isn’t a post about Star Wars. This instead is my Wishlist  for the Philippine Energy Sector as we start a new year.

First, I hope and pray that our government takes a closer look at the long-term power needs. Our officials should work hard on ensuring the following:

Energy security- Energy security can be achieved by developing indigenous and sustainable energy. Unfortunately, the Philippines continues its reliance on traditional sources of power. For 2018, coal accounted for more than half our power source. We are also no longer the second largest producer of geothermal energy as our neighbor, Indonesia is already producing more.

Resiliency-  Many of our countrymen are starting 2020 without electricity after Typhoon Ursula devastated their areas. It’s a sad thought that families affected by the typhoon are left in darkness. Hopefully, this year, our government will push for the development of microgrids for the country’s energy resilience. Microgrids, after all, will allow any devastated area to recover quickly as power restoration becomes easier.

Introduction of reforms in the power supply contracting- Time and time again, players in the energy sector complain of the tedious process in power supply contracting. Hopefully, the process can be simplified soon. More importantly, our government officials also require fixed-price contracts in our energy portfolio.

As I have been saying, “floating” PSAs where foreign exchange and global price fluctuation are passed on to consumers should slowly be phased out. Introducing fixed-price contracts peg the price consumers have to pay at a fixed rate for a number of years, resulting in more savings for the Filipinos

Second, the power distribution industry should now work to offer more choices at the customer level. Our power distributors must appreciate the convergence of Information and Communication Technology and the power sector given that around the world, Information Technology is changing the energy sector.

Power distributors should then work on introducing more smart grids in their networks. Smart girds empower consumers by providing them with information that can, among others save money, and purchase electricity directly from retail suppliers.

Along with the development of smart grids, we should also encourage embedded generation such as rooftop solar power along with its use in microgrids.

Third, may our government start planning for resiliency programs seriously. We have to keep in mind that the Philippines will always be at risk of being hit by devastating natural disasters like earthquakes and typhoons. Let’s just look at the recent typhoons, Tisoy and Ursula that affected some provinces badly.

It is time for our government through the Local Government Units (LGUs) with the help of Congress to invest in underground conduits capable of carrying power and telecommunication cables. Investing in such will ensure both internet and power supply despite catastrophic events.

The government can increase its investments on research and development to address power resiliency issues and the use of big data and technology in increasing resiliency. Perhaps the UP Resiliency Institute can help in this endeavour.

Every new year brings new hope. And the start of 2020 is no different. May both the public and private sectors along with the rest of Filipinos work together in making the energy sector a better one. A sector that safeguards the welfare and provides more choices to Filipino consumers.

Happy New Year, everyone!

Should We Have a Moratorium on New Coal Plants?

 

According to news reports, Germany intends to shut down its first power plants that use black coal in 2020 as part of the country’s efforts to phase out all coal plants by 2038.

Earlier this year, Germany, one of the largest consumers of coal in the world, announced that it would shut down all 84 coal-fired power plants in the next two decades in the hope of meeting its international commitments in the fight against climate change. 

Coal plants account for roughly 40 percent of Germany’s electricity as the country is the last bastion of coal burners inNorth-Western Europe.

The decision to close all of Germany’s coal-fired plants was no walk in the park. The German coal exit commission consisting of industry representatives, politicians, and non-government organizations (NGOs) spent seven months of discussions and a 21-hour negotiating session deciding whether to junk coal-fired plants altogether. 

The decision to end coal plant operations was described as “a historic accomplishment,” by Ronald Pofalla, chairman of the 28-member government commission. Likewise, Hans Joachim Schellnhuber, a member of the commission and an adviser to the German chancellor, Angela Merkel stressed that “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.” 

German Chancellor Angela Merkel’s administration is reported to have allotted some 1 billion euros or $1.1 billion to fund the closing of several coal plants with a total of five gigawatts capacity by 2023. Merkel’s government intends to replace coal power with renewables by increasing the share of renewable energy from 38 percent to 65 percent in 2030.

Germany, one of the largest consumers of coal in the world is shutting down all 84 coal-fired power plants in the next two decades. Photo c/o carbon brief. org

Germany is not the only country that’s retiring coal-fired plants. The United Kingdom government has earlier committed to phasing out its coal plants by 2025.

Similarly, in the United States, coal plants are being closed as well. According to data from the U.S. Energy Information Administration and Thomas Reuters, around 10,6000 megawatts of coal-fired plants are either to be retired or converted to gas by the end of 2019. Last year, several coal plants with a total of 13,000 MW ceased operations.

The Philippines, however, is going against the global trend. Data shows that coal accounts for 52.1 percent of the country’s power generation mix in 2018, up from 49.6 in 2017. On the other hand, the contribution of renewable energy has declined from 24.7 percent in 2017 to 23.5 percent in 2018.

And the Philippines will continue to rely on coal for at least two more decades, according to BNEF’s New Energy Outlook 2019. 

Caroline Chua, BloombergNEF’s energy analyst for Southeast Asia noted that coal-fired power generation in the Philippines will steadily increase and will remain as the biggest single source of electricity until 2041. “By 2050, the Philippines will still have almost as much coal-fired generation as today,” Chua stressed.

Our country’s reliance on coal does not sit well with various sectors. There have been calls to place a moratorium or suspension on the building of new coal-fired power plants. Cagayan de Oro City 2nd district Rep. Rufus Rodriguez floated the idea during a budget deliberation so the Philippines can cut its carbon emissions. 

Congressman Rodriguez asked Energy Secretary Alfonso Cusi if he agrees to a moratorium on coal to help the Philippines meet its commitment to the United Nations by 2030. “May we know whether the Secretary agrees that we should, therefore, to comply with our Intended National[ly Determined] Contribution to the UN, we should therefore already have a moratorium on coal plants?” he asked.

The secretary, however, was quoted to have said a “moratorium on any technology is a disservice to our country.” If we can find alternative ways to provide electricity service, then it will not be a disservice.

The suggestion of Congressman Rodriguez has its merits. If we want to meet our international obligations of cutting down carbon emissions, then preventing the construction of more coal-fired plants is a great start. I am from Cagayan de Oro, and I am proud of Congressman Rodriguez’s stand. He will get my support.

But setting aside environmental concerns, there are other reasons why the Energy Department should consider placing a moratorium on coal power, particularly large central thermal coal plants.

We have to keep in mind that coal-fired power plants with large generating capacities are signed up for long-term power supply agreements (PSAs). These contracts often run up to 25 years.

The problem with these long-term PSAs is that they take away the power of consumers to choose their preferred sources of energy or technologies. Essentially, big coal-fired plants that are signed-up by distribution utilities will end up burdening consumers who are stuck with the same power supply contract for as long as 25 years. This is a disservice to consumers since what we should be aiming for and working for is for the consumers to be given a choice on their preferred technology and pricing. So distribution utilities should balance their portfolio by matching type and tenor of their contracts to the needs of their consumers.

This is just the problem with our energy planning. We often fail at being consumer-centric when in fact, placing the welfare of the consumers should always be the priority. Looking after consumers mean giving them as many options as possible. Unfortunately, locking them into long-term supply contracts is akin to taking away their power to choose. We could change all that now by considering a moratorium on the construction of big central thermal coal power plants.

But the discussion should be beyond just discussing “moratorium” as we should really be thinking about alternative ways to tap the environment for energy. It is this mentality of looking for an easy way out of our energy needs that leads us to the usual suspect: coal. So yes, we should have this moratorium on new coal plants while developing other sources of energy.

References:

Murang Kuryente slams DOE refusal to impose coal moratorium

Green energy use to rise but coal to remain necessary

http://ieefa.org/u-s-coal-plant-retirements-to-top-10gw-in-2019-eia/

Cusi not cool with coal-fired power plant moratorium

https://cleantechnica.com/2019/10/04/a-uk-coal-power-station-closes-signaling-the-end-of-an-era/

https://www.theguardian.com/world/2019/jan/26/germany-agrees-to-end-reliance-on-coal-stations-by-2038

Floating nuclear power plants? Why not floating solar power plants?

Recently, our government signed-up with Rosatum Overseas, Russia’s state nuclear company to study the possibility of exploring the construction of nuclear power plants in the Philippines.

According to reports, our government is looking into the feasibility of buying into the newly launched floating nuclear power plant technology of Russia. Rosatom’s chief executive officer Alexei Likhachev was quoted to have said that Russia had already proposed building a floating nuclear power plant in the Philippines.

However, according to the palace spokesperson, the agreement on nuclear power is still uncertain.

This isn’t the first time proposals of building nuclear power plants are being brought up.

Last year, the local government unit of Sulu announced that it was studying the feasibility of putting up a modular nuclear power plant (NPP) in the province. This idea, however, was dismissed by Energy Department’s spokesperson and undersecretary Felix William as a “remote possibility”.

And he was correct in saying that there’s little chance of having a modular nuclear power plant in the country anytime soon.

During the power crisis of the 1990s we even considered tapping Russia’s nuclear submarines to help solve the power shortage. We just had a simple problem – the submarines had a frequency of 50 Hz.  We operate at 60 Hz.

Those pushing for nuclear plants fail to realize that the legislative and regulatory frameworks we have for nuclear power are already outdated as they were created some 50 years ago.

The Philippine Atomic Energy Commission or PAEC was created almost half a century ago to regulate nuclear power development and operations. PAEC also was handling the licensing of nuclear power engineers. The agency, however, was later downgraded to the Philippine National Research Institute (PNRI) during President Cory Aquino’s administration.

Before we talk about building nuclear power plants, let us ask ourselves, who would issue permits to build and operate a nuclear facility? And do we even have qualified people to build and operate them anyway?

Russia says that it is ready to assist the Philippines in exploring nuclear energy if it requests for such help. However, is it a good idea to rely solely on foreigners’ help given our lack of experts and experienced personnel to handle nuclear power?

It’s mind-boggling that a country that has so many natural resources are contemplating on building nuclear plants rather than turning to indigenous renewable energy. Have we forgotten that we are a tropical country or that we are a top producer of geothermal power?

We should instead start thinking about floating solar plants rather than floating or modular nuclear plants. Floating solar photovoltaic installations, after all, are a safer and more sensible option than nuclear ones.

floating solar2

World’s largest floating solar plant in China. Photo c/o http://www.we.forum.org

What’s great about floating solar technology is that it is highly similar to land-based PV systems except that the PV arrays, as well as most inverters, are placed on a floating platform. Thus, floating photovoltaic (FPV) installations are great for us as we have the expertise to build and operate floating solar plants given that we have been building land-based ones. The floating power plants are beneficial for our country, too given our high population density and competing uses for our land.

Floating solar plants are nothing new as the first FPV system was built in 2007 in Japan. The first commercial installation involving a 175 kWp was in 2008 in California. This was then followed by a medium to large floating installations in Korea, Japan, China, Australia, and the United Kingdom, to name a few. As of December 2018, some 1.8 gigawatt-peak was the recorded cumulative installed capacity around the world. This is expected to increase rapidly as more countries add FPV installations.

It can be the solution for those hard to reach areas as ground-mounted PV are usually difficult to deploy in mountainous areas. FPV, on the other hand, can be placed on bodies of waters like lakes or dams.

So, again why are we discussing floating nuclear power plants when we can bank on floating solar power plants? We have the expertise to build FPV installations. Thus, we do not need to rely solely on the knowledge and experience of foreigners, unlike nuclear plants. We do not have to look for complicated and almost impossible to achieve solutions for our growing power needs. We simply need to be practical and turn to our indigenous renewable energy for our energy security.

References:

https://globalnation.inquirer.net/180821/from-russia-with-nuke-plant-plans

https://www.rappler.com/nation/241987-gatchalian-says-nuclear-energy-very-risky-philippines-signs-deal-russia

Where Sun Meets Water: Floating Solar Market Report

Rolling Out New Programs May Not Be Necessary

It is no secret that the Philippines is heavily dependent on coal for its energy needs.

Data from the Department of Energy show that coal’s share in our country’s energy mix was 35.4% in 2017 up from 34.6% in 2016.  On the other hand, renewable energy contracted last 2018, only contributing 31.1% of the total, down from 32.5% in 2017.

Indeed, the Philippines is declining in terms of renewable energy development.

This is why it’s heartwarming to hear President Rodrigo Duterte address this issue in the last State of the Nation Address (SONA) where he ordered to fast-track the development of renewable energy resources. His exacts words were: “We recognize the urgent need to ensure the sustainability and availability of resources and the development of alternative ones. In this regard, I trust that Secretary Cusi shall fast-track also the development of renewable energy sources, and reduce dependence on the traditional energy sources such as coal.”

Naturally, the Department of Energy (DOE) responded to such call. In a statement, Energy Secretary Alfonso Cusi said that “The DOE is encouraged by the President’s comments. Indeed, his leadership will be pivotal for the DOE to implement policies and regulations that ensure the affordability, reliability, security, and sustainability of energy in the Philippines for generations to come.” 

The secretary promised to fast-track the implementation of the key renewable energy policies, namely the Renewable Portfolio Standard and the Green Energy Option. The former mandates distribution utilities to source a percentage of their power from renewable sources. The latter, on the other hand, empowers consumers to demand that their power comes from renewable sources.

The Energy secretary also said that it is looking at implementing a Green Energy Rate that will help the country to build a renewable energy portfolio of 2,000 megawatts in 10 years. There would be a ceiling rate and a green tariff rate would be auctioned among investors and developers.

Green tariffs and Green Energy Options are nothing new.  Other countries already have these programs, although the Green Tariff in other countries seems to be quite different from the one being planned by the DOE.

For example, in the United States, utility green tariff is optional programs in regulated electricity markets that are offered by utilities and by the state public utility commissions. The program lets industrial customers and large commercial clients purchase bundled renewable energy power with a special utility tariff rate.  It allows utilities to supply large industrial and commercial clients with up to 100 percent renewable power that’s either owned by the utility or sourced from another independent power producer. I’m not sure if this is the model the DOE and National Renewable Energy Board (NREB) are looking at. 

In the United Kingdom (UK), the green tariff is also available and works quite differently.  It is offered to those who want to lessen their carbon footprint with their power consumption by allowing customers to give back the same amount of power consumed back to the national grid in the form of renewable energy. Green tariff can also work by supplying the customer with either 100 percent RE or a portion of.

Clearly, Green tariffs are in place in other countries to help their RE sector prosper as well as to provide customers with cleaner option.

However, in the Philippines, rolling out new programs may not be the most urgent concern if we want our renewable energy sector to flourish. What our regulators must pay attention to are the current programs that hinder the growth of the sector. There is the Competitive Selection Process  (CSP) as it places renewable energy developers at a disadvantage and the Retail Competition and Open Access (RCOA) that fails to help local renewable energy development.

Let’s take a look at the CSP mandating energy demand must first be aggregated then later bid out by a third party. This means that the power capacity becomes large before it can be auctioned off. It is then the large quantity required by the bid that places renewable energy suppliers at a disadvantage. We have to keep in mind that most RE plants have small capacities.  Unfortunately, those with smaller capacities RE plants will be left out in the cold as a result of aggregating the power requirement before the auction.

So, will the planned Green Energy Tariff by the DOE no longer require undergoing the CSP? I am personally curious about the mechanics of this planned program intended to help develop renewable energy in the Philippines. 

Our government should indeed work harder to make renewable energy development a priority. After all, going for sustainable and green energy helps in bringing down our power rates. Renewable power will also provide us with energy security.

As I have been saying, renewable energy, unlike traditional sources of energy are not vulnerable to foreign exchange and world price fuel prices. This means consumers are spared from the consequences of ‘floating contracts’ where Filipinos pay for higher power prices when the peso falls against the dollar or when coal or oil prices in the world market spikes.

Developing renewable power bodes well for us. Traditional sources, particularly oil and coal are finite sources. What then happens when these power sources are low in supply or worse are already unavailable?

There’s also the RCOA that’s also meant to help the sector by allowing a number of customers to source their preferred service provider.  Unfortunately, only those with  750 kilowatts or higher monthly demand can be considered contestable customers, thus restricting the number of consumers that has the option of choosing their power source.

So, yes we can look at other programs to help the RE sector prosper. Unfortunately, DOE has a track record of showing its lack of appreciation on the many benefits of renewable power for the Filipino consumers. 

We have to keep in mind that sometimes new programs, entities or rules can wait. They may not even be necessary. All we have to do is to simply review current regulations and practices rather than find new ones. And if we as a nation want to heed the orders of the President to develop cleaner and sustainable sources of power, then we urgently need to review our current regulations. 

References:

https://www.epa.gov/greenpower/utility-green-tariffs

https://www.comparethemarket.com/energy/information/energy-tariffs-explained/

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