Wanted: Fast and Reliable Internet Connection

The Enhanced Community Quarantine or ECQ forced us all to stay indoors. As with the many Filipinos, I stayed inside and worked at home. But work from home means having a slow and unreliable internet connection.

According to Speedtest Global Index, as of February 2020, the Philippines’ mobile, download speed average is 16.66 while upload speed is 6.47 Megabits per second (Mbps). On the other hand, fixed broadband average download speed is31.48 Mbps and upload of 31.42 Mbps.

An internet speed test I did, however, show that my home internet’s download speed was at 1.59 Mbps while upload speed is 11.17 Mbps. I am subscribed and am paying for a plan that’s supposedly up to “100 Mbps”, considered my fast internet that can handle multiple activities online.

Yes, one can argue that with everyone at home there’s heavy usage of the internet. But really, my internet service provider (ISP) seems to be robbing me with my 1.59 and 11. 17 Mbps. My ISP says my subscription is up to 100 Mbps but really, my download speed is just 1.5 percent of what I’m subscribed to. The service I received is even way below than the Philippines’ average. This kind of service is just really absurd.

Clearly, and as everyone knows, we need better internet speed and reliable connection, requiring more investments in IT infrastructure. This isn’t because I simply want to stream in Ultra High Definition for my Netflix, Hulu or Apple TV. We need to invest in our IT infrastructure because our modern world depends on reliable interconnectivity.

In the Energy Sector, high speed and dependable internet is a prerequisite for modernizing the grid.

The Internet of Things or IoT is a game-changer and the internet is the backbone of IoT. Technological advancement has given birth to distributed energy systems, which foregoes the traditional distribution energy of centralized generation and transmission with really long high-powered lines delivering power. Rather, we now have a combined generator and distributor in small and even remote communities.

IoT is needed to empower consumers. There are more choices for everyone if we can leverage on what technology has to offer, allowing even a homemaker to be a generator and distributor at the same time. Imagine a homeowner with solar power or even wind turbines generating excess capacity that can be sold to neighbors.

Speaking of distributed energy, thanks to the internet, grid managers will have visibility over grid functions and performance remotely. Distributions lines and substations are equipped with sensors that can provide real-time data on power consumption helping grid managers make decisions remotely. Even when away from their substations, grid managers can decide real-time on network configuration, load switching, and voltage control, among others.

The Internet allows for virtual troubleshooting, too. We can expect fewer linemen risking their lives trying to fix broken power connections and consumers waiting for days or weeks to get their power back that after a devastating natural disaster.

As for consumers, they now have more information in their hands. With smart devices and meters, they can now know their power consumption and adjust their consumption patterns accordingly. Smart technologies allow them to choose and eventually limit the use power-hungry appliances. Likewise, they can strategize their consumption if they are likely to go over the budget with their power consumption. This is because IoT’s low-powered sensors and internet-connected devices allow for the collection and transmission of data to users quickly.

The case of Chattanooga City in Tennessee illustrates how crucial fast internet is in the modernization of grids and improvement of the community’s economy. In 2008, Chattanooga City rolled out a fiber-optic network that could provide speeds of up to 1000 Mbps. This despite the huge capital needed to install and maintain fiber networks which required new underground wiring and linking to individual homes.

Chatt gridsmart

Chattanooga City is reaping huge benefits from investments in fiber optics and smart grids. Photo c/o http://www.smartgrids.com

Chattanooga’s project was started as the small city wanted to build a “smart” power grid that’s capable of rerouting or switching electricity easily to prevent outages.

The city government opted to operate a city-owned agency, the Electric Power Board (EPB) that would run its own network offering higher-speed service than any private sector players can provide. Naturally, large businesses incapable of providing better service tried to prevent the entry of a new player that would change the competitive landscape. The city government faced lawsuits from US telecom giant, Comcast and local cable operators who tried to block the entry of EPB. But by September 2009, the internet service was already in operation.

A $111 million stimulus grant given to the city by the US Department of Energy saw the completion of the project. EPB managed to roll out its smart grid rapidly. The organization intended to complete the smart grid deployment in 10 years, but only needed three years. “Deploying a network for telecommunications is not fundamentally different from deploying a network for power,” Benoit Felten, a broadband expert with Diffraction Analysis said. “Chattanooga is the prime example of that, and it’s absolutely worked.”

These days, the EPB offers electric, cable, internet and telephone service to the majority of the Hamilton County in Tennessee and eight nearby counties in East Tennessee and Georgia. It manages 3560 miles of transmission line and serves around 178,000 residential and business customers.

Reports say that Chattanooga City is reaping huge benefits from EPB’s investments in fiber optics and smart grids. EPB is credited for being the most influential in Chattanooga’s astonishing economic transformation

The city’s smart grids have helped reduce power outages and incidents in half. This translates to 285 million customer minutes, which means EPB’ customers get to save around $50 million yearly in spoiled food, lower productivity, and other negative impacts.

Chattanooga City’s example shows that there are many benefits to be enjoyed if one invests in a smart grid. The best way to start modernizing the grid is to address the lack of high speed and reliable internet. This is why we need to have better internet services in the country. We need to invest in our internet infrastructure not because we need to stream our entertainment content in Ultra High Definition. But rather because, the Energy Sector needs reliable internet to provide more choices and better services to Filipinos.

Is Weather Too Hot? Soon the World Will Be Unlivable

 

The summer season in the Philippines means enduring sweltering weather for two to three months. According to the state weather bureau, Philippine Atmospheric, Geophysical and Astronomical Services Administration or PAGASA, the month of May saw the country’s heat index reach its highest values for the year.

The heat index in May (or at least for the first half of May) reached what Health officials refer to as dangerous levels, a range between 41℃ to 54 ℃.  The dangerous level can cause heat cramps, and heat exhaustion and might result in a heat stroke. Unfortunately, the dangerous heat index was recorded in May all over the Philippines, the highest so far for the month was 51℃ to 53℃ in places like Dagupan City in Pangasinan, Butuan City in Agusan Del Norte, and Sangley Point, Cavite.

It was worse for San Jose City in Occidental Mindoro on April 20 as it recorded a heat index of 58℃. The Health Department says there is an extreme danger if the heat index is more than 54 ℃ because heat stroke is imminent. 

In mid-May, a tropical storm with an international name, Vongfong. After two days of torrential rains and strong winds in Northern Philippines, the warm summer heat in the Philippines returned a few days after, which is likely to last until mid-June. The current heat index we are experiencing shouldn’t be surprising since scientists have already predicted that 2020 will be the hottest year on record.

Fortunately for us, we only have to endure such sweltering heat for two to three months. But there’s a strong likelihood that the majority of the world will suffer from extreme heat by 2070 as new research revealed.

According to the study “Future of the human climate niche,” some three billion people will live in “nearly unlivable” conditions by 2070 if global warming remains unchecked. Authors say that much of the world’s population will live in climate conditions that are “warmer than conditions deemed suitable for human life to flourish.” I probably won’t be around by then but my grandchildren will be still on this earth by that time, so this warning is still alarming for me.

The study warns that the average annual temperatures will be above the climate “niche” in which humans have lived for 6,000 years. “We show that in a business-as-usual climate change scenario, the geographical position of this temperature niche is projected to shift more over the coming 50 years than it has moved (in the past 6,000 years),” the study noted.

If the world continues with its business-as-usual and refuses to take climate mitigation measures, a substantial part of the world will be experiencing average annual temperatures warmer than practically anywhere today by 2070. This means the future generations could be enduring warmer weather than what we are experiencing now here in the Philippines. 

 

ecoworld

By 2070, the world will suffer from unlivable weather conditions if global warning remains unchecked. Photo c/o eco world

“Large areas of the planet would heat to barely survivable levels and they wouldn’t cool down again,” says the study co-author Marten Scheffer of Wageningen University in the Netherlands.”Not only would this have devastating direct effects, it leaves societies less able to cope with future crises like new pandemics. The only thing that can stop this happening is a rapid cut in carbon emissions.”

Again, this isn’t the only warning about the effect of climate change. we have heard. A few years ago, Nobel Prize winner and Director of Germany’s Potsdam Institute for Climate Impact Research (PIK) already warned us that Southeast Asia would likely suffer from extreme temperatures if nothing is done to lessen our high carbon emission levels. 

Schellnhuber’s paper entitled “A Region at Risk: The Human Dimensions of Climate Change in Asia and the Pacific,” said that temperatures would keep increasing where we could “see a complete shift in living conditions,” and that “All of the tropics will develop conditions that physiologically, humans cannot live outside anymore.”

Experts have been warning us all that lessening our carbon footprint is the only way we can avoid extreme temperatures around the world in the future. These studies also point out that a shift to renewable energy is one of the effective climate change mitigation measures we should adopt. 

Unfortunately, with the world already falling into recession, the renewable energy sector is likely to see a lean period, probably temporarily ending the sector’s rapid growth in recent years. Renewable power projects are exposed to various risks due to the economic crisis brought by the COVID-19 pandemic just like other sectors. One of these risks could be less access to financing.

Fossil fuels are likely to become more attractive in the cover-19 recovery period as coal prices have been falling even before COVID-19 forced locked downs. Plus, oil prices hit at an all-time low. Economies could be wary of the high upfront costs of renewable energy projects and potentially renege on long-term sustainable development plans.

But governments, particularly ours, shouldn’t be too quick to abandon or shelve clean energy transition plans for a variety of reasons. For one, analysts say that the low oil prices will be short-lived. According to an editorial entitled “Coronavirus: The Caribbean is the First Domino to Fall, but There is Hope” “It is expected that at current lows, many high-cost producers will shut down operations and some may go out of business. In a post-COVID world, with increasing global demand and a reduced number of suppliers, there will be upward pressure on oil prices.”

Plus, energy transition plans were well already underway before the pandemic causing the technology costs for renewables to fall in recent years.  Wind power and solar photovoltaic have become the cheapest source of energy in many markets, debunking the myth that renewable energy is the more expensive choice.

A report by the International Renewable Energy Agency also showed that accelerating investments in renewable energy could spur the global gross domestic product (GDP) by almost $98 trillion between now and 2050. IRENA projects that RE would provide returns of $3 to $8 for every dollar invested in renewables. The report entitled “Global Renewable Outlook” stressed that high investments renewable power could also quadruple the number of jobs in the sector over the next 30 years.

And in the short-term, decentralized energy systems will help small communities economically as IRENA Director-General, Francesco La Camera stressed recently. “Decentralized technologies also allow for greater involvement by citizens and communities in energy decisions, with transformative social implications. Importantly, they offer a proven approach for remote health care in energy-poor communities and add a key element to the crisis response toolkit.”

These are some of the reasons to debunk the belief that fossil fuel could be the better choice in the short-term. But if these counter-arguments illustrating that renewable energy isn’t the “expensive” option, then let us go back to the fact that we need to address climate change.

According to scientists, climate change is a potent risk multiplier or can contribute to pandemics. Plus, rising temperatures allow for the quick spread of certain infectious diseases like dengue and malaria. As research shows, failure to address rising carbon emissions will make the world an unlivable place as humans cannot survive the high temperature by 2070 unless they stay in an air-conditioned place, day-in and day- out.

A Bloomberg New Energy Finance (BNEF) report released before coronavirus was declared a pandemic said that 77 percent of investments from 2019 to 2050 will be in renewables. This prediction of BNEF remains achievable if we don’t let the pandemic and its economic effects derail us from putting more money in clean energy. Short-term plans to revive any economy post-COVID-19 must remain aligned with our long-term objectives on sustainable development and climate change. The COVID-19 pandemic should encourage us to build back better.

Finally, I would like to repeat my previous point that moving forward we need to move away from our dependence on imported fossil fuel.  The COVID-19 crisis has raised a specter that Indonesia may decide to shut down its ports and close down all ingress and exit points of the country.  If that happens – and thank God it has not happened – this will not augur well for the Philippines We rely on 90% of our coal from Indonesia.

We will have not only a pandemic but a total power meltdown.

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/

Coal plants’ share in 2017 energy mix expands to over 35%

Amid fears of global economic recession, let’s worry about high power rates, too

Those who regularly read the business news would know that the US-China trade war has been hogging the headlines way back in 2017.

Two years ago, the United States launched an investigation into China’s trading policies and imposed tariffs on Chinese products worth billions of dollars a year after. Beijing, naturally retaliated.

The trade war between these two countries escalated after China allowed its currency, the Yuan to depreciate for the first time in over 10 years. This move was criticized and China was called a currency manipulator by the US.

I will not delve on how the trade war will place the Philippines in an advantageous or disadvantageous position. I leave that to economists.

Now, perhaps you are wondering why am I writing about this trade war when my expertise is the energy sector?

The answer is simple. The trade war, just like other major global developments in the Philippines  hurt the Philippine peso since global issues such as the spat between the US and China affect emerging economies such as ours.

For example, the peso sank to Php51.955 from Php51.79, down by 16.5 centavos on August 6 after the US tagged China as a currency manipulator. A trader quoted by a Business Word report said that “The peso weakened significantly due to demand for safe-haven currencies after the US Treasury Department labelled China as a ‘currency manipulator,’ further heightening current tensions between the US and China.”

According to S&P Global Ratings director Andrew Wood early August,  the Philippine Peso has been weakening as the trade and currency war of the two giant economies makes currencies vulnerable to downward pressure. “The Philippines and India have relatively strong external profiles, stronger than Indonesia, but they have proven to be relatively vulnerable when we do have these global contagion effects in the currency markets in the past. So the peso and Indian rupee could also be somewhat vulnerable to downward pressure,” Wood said

But the row between China and the US is not the only thing that’s affecting the performance of the Philippine Peso against the dollar.

peso dollar

Some forecasts say that the peso could be on the softer side and go as low as Php 53.50 against the dollar. Photo c/o Business world

For example, worries over a pending global economic recession last August 15 weakened the peso where trading day ended from 52.498 to a dollar from a 52.28 close a day before. “The peso depreciated as a potential U.S. recession pushed investors towards risk aversion,” a BPI Research market report said. It added  that a possible US economic slowdown and reports that Germany posted zero economic growth in the second quarter also caused the Pesos’ depreciation.

Some forecasts say that the peso could be on the softer side and go as low as Php 53.50 against the dollar or even slight below the P54 level if worries over a global economic recession worsen. For example, Mizuho Bank head of economics and strategy Vishnu Varathan as quoted by ABS-CBS news said that “For most of the next half, we’re looking at the peso on the softer side,” he said.

So, what does a weak peso mean for Filipino consumers?

As I have been pointing out, fluctuations to the peso dollar exchange will hurt the Filipino consumers.

I have discussed this at length in many posts. But let me reiterate that our energy planners love for a “floating” power sales agreements (PSAs) and reliance on traditional power sources can cause high energy rates. This is all thanks to the pass-on costs provision in our PSAs where consumers shoulder the cost of the falling peso against the dollar. Unfortunately, our reliance on coal, which we mostly export and pay for in US dollars means that we will pay higher electricity rates when the peso falls against the dollar. It also does not help that our independent power producers also have the majority of their billings in dollar denomination.

Yes, one can argue that the peso may also strengthen despite the forecasts of analysts. But it could also go the other way around.  Unfortunately, there’s no way of exactly predicting what will happen to the local currency. And there lies the problem with the floating PSAs. It leaves consumers in a vulnerable position.

So, again, we must revisit having fixed price contracts work for us as we watch how the Philippine peso fares against the US dollars amid the chaos in the global economy. Let us see the good in letting the consumers pay the  same amount for their electric bill for a specified period regardless of the performance of our local currency. This will ease the burden of consumers who pay more for energy when the peso is weak.

And while we’re at it, helping develop our renewable energy sector will also ease the burden of the Filipinos. Doing so will reduce the need to import traditional power sources that trade in US dollars.

Let the economists and analysts debate on what the government should do in light of the on-going trade wars and possible global economic slowdown. In the meantime, our energy planners should take a closer look at how these global issues will affect power rates and how we can ease the burden of consumers  by turning to renewable energy which can peg electricity rates at a fixed prices and eliminate the need to import raw materials for energy production.

I believe the world will be going towards energy independence as a goal for every household and community.  The reliance on big thermal plants and high voltage transmission networks will wane in the coming years.  Increasingly, electricity consumers will want to have more control of how and when they consume power in their homes.

This development of taking “power in their own hands” will mean that electricity consumers will be able to delink forex and global price risks.  And maybe with more independence, other supply and demand markets, other than WESM, may spring up independently.

Let me discuss these possibilities in my next blog.

References:

https://news.abs-cbn.com/business/08/19/19/peso-seen-in-p5150-p5350-vs-1-range-on-global-recession-worries

Peso sinks further on yuan move

Peso to trade sideways

https://www.philstar.com/business/2019/08/07/1941135/philippines-vulnerable-us-china-trade-tension-currency-war

https://www.pna.gov.ph/articles/1077961