The Path to 100

Just recently, the International Renewable Energy Agency (IRENA) released a study titled “Accelerating the Deployment of Renewable Energy Mini-Grids for Off-Grid Electrification.” The research tackled how the Philippines can promote better access to basic electricity services as the government works on achieving total electrification in the country.

The study came up with five major recommendations ranging from defining roles and responsibilities, having a strategic and comprehensive planning for electrification, promoting the setting up of micro-grids, reviewing the regulatory frameworks for mini-grid projects and increasing support for project development and execution.

Of these recommendations, several caught my attention.

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Our government must now seriously consider using RE for off-grid islands. Photo c/o ADB

IRENA, in its conclusion, stressed that the country needs to prepare a definite plan for off-grid electrification, with the government revising the current Missionary Electrification Development Plan “to focus on reliable energy electricity access to small, remote and isolated areas.” Part of which is to aim for a 24-hour electricity service that can support both commercial and industrial needs to enhance livelihood opportunities to increase incomes.

The report noted that such goal could be achieved by “strategically using renewable energy technologies (RETs), selected based on a least-cost approach to lower generation costs, improve reliability, increase service hours and avoid the use of fossil fuels.”

The reason for prioritizing RE for small and remote off-grid areas was underscored: “These technologies can reduce generation costs and increase service reliability and service hours, while simultaneously mitigating climate change and improving climate resiliency.”

Now, don’t these conclusions and recommendations of advocating the use of RE Technologies for off-grid islands by the IRENA sound familiar? I have been in fact, advocating almost the same recommendations and conclusions above.
For one, as I have been saying, renewables are the cheaper option as generation costs from them are not subject to global price changes and foreign exchange adjustments. On the other hand, traditional sources of power cause consumers to pay higher when the peso falls against the greenback or when prices of coal or oil surge in the world market.

Plus, of course, RE is obviously the better option to use to mitigate the effects of climate change.

But I’m not the only one who echo the calls made by the IRENA report. There are other reputable organization, too that are calling out our government to transition to RE for our energy needs.

For example, The Energy Economics and Financial Analysis (IEEFA) and Institute for Climate and Sustainable Cities (ICSC) earlier this year released a study emphasizing the need for RETs in off-grid islands. The research, “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids” noted that “Small island grids powered by solar, wind, and other renewable energy could reduce dependence on expensive imported fossil fuel generation without compromising the availability of power and grid reliability.” In fact, the country can save up to Php10 billion if off-grid islands use RE rather than traditional power sources.

The report stressed that off-grid islands in the country could transition away from fossil-fuels to RE except for the country’s policies and regulations, which are already outdated: “Barriers to small island grid uptake of modern renewable energy power include outdated regulations that have not kept up with technology.”

Time and time again, we have heard experts urge our government to invest in RETs for stable and secure supply both for those in the main grid supply as well as for off-grid islands especially since our government aims to achieve 90% household electrification by the end of this year.

As of July 2016, household electrification rate is at 89.6%, which means some 2.36 million homes are either without power or with limited electricity services of four to six hours daily. Such is still far from our government’s goal “that every Filipino family shall have an equal opportunity to access basic electricity service.”

There is no doubt, as many experts suggest, that the path to complete electrification is RE. But I will have to stress that RE can do more than just help us achieve our goal of 100 percent electrification. In fact, renewables are the long-term solution needed for our country’s energy security. And the sooner we learn how to implement RE systems, the more secure our future will be.

References:

Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids

“Accelerating the Deployment of Renewable Energy Mini-Grids for Off-Grid Electrification.” IRENA

 

 

 

 

 

The Cost of Being Outdated

Numerous studies reveal the benefits of shifting to more renewable energy. These research papers debunk the myth that RE is more expensive and rather stresses that in the long-run, greener forms of energy may be cheaper if one is to consider many factors including cost of oil importation and effects on health and environment, to name a few.

One such study is the recently released “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids¬” by the Energy Economics and Financial Analysis (IEEFA) and Institute for Climate and Sustainable Cities (ICSC).

According to the report, the Philippines is likely to save more than P10 billion annually if we are to replace diesel-fired power plants with renewables in off-grid islands or areas that are not connected to the grid.

For these off-grid islands, energy is provided by the small power utilities group or SPUG under the National Power Corporation (NAPOCOR) or by Independent Power Producers (IPPs). According to the report, there are 310 SPUG and IPPs combined with a total dependable capacity of 267 MW with mini-grids that uses oil-powered plants. The cost of generating electricity in these islands are subsidized under the Universal Charge for Missionary Electrification (UCME) of NAPOCOR where fuel costs account for 75% of the NPC-SPUG cost of power generation.

The reliance on oil for energy needs comes at a significant cost as fuel account for 75% of the NPC-SPUG cost of power generation. The cost of generating electricity in these islands are subsidized under the Universal Charge for Missionary Electrification (UCME). The researchers point out that P60 billion are spent on subsidies even if these areas only generate 0.49% of the overall generated power in the country and 6% of the total energy demand.

With the falling costs of RE technologies, the study noted that great savings can be made A swift transition to RE for these off-grid islands is possible says the researchers, except the country’s policies and regulations, are outdated: “Barriers to small island grid uptake of modern renewable energy power include outdated regulations that have not kept up with technology.”

The researchers emphasized that the present system fails to provide incentives to buy cheaper sources of power, which unfortunately causes the slow the shift towards RE in these areas “This system tends to be biased against renewable generation because franchise managers would rather stick with diesel generation they are used to, even though more expensive.”

The authors recommend for the Energy Department to provide incentives to the SPUG to hybridize their power plants as well as for the National Electrification Administration (NEA) to order electricity cooperatives to be neutral in their purchase of energy. After all, the researchers concluded that “Small island grids powered by solar, wind, and other renewable energy can reduce dependence on expensive imported fossil fuel generation without compromising availability of power and grid reliability.”

In a previous post, I have tackled the problem of energy poverty as some 1.2 billion individuals are without electricity. Unfortunately, our country is suffering, too from the lack of access to power.  We are in fact being left behind in terms of electrification in the region.

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Photo c/o http://www.thai-german-cooperation.info

The Philippines is almost at the bottom of the list in South East Asia when we talk about national electrification rate which is at 79% while our neighbors such as Malaysia, Singapore, and Brunei have already achieved 100%. Thailand, Vietnam, Laos and Indonesia have impressive numbers at 99%, 97%, 87%, and 81%, respectively. We are at the bottom three along with Cambodia and Myanmar.

Indeed, there is a need to hasten in reviewing our policies to catch up with our needs especially since we are aiming for more inclusive growth.

The big picture is actually very simple: The Philippines should exploit and encourage the development of all renewable energy resources for the simple reason that: a) no need for fuel importation and thus saving foreign exchange; b) the Philippine economy will be shielded from wild swings in the global energy markets; and c) electricity prices will be stable over the long-term.

Clearly, falling prices of renewable energy aren’t enough for a major shift towards renewable energy. A problematic regulatory system must be addressed if we want cleaner and cheaper sources of energy.

The lack of foresight, willpower and competence can be a bane for the growth of any sector. And our power sector is one of those that stands to gain if only regulators competently enact changes needed to help our country develop.

References:

Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids

World Economic Outlook 2015 data base. International Energy Agency http://www.worldenergyoutlook.org/resources/energydevelopment