What Lack of Competition Means

A recent World Bank report says that more competition in the power, transportation, telecommunication can boost economic growth in the Philippines.

According to the study, “Fostering Competition in the Philippines: The Challenge of Restrictive Regulation,” the above-mentioned sectors are crucial in improving job generation and services in the country. Unfortunately, there is limited competition in these sectors.  

When compared to other countries, the Philippines’ economy is more concentrated due to the higher proportion of oligopoly, duopoly, and oligopoly in the market, the report added.  The author of the report and World Bank senior economist, Graciela Miralles Murciego stressed that such market structures have hampered productivity growth in the sectors: “The entry of politically connected companies limited productivity.”

The study also emphasized that restrictive regulations and restrictions such as complex regulatory procedures and barriers to trade and investments including foreign equity investments have constrained the growth of the economy. This in turns led to the high prices of services. It also cited that the limitations on foreign direct investment have stunted the development of infrastructure in the energy sector.

The World Bank is not alone in pointing out that more competition is needed in the energy sector. For example, the Massachusetts Institute of Technology released a paper, Utility of the Future by Massachusetts Institute of Technology, which concluded that “the structure of the electricity industry should be carefully re-evaluated to minimize conflict. It is critical to establish a level playing field for the competitive provision of electricity services by traditional generators, network providers, and distributed energy resources.” The report may not be talking about the Philippines directly, but it nevertheless echoes the sentiments of the World Bank.

The MIT study added that there is a need to review electricity markets especially since new technologies can be integrated into the power system. “Wholesale market design should be improved to better integrate distributed resources, reward greater flexibility, and create a level playing field for all technologies.”

I have been vocal about the needed reforms by the power sector so Filipinos can enjoy lower electricity rates. Our rules are skewed to favor the few. 

Take for example the lack of competition in service areas. Currently, another power player is barred from offering its services in an area that is already being served by a distributor. This, in turn, creates a monopoly. And as our economic professor will tell us, monopolistic practices will always put consumers at a disadvantage.

It also does not help that we are not allowing more foreign investments in the power sector. As the World Bank Report stressed, limitations on foreign direct investments have curtailed the growth of energy infrastructure. This is especially true for renewable energy development. 

We have to remember that renewable sources need to be explored (as in the case of geothermal) and plants have to be constructed. These undertakings require new technologies and equipment. Foreign investors can provide these two while we limit the foreign investors’ ownership on the natural resources if they are allowed to do so. This is the best way forward if we are serious in shifting to greater use of cleaner and sustainable energy sources.

Unfortunately, our 1987 constitution limits foreign participation in many industries including power. These provisions, however, are already outdated and needs to be revised. Former National Economic Development Authority chief, Cielito Habito emphasized this need aptly when he said, “The hope is we will be willing to amend economic provisions of the constitution because that is what really is holding us back. It is outdated. Many of the restrictions in foreign advertising, mass media, education, are really out of date. Given the technology in recent years, those rationales don’t apply anymore to the information age.”

Time and time again we are reminded by various experts on the many virtues of competition in various areas including the power sector. But these reminders seem to fall on deaf ears. The Philippines still has one of the highest power rates in Asia, and we all have to thank our regulators and policymakers for that.

References:

https://www.philstar.com/business/2019/03/05/1898614/greater-competition-power-telco-transport-boosts-growth-world-bank#UcJx07M8WylEry0k.99

http://www.bworldonline.com/constitutional-amendments-needed-boost-fdi/

Isn’t It Ironic?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

References:

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

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

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

Good and Sad Headlines

 

re germany

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

References:

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

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

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

Ambitious, Admirable and Much Needed

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Spanish Turbines. Spain wants to source all its power needs from renewable sources by 2050. Photo c/o http://www.treehugger.con

Spain recently announced its plan to source all its power needs from renewable energy by 2050 in the hope of fully decarbonizing its economy. To achieve this goal, its government is committing to installing 3,000 megawatts (MW) of wind and solar capacity yearly in the next decade.

Aside from additional capacity from renewables, the Spanish government will also ban new licenses for hydrocarbon exploitation, fracking wells, and fossil fuel drills. Spain will also allot one-fifth of its national budget to mitigate the effects of climate change.

The government is prepared to look after the welfare of workers who are likely to lose their jobs due to the shift to renewable energy by providing early retirement schemes and re-skilling in clean energy jobs.

Not surprisingly, Spain’s announcement was hailed by many. The chief executive of the SolarPower Europe trade association, James Watson described Spain’s move as “a wake-up call to the rest of the world”.

Likewise, the chief executive of the European Climate Foundation, and former French climate envoy, Laurence Tubiana said that this move is both inspirational and groundbreaking. “By planning on going carbon neutral, Spain shows that the battle against climate change is deadly serious, that they are ready to step up and plan to reap the rewards of decarbonization,” she stressed.

Spain is not the only country that is making the headlines for its commitment to using more renewable energy. A recent report by Green Energy Markets found that Australia is likely to have three-quarters of its energy needs supplied by renewables by 2030.

The report noted that the installation of 150 megawatts of solar rooftop energy systems in residential and commercial zones in October alone is a record breaker as it is 76 percent higher than the monthly average last year. Australia has also committed to large-scale solar and wind farm projects with a total capacity of 412 watts with construction set to commence in October.

The additional 412 MW capacity brings the year-to-date total to 3,200 MW. The report stressed that this recent commitment and additional capacities will allow the majority of Australia’s power needs to source from clean forms of energy. “If we maintained over the next decade the record rate of both rooftop solar installations and wind and solar farm construction commitments that have prevailed since 2017 then renewable energy would represent 78 percent of electricity supply across Australia’s west and east coast main grids, ” the report noted.

Spain’s move, as well as Australia’s accomplishments, are more than welcome developments. After all, we need drastic action to combat the effects of climate change. More so since the world has only 12 years to limit climate change catastrophe as recently warned by the United Nations. This gloomy warning says that the world has only a dozen years to keep global warming to a maximum of 1.5 C. Otherwise, we will see the worsening of droughts, floods, poverty, and extreme heat.

Speaking of extreme heat, scientists also say that 2018 is likely to be the fourth hottest year on record. According to the World Meteorological Organization, the average global temperature between January and October was close to 1 c above the pre-industrial baseline.

The WMO stresses that the 20 warmest years on record happened in the past 22 years and the four hottest have all come in the last four years. A warmer world is very alarming and has dire effects according to WMO Deputy Secretary-General Elena Manaenkova. “Every fraction of a degree of warming makes a difference to human health and access to food and fresh water, to the extinction of animals and plants, to the survival of coral reefs and marine life,” she said.

Unfortunately, the Filipinos do not seem to share the other countries enthusiasm for renewable energy. Our energy planners and government officials fail to realize that shifting to renewables is the only way forward if we are to provide power for all as well as help save the planet.

This lack of appreciation is lamentable since the Filipinos will surely benefit from using more renewables. For example, off-grid islands will no longer have to rely on the expensive diesel-powered generators if we only we can harness our natural resources properly. In fact, one study showed that the Philippines could save as much as Php10 billion if off-grid islands turn to RE instead of the expensive diesel generators.

Plus, renewables can help ease the burden of Filipinos who pay more for power consumption everytime the international coal prices shoot up or when the peso falls against the dollars. As I have been explaining, renewable energy provides a fixed price whereas coal and gas power sources result in higher power rates as prices are affected by movements in the foreign exchange and world prices.

Of course, the Philippines should also do its part in helping improve the world’s carbon footprint. After all, our country is ranked as one of the most vulnerable to climate change, according to credit rater Moody’s. “The Philippines’ heavy reliance on agriculture (31% of employment) and high exposure to climate-related disasters (on average 19 events per year over the last decade) imply that it was already among a group of sovereigns that we assessed as vulnerable to climate change — but it is now among the most vulnerable.”

The reported, which was released last May, noted that the calamities in the country affect economic activities and food production. Plenty of Filipinos have also lost their lives due to natural disasters. It is then wise for us to do our share in mitigating the effects of climate change since the Filipinos suffer so much from its consequences.
Clearly, we need to grab every opportunity to reduce our carbon footprint to help keep global warming at the desired level as well as improve the Filipinos access to energy. This is why the two countries announcements and achievements may be ambitious but nevertheless admirable. Such actions, particularly shifting to renewable energy is what the world and the Filipinos badly need right now.

References:

https://www.theguardian.com/environment/2018/nov/13/spain-plans-switch-100-renewable-electricity-2050

http://www.xinhuanet.com/english/2018-11/30/c_137641641.htm

http://time.com/5466681/climate-change-hottest-year/

Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids. The Institute for Energy Economics and Financial Analysis

https://www.bworldonline.com/philippines-rated-among-most-vulnerable-to-climate-change-in-new-moodys-ranking/

Taking Action

All over the world, calls are being made to shift from traditional forms of energy to more sustainable ones in the hope of saving our environment and making energy available for all. In response, various sectors have taken drastic actions and are making great progress in their shift to renewable energy.

The achievements of the private and public sector in transitioning to greener forms of power in recent years are significant. The numbers for 2017 alone are a testament to both sectors commitment to add and use more renewable energy.

Last year was a record-breaking year as renewable power generation capacity had its biggest annual increase of nine percent with an estimated 178 GW added capacity, according to REN21’s study, Renewables 2018 Global Status Report.

More renewable power was added than fossil fuels as renewables accounted for 70 percent of the overall combined global generating capacity. Investments in RE for 2017 reached $279 billion, up from the recorded $274 billion in 2016 as well.

The figures from corporate buying of renewable energy are admirable, too.

For one, the International Renewable Energy Agency report, Corporate Sourcing of Renewable Energy: Market and Industry Trends showed that firms across 75 countries sourced a total of 463 terawatt-hours from renewables in 2017. This volume is enough to power up a country equivalent to the total demand of France.

The report found out that half of the 2,400 large companies analyzed for the study are voluntarily and actively buying or investing in self-generation of renewable energy for their operations. Plus, 200 of these firms source at least 50 percent of their power needs from renewables. “Renewable energy sourcing has become a mainstream pillar of business strategy in recent years,” IRENA Director-General Adnan Z. Amin stressed.

Environmental and sustainability concerns, social responsibility, reputation management, and economic and financial objectives are the top reasons cited by corporations on why they are making the shift to renewable power. “While environmental concerns initiated this growing trend, the strengthening business case and price stability offered by renewables can deliver a competitive advantage to corporations, and support sustainable growth,” Amin added.

There’s definitely an increased appetite for renewable energy as other countries are also gearing up to accommodate more renewables such as in the case of Vietnam.

Recently, Vietnam Prime Minister Nguyen Xuan Phuc reiterated his country ’s commitment to shift to renewable power in an interview with Reuters.

He announced that Vietnam is set to increase electricity generated from renewable sources to 101 kWh billion by 2020 and to 186 kWh billion by 2030 from 58 billion kWh recorded in 2015. The country also aims to reduce the use of coal and petroleum products by 40 million tons by 2030.

Phuc said that the government has already prepared incentive mechanisms as well as policies to promote local and foreign investments into renewable energy development.

The chief executive stressed that this shift is needed despite the country’s push for more economic growth,“It is important that we will not pursue economic growth at the expense of the environment,” Phuc noted.

turkey

Soma Kolin power plant in Turkey’s western province of Manisa. Survey says more Turkish favor greener forms of energy despite the country’s dependence on coal
Photo c/o: http://www.aa.com.tr

There also seems to be greater awareness and appreciation for renewables among citizens in other countries. Turkish, for example, favor greener forms of energy than coal despite Turkey’s dependence on this form of power. The country sources more than 70 percent of power need from fossil fuels since the government named coal as its preferred fuel for the growing energy demand.

A survey conducted by climate information hub İklim Haber and research company Konda revealed that more than half of its citizen oppose the building of additional coal-fired plants as 75 percent of the participants are worried about climate change.

In the Philippines, our government claims to have the appetite for more renewables in our power mix. But that hunger is not correctly matched by government’s actions. It is highly likely that we will remain starved for cleaner forms of energy for now as we have moved down our renewable energy targets.

The Energy Department had announced the target of sourcing 35 percent of our overall power needs from RE by 2030. This goal, however, has been recently pushed back to 2040. This is not surprising as data from BMI report showed that there would be a 10 percent increase of coal in our energy mix in the next decade from below 50 percent in 2017 to more than 55 percent by 2027.

That is unfortunate since now is an excellent time for the Philippines to add more renewables and to take advantage of the falling costs of renewable power prices. Plus, of course, we need stable energy at reasonable prices as we try to industrialize. But then, again, we will remain hungry for cheaper and sustainable forms of power for now.

References:

Renewables 2018, Global Status Report, http://www.ren21.net/gsr-2018/
http://www.vir.com.vn/vietnam-well-positioned-to-develop-renewable-energy-says-pm-59892.html

http://www.climatechangenews.com/2018/06/05/83-turks-favour-renewable-energy-coal-survey-finds/

http://www.irena.org/newsroom/pressreleases/2018/May/Corporate-Sourcing-of-Renewables-Growing-Taking-Place-in-75-Countries

Missing Out on Benefits

 

renewable-energy-jobs-in-world

10.3 million people were employed in renewable sector says IRENA. Photo c/o https://constructionplacements.com

Renewable energy as experts has been saying bring many benefits. All over the world, big global brands and governments are making the shift to sustainable sources of power because they to help the environment as well as save on power costs.

 

However, more affordable energy prices and a cleaner environment are not the only benefits of choosing renewable energy. Fortunately, opting to build RE plants has a direct on the economy through job generation.

The International Renewable Energy Agency or IRENA report, Renewable Energy and Jobs Annual Review 2018 showed that in 2017 alone, the renewable energy industry generated more than half a million jobs around the world. This number brings the total number of people employed by the sector to 10.3 million as some 500,000 more jobs were created last year by the industry.

The same report noted that United States, China, Brazil, Germany, Japan and India combined accounted for the 70 percent of the jobs. Asia on the other hand accounted for 60 percent of all the renewable jobs having employed three million workers for solar PV energy alone.

These numbers can silence many naysayers who claim that a shift to greener forms of energy could cost many workers their jobs. In fact, the change to cleaner forms of energy is set to create more employment in the next coming decades as noted by Adnan Z. Amin, Director-General of IRENA. “Fundamentally, this data supports our analysis that decarbonisation of the global energy system can grow the global economy and create up to 28 million jobs in the sector by 2050,” Amin stressed.

Locally, the RE sector can create plenty of jobs for the Filipinos, too.

The  Greenpeace report “Green is Gold: How renewable energy can save us money and generate jobs, in 2013, noted that the Philippines, being a tropical country can generate as much as   4.5 to 5.5 kWh/m2/day. Data collected by the research showed that a 10 MW solar power plant usually employs 1000 people during the construction phase that lasts for six months and additional 100 full-time employees.
And this is just for solar power.

Overall, Greenpeace’s report found that the RE sector in the country can provide as much as 6.3 million jobs by 2030. Plus, renewable power in the Philippines can create some 62,625 jobs for every 7.828 RE projects for development

Unfortunately, unless we can fix the problems in the sector, then we cannot expect to reap the full benefits of RE including providing more employment for the Filipino workers.

Inconsistent and unfavorable policies to developers hinder the sector from reaping the economic benefits of harnessing more power from natural sources. The IRENA report stressed this point when it noted: “Employment trends and patterns are shaped by a wide range of technical, economic and policy-driven factors. Where policies become less favorable to renewable energy, change abruptly or invite uncertainty, the result can be job losses or lack of new job creation.”

The developments in the last few months have been a testament to the uncertainty in the energy sector. Just last December, the Commission on Audit suspended the four commissioners of the Energy Regulatory Commission or ERC.  A bill in Congress is seeking to abolish the commission was filed in the lower house after. By February, the Court of Appeals’ granted a temporary restraining order stopping the suspension. The conclusion of this saga remains to be seen.

Plus, we are also dealing with the cha-cha of our government or back and forth of our government in increasing the shares of renewables in our power mix. The Energy Department had a goal of sourcing 35 percent of our overall power needs from RE by 2030 and later pushed the deadline further to 2040.

In fact, in the next decade, the share of coal is set to increase by 10 percent as noted by Fitch-owned, BMI “The share of coal [is]actually increasing over our 10-year forecast period—from just under 50 percent in 2017 to over 55 percent by 2027,” BMI noted. What’s worse is that the contribution of renewables in our energy mix will likely decrease to 16 percent in 2027 from 20 percent in 2020 according to the study.

These numbers do not reflect our goal to source more power from renewable energy. So, we are unlikely to generate more jobs from the RE sector if this projection materializes.

Aside from missing out on having lower energy costs and helping our environment, the Philippines is likely to miss out on the opportunity of providing additional jobs from the development of more renewable energy plants.

If we can only get our act together, then we can surely reap the benefit of having more jobs from harnessing more power from renewables especially since the Philippines is blessed with overflowing natural resources. Doing so will reduce the burden on Filipino households and provide individuals with more jobs and higher disposable income which Filipinos need and deserve.

References:

Greenpeace report “Green is Gold: How renewable energy can save us money and generate jobs

IRENA report, Renewable Energy and Jobs Annual Review 2018

http://www.manilatimes.net/coal-top-55-ph-power-mix-2027/377594/

Honoring Commitments: A Hot Warning

The historic 2015 Paris climate agreement saw world leaders committing to limit the average global temperature rise to “well below 2°C” above pre-industrial levels to combat climate change and its effects.

However, more than two years after the signing of the accord, the International Renewable Energy Agency or IRENA notes that “current emission trends are not on track to meet that goal.” In its report, the Global Energy Transformation: A Roadmap to 2050, released last April, the agency stressed that current and planned policies of governments are far from achieving their emission reduction targets. Fossil fuels like natural gas, oil and coal would still dominate the global energy mix in the next decades.

The Energy agency stressed that the goal of keeping the world’s temperature rise below 2 degrees Celsius is technically feasible. But it is imperative to scale up renewable energy (RE) at least six times faster so that the world can start hitting the goals set out in the Paris Agreement. “Global energy system must undergo a profound transformation from one largely based on fossil fuel to one that enhances efficiency and is based on renewable energy,” the report added.

The report also emphasized that all countries can grow the proportion of RE in their overall energy use. According to IRENA’s global roadmap, the REmap, nations can source 60 percent or more of their total energy consumption from renewable energy. After all, the world would need to increase the share of renewable energy in the power sector from 25 % in 2017 to as much as 85% by 2050. “If we are to decarbonize global energy fast enough to avoid the most severe impacts of climate change, renewables must account for at least two-thirds of total energy by 2050,” IRENA Director-General Adnan Amin said.

To accomplish this feat, new approaches to the power system, planning, system and market operations, regulations and public policy must take place IRENA stressed

The Energy agency also noted that all regions of the world would benefit from the energy transformation. Areas like East Asia, Southern Africa, S. Europe and Western Europe are set to have high welfare gains from this transition through reduced greenhouse gas (GHG) emissions.

So, it’s not only the Philippines that’s having a difficult time in meeting the goals set by world leaders in the Paris agreement since there is a need to undergo a major shift to cleaner forms of energy around the world.

Unfortunately, the world’s lack of action in fighting climate change will hurt vulnerable regions like Southeast Asia.

Hans Joachim Schellnhuber, a member of the Pontifical Academy of Sciences in the Vatican and the Director of Germany’s Potsdam Institute for Climate Impact Research (PIK) last year warned that Southeast Asia might end up suffering from daily extreme temperatures if the world keeps us with high emission level where “All of the tropics will develop conditions that physiologically, humans cannot live outside anymore.”

His study, “A Region at Risk: The Human Dimensions of Climate Change in Asia and the Pacific” showed that it is possible for temperature to increase to 1.7 degrees Celsius above pre-industrial levels by 2030, up to 2.7 degrees by 2050 and even up to 4 degrees by 2070 or the temperature “where you would collapse.”

This means that the Philippines and its neighbors could “see a complete shift in living condition” where people would be forced to flee their homes. The Nobel Prize winner further added that “You would actually have to give up the Philippines altogether….Unless you put the entire population into a shopping mall, which would be a very big mall,”

This summer, the Filipinos have already endured warm temperature with the heat index reaching 46.8 8°C in Sangley Point in Cavite. Our weather bureau, PAGASA, classifies heat index temperatures from 41 to 54°C as dangerous where “heat cramps and heat exhaustion are likely” and that “heat stroke is probable with continued activity.”

 

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Dried-up rice field in Cavite as heat index this summer reaches dangerous levels. Photo c/o of philstar.com

 

Can you imagine having to endure warmer temperature than the ones we have this summer? As Schellnhuber stressed, we Filipinos will be unable to live outdoors if we all fail to limit our GHG emissions.

The problems of Boaracay may not be limited to the quality of the water alone. If we do not do anything about climate change soon, sea levels will rise in the coming century by as much as 1.4 meters most likely engulfing the not only Boracay but our other lovely islands as well.

Clearly, there is a pressing need for us to do our share in limiting the average global temperature rise to the desired level as we are the ones who will suffer from the effects of climate change. Fortunately for the Philippines, it is possible to help reduce GHG emissions by relying more on cleaner forms of energy.

In fact, the country can supplement its power needs with renewables by 57 percent to 60 percent by 2040 with the right policies according to research from the International Food Policy Research Institute (IFPRI). “The Philippines’s current energy-supply mix must be diversified to minimize import dependency on fossil fuels and meet the country’s energy needs,” said Alam Hossain Mondal, a researcher at IFPRI and lead author of the study. And as I have repeatedly stated in the past, the impact of reliance on fossil fuel hits our ordinary households. The weakening of the peso and increasing coal prices will adversely affect the ordinary Filipino.

He further added that failure to add more RE in the power mix would result in greater fossil fuel dependency by an average rate of seven percent per year. As a result, CO2 emissions could reach 144 million tons by 2040 from the 43 million tons recorded in 2014.

Indeed, it is time to pay attention to how we can help the world limit the average global temperature rise. Yes, the Philippines and even its neighbors’ contribution GHG emissions may be negligible compared to advanced countries. But since the country and its neighbors are at risk if we fail to mitigate the effects of climate change, then it would be beneficial for us to help reduce our GHG emission.

It is time for us to exert our best effort to honor our commitment in the Paris Agreement. And it starts by sourcing more power from cleaner sources.

References:

https://www.irena.org/publications/2018/Apr/Global-Energy-Transition-A-Roadmap-to-2050

https://businessmirror.com.ph/ifpri-phl-could-supplement-57-60-of-its-energy-needs-with-renewables-by-2040/

http://www.interaksyon.com/expert-warns-with-no-cap-on-greenhouse-gas-emissions-going-outdoors-will-be-deadly-by-2100/

http://www.gmanetwork.com/news/scitech/weather/650902/heat-index-over-41-degrees-in-several-areas-across-phl/story/

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.

10891-cobardor-island-solar-panels-lines-wide-angle

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

 

 

 

 

 

My New Year Wishes

This holiday is the time to reflect on the past year as well hope and pray for a better one. So, while wearing my renewable energy developer hat, let me share my new year wish list.

Top on my agenda for 2018 is the resolution of the ERC issue. Just last month four commissioners were suspended, which left the energy sector in limbo. This means that the sector is left paralyzed and this does not augur well for the New Year. 

Legal experts tell me that the basis for their suspension is skating on a very thin ice. And many are concluding that the move reeks of political vendetta. If these are true, then it is a development that does not bode well for our country. This undermines the very integrity of the regulatory framework and will bring about uncertainties on the security of investments in the sector. And this, obviously, will spell disaster for the entire economy. 

Equally important is for the players in the sector to realize important role of renewable energy (RE) on the economy. Yes, environmental sustainability is a crucial aspect, but using RE has a more significant benefit for households and businesses: the minimization of risk and lowering of power cost. This approach goes beyond the “least-cost” traditional view of energy planning. With the state of geopolitics, energy security and lowering of prices should be on the top agenda of the regulators today. Renewable energy has to be a priority. 

Related to risk minimization is the diversification of energy supply. Coal cannot and should not be relied upon solely for our energy needs. Natural gas has an important role to play in the country. Today, we source over 2,500 MW of our power needs from natural gas.  We cannot expect coal to replace that capacity when Malampaya runs out in seven years; Coal just does not have the physical characteristics intrinsic to natural gas. It is time to seriously consider how to develop Liquefied Natural Gas (LNG). Unfortunately, a monopsony like MERALCO is not easily swayed to buy such a massive capacity of LNG. It is imperative for our government to be more creative in finding ways to introduce LNG into the country.

The proposal to have an Independent Market Operator (IMO) is long overdue. However, aside from the IMO, we should also have an Independent System Operator (ISO) to ensure complete independence in the dispatch and operations of the power network.

 Finally, the world will be going towards a phase of distributed generation and smart grids. The government must prepare for this by providing robust telecommunication and internet infrastructure since the current internet speed in the country is just unacceptable. Our telecom and internet should be vastly improved.

 Happy New Year, everyone!

A Growing Consensus

There is a growing consensus among energy players and experts around the world that the best path forward to a sustainable energy and clean energy is to combine renewable energy with natural gas. Unless an alternative type of fuel is found, or until battery storage (or similar technologies) become economically feasible, this may be the case.

For one, Royal Dutch Shell, Europe’s biggest energy company is investing heavily in liquefied natural gas (LNG) plants and developing a market for it. Shell currently has various LNG projects scattered in practically every continent.

Now why the massive investment on LNG? According to Maarten Wetselaar, Royal Dutch Shell Plc’s director of integrated gas and new energies, its because “We are deeply convinced that the end-point energy mix that provides cheap, or at least affordable, reliable and clean energy to everybody will consist of renewable power, biofuels, and natural gas.”

He added that that the company will go full speed with investments projects that can produce the cheapest LNG.

As early as 2012, Shell’s CEO, Peter Voser already announced that the firm would invest some $20 billion in the natural gas around the world in the next three years.

Shell isn’t alone in its belief that renewables should be combined with natural gas.

Craig Ivey, president of US Energy firm, Consolidated Edison Inc, stressed that the US shift to RE like wind and solar is feasible if there is greater reliance on natural gas. Consolidated Edison Inc. provides electric service to some 3.3 million customers and gas service to roughly 1.1 million customers in New York City and Westchester County in the US

Ivey added that REs could account for half of New York’s energy needs by 2030 only with the help of natural gas.

But energy company officials are not the only ones to have this conclusion. A study published recently by the National Bureau of Economic Research concluded that natural gas power plants that can fire up quickly must be used to meet the cut emissions and energy stable supply.

Author’s of the study, “Bridging The Gap: Do Fast Reacting Fossil Technologies Facilitate Renewable Energy Diffusion?” stressed that “Renewables and fast-reacting fossil technologies appear as highly complementary and that they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.”

I have to agree with these experts as adding more natural gas helps in ensuring a stable energy supply through diversification.

 

Shell LNG

Adding more natural gas to the power mix is key to achieving energy diversification. Photo c/o https://www.green4sea.com

 

According to Andy Stirling, a Professor of Science & Technology Policy at the University of Sussex, there are three basic properties when it comes to diversification: variety, balance and disparity.

In the context of energy systems planning, variety is about the number of energy supply options available. And having more variety of energy types means that there is greater diversity in the system.

On the other hand, balance pertains to the reliance on each option available where the system is considered as more diverse if there is more balance across energy choices while disparity refers to the differences in each option. There is more diversity in the energy supply system when options are more disparate.

This is why we need to make use of various energy types for our energy mix.So far, we depend heavily on coal to meet our ancillary needs. According to the Department of Energy, last year, coal accounted for 48 percent of our energy needs while some 22 percent came from natural gas.

Obviously, our energy supply is far from diverse given the numbers above. This is why we need to develop and increase the share of natural gas in our energy mix. We can lower our reliance on coal, and use more natural gas for our ancillary need as we add more renewable energy mix.

Keep in mind that both wind and solar power are intermittent. Thus, we need to beef up on our ancillary services to maintain the correct direction and flow of power as well as to address the imbalance between the supply and demand on the grid. And for that we can utilize more LNG rather than always turning to traditional power sources for our ancillary needs.

After all, there are advantages in using natural gas. For one, natural gas is three times more useful compared to conventional power. It is highly efficient as around 90 percent of natural gas produced can be converted to useful energy.

Natural gas is less harmful to the environment, too since its main component, methane, results in lesser carbon emission. LNG’s carbon dioxide emissions are 30 percent less than oil and 45 percent lower than other conventional fuels.

Plus, the death print of natural is less than coal according to energy expert James Conca who defined death print as “the number of people killed by one kind of energy or another per kilowatt hour (kWh) produced”. Natural gas death print is 4,000 significantly less than coal’s 100,000.

We have so much to gain by developing our LNG to replace coal-fired plants in the country. Adding more LNG will make our energy supply system become more diverse while helping us achieve our goal of helping the world become a less polluted place.

In the long-term, however, maybe indigenous, sustainable and therefore renewable energy may be the way to go.

References:

http://www.reuters.com/article/usa-property-coned-energy-idUSL1N1IY1DK

https://www.cnbc.com/id/49841864

fuel.https://www.bloomberg.com/news/articles/2017-09-06/shell-seeks-to-boost-lng-demand-as-canada-in-mix-for-new-plant

https://www.washingtonpost.com/news/energy-environment/wp/2016/08/11/turns-out-wind-and-solar-have-a-secret-friend-natural-gas/?utm_term=.dbf4c1935ceb

https://www.doe.gov.ph/electric-power/2016-philippine-power-situation-report

Diversity and Sustainable Energy Transitions: Multicriteria Diversity Analysis of Electricity Portfolios By Andy Stirling