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

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!

Ignoring the Numbers

Just recently, United States President, Donald Trump signed an executive order, which mainly seeks to overturn his predecessor, Barrack Obama’s Clean Power Plan.

To recall, then President Obama announced the Clean Power Plan in August 2015 in response to the growing clamor to address climate change. The Plan’s primary objective is to reduce carbon pollution from power plants. The Environmental Protection Agency (EPA) subsequently issued the Carbon Pollution Standards, the first U.S. national standard on pollution.

Trump’s EO will trigger the review of the US Clean Power Plan and carbon standards for new coal plants. News reports, however, note, that it is unclear if the US will keep its commitment to made in COP 21 agreement to keep the world’s average temperature below two centigrade above pre-industrial levels.

Reports also quoted Trump as saying that his order is about “ending the theft of prosperity” as the signing of the EO will “start a new era of production and job creation,” particularly in the coal and mining sector.

Perhaps it’s not surprising that the new US President is ignoring the actions and calls of the global community to work double time to mitigate the effects of climate change. After all, he has promised to bring coal mining jobs back while dismissing climate change as “a hoax created by the Chinese” during his presidential bid.

More details are yet to be released on the full impact of this new executive order. But as early as now, environmental activists are already criticizing Trump for going backward on the progress already made by the US in fighting climate change. The U.S, once considered as the leading country in the world’s quest for a cleaner and greener world is now seemingly going backward.

I also join the many others who question Trump’s move in signing such an E.O. as Trump seemed to have ignored that cleaner forms of energy, do generate jobs. Many jobs in fact.

Weeks before Trump signed his controversial order, the US Department of Energy (DOE) released a report showing the contribution of the renewable energy (DOE) sector in jobs creation in the country.

The US, Energy and Employment Report revealed that solar power employs the most workers in the US Electric Power generation industry with wind energy is the third biggest. Solar alone provided work for 43 percent of the sector’s employees with 374,000 individuals from 2015 to 2016. In contrast, traditional fossil fuels all together just hired 22 percent of the workforce at 187, 117 for the same period. Coal’s job figures have been on the decline for the past decade the report stressed.

And renewables’ contribution to the additional employment in the power sector is not to be ignored either. The Energy Sector’s contribution to the overall job generation is significant as it accounts for some additional 300,000 jobs, which is 14 percent of the US job growth in 2016.

Plus, RE’s job growth is significant as it increased by 25 percent, creating a total of 73,000 new jobs last year.  Wind power employment alone grew by 32 percent.

The growth of the renewables has been significant in the past decade as more energy are generated from these sources the report stressed: “The electric generation mix in the United States is changing, driven by the transition of coal-fired power plants to natural gas and the increase in low-carbon sources of energy.”

The study pointed out that generation from coal sources has dropped by 53 percent from 2006 to September 2016 while solar power alone has increased by 5000 percent in the same period.

And with the stellar growth of cleaner energy, jobs are still created.

“These shifts in electric generation source are mirrored in the sector’s changing employment profile, as the share of natural gas, solar, and wind workers increases, while coal mining and other related employment is declining.”

china-solar-energy

Solar alone provided work for 43 percent of the sector’s employees with 374,000 from 2015-2016.  Photo c/o http://www.zmescience.com

Trump stressed during the signing of the report that the main thrust of the EO was to protect American jobs. But apparently, the above numbers released by the U.S. DOE shows that adding cleaner forms of energy in the mix does not necessarily translate into the loss of jobs. Renewable power generation also requires manpower.

The US DOE study isn’t the only one that talks about job generation in the RE sector. Earlier studies have already established that increasing investments in renewables will generate employment.

Research by the University of California, Berkeley has shown that “photovoltaic technology produces more jobs per unit of electricity than any other energy source. Most of the jobs are in construction and installation of solar facilities and can’t be outsourced to other countries.”

Similarly, the report of the University of Massachusetts, “The Economic Benefits of Investing in Clean Energy in the US” stressed that a total of $150 billion of investments in clean energy would produce some 2.5 new million jobs.

Inevitably, these numbers point to one thing: Clean energy generates jobs. Choosing cleaner forms of energy does not come at the expense of the workers. On the contrary, more employment opportunities are available as we grow the RE sector.

Industry experts are bewildered on how Trump will deliver his promise of bringing more jobs to the coal industry.  Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University, says that it is impossible to bring back coal jobs. “There isn’t a lot of investment activity because in some cases it looks more economically attractive for firms to invest in cleaner technologies.”

Additionally, the Institute for Energy Economics and Financial Analysis or IEEFA, in its 2017 U.S. Coal Outlook stressed that job losses would continue for coal industry as companies will continue to use fewer workers in the future: Promises to create more coal jobs will not be kept — indeed the industry will continue to cut payrolls.”

Plus, the IEEFA sees that natural gas will soon replace coal, which makes it almost impossible to for Trump to achieve his goal: “Trump’s false promise that he can bring back coal is really exposed as so much coal dust and mirrors by this executive order, since utilities will continue to use natural gas instead of coal.”

Sadly, the US President didn’t look at these numbers nor listened to industry experts.

References:

http://edition.cnn.com/2017/03/27/politics/trump-climate-change-executive-order/

http://www.independent.co.uk/news/world/americas/us-solar-power-employs-more-people-more-oil-coal-gas-combined-donald-trump-green-energy-fossil-fuels-a7541971.html

http://www.reuters.com/article/us-usa-trump-energy-idUSKBN16Z1L6

https://www.energy.gov/sites/prod/files/2017/01/f34/2017%20US%20Energy%20and%20Jobs%20Report_0.pdf

https://www.epa.gov/cleanpowerplan/fact-sheet-overview-clean-power-plan

http://www.independent.co.uk/news/world/americas/donald-trump-coal-mining-jobs-promise-experts-disagree-executive-order-a7656486.html

Green is Gold: How renewable energy can save us money and generate jobs”. Greenpeace

Note: UCLA Berkeley & University of Massachusetts studies are cited from the Greenpeace report.