Additionality: A Concept Often Overlooked in Local Geothermal Energy Development

Photo c/o https://climatographer.com/

The term “additionality” is often used in the climate change space, pertaining to when greenhouse gas projects’ impact exceeds their initial targets.

Cambridge Dictionary defines the word “additionality” in two ways.

In an environmental context, additionality according to the Cambridge dictionary is when there is “the reduction in the amount of carbon dioxide gas released into the environment that happens only as a result of trading carbon credits.”

The Dictionary’s other definition is finance-related, with additionality being described as “the situation in which a government or organization is able to get money from another government or organization especially the European Union, only if it pays for most of the project itself.”

The Organisation for Economic Co-operation and Development (OECD) has identified three kinds of additionality in impact investing, namely financial additionality, value additionality, and development additionality. It is financial additionality that I would like to focus on in discussing the problems in our local renewable energy development

According to the OECD, financial additionality “describes a private-sector investment that otherwise would not have happened.”

Energy consultancy group in the Asia Pacific, Lantau Group has a simplified definition, describing the term additionality as “when someone takes an otherwise non-viable project and makes it happen anyway.”

We can take the concept of additionality and apply it to our local geothermal energy development conundrum.

Local geothermal energy development has been stagnant as very few private entities are willing to undertake exploration risks. Previously, the government shouldered the cost of the preliminary surveys of geothermal areas. Those days are gone now since after the passage of the Electric Power Reform Act or EPIRA, geothermal power exploration and development are left entirely to the private sector. The exploration costs are assumed by the private developer. So, we can say that private firms offer financial additionality when they embark on geothermal exploration and eventually development.

The Lantau Group stresses that additionality implies a premium, and “is clearly a requirement of the economic concept of making something happen that would not otherwise have happened. “

The research group further added that risk is an important element of additionality as investors typically spot an opportunity that looks attractive in current market conditions “but if that value proposition is incomplete or could deteriorate in the future, the investor has to consider risk.”

And there lies the problem with our renewable energy projects, particularly geothermal energy development. Unfortunately, our regulators fail to realize that additionality is about premium. Local regulators have such little appreciation of the risks being assumed by private geothermal developers. This can be seen in our current tariff setting.

I have discussed this lack of appreciation in a previous post. To recap, our tariff setting uses the Beta in computing for the cost of the equity under the Capital Asset Pricing Model or CAPM. The Beta determines the return on equity for any project.

Given the risks being assumed by the private sector in geothermal energy development, one would think that Energy Regulatory Commission (ERC) would offer a premium for the risks of geothermal energy development. Sadly, our ERC uses the same Beta across all power projects, failing to consider the risk profile of each power plant project. The CAPM is being incorrectly applied in our tariff setting.

So, as with the concept of additionality, why should investors put their money into developing geothermal resources when there is no premium to make something happen that would not otherwise happen? Geothermal greenfield exploration costs a lot of money. And one study done by the International Finance Corporation some years back showed that worldwide, only 60 percent of the explored holes turned out to be successful.

It’s clearly easy to see why investors are shying away from geothermal energy development as they are assuming high risks of exploration but won’t be properly compensated for assuming those risks. Again, for investors, a premium is needed to make something happen that would not otherwise have happened.

Revisiting the problems in geothermal energy development in the Philippines is not just timely but also necessary. For one, we are now experiencing rotational brownouts as of this writing given the lack of supply as more people turn on their cooling device this hot season.

For the entire first week of June, red and yellow alert statuses were raised on the Luzon grid. The grid operator was projecting a power supply deficiency of around 201 megawatts. The long-term solution, National Grid Corporation of the Philippines (NGCP) says is to add to the current power supply as demand continues to rise.

The NGCP has warned us of an impending power supply shortage in Luzon as early as March saying that operating margins were forecast to be thin from April to August this year. The grid operator called on policymakers and power industry players to address the impending shortage.

It was a warning that was downplayed by the Department of Energy (DOE) claiming that supply and demand projections don’t indicate any possibility of a red alert, although the Energy Secretary did admit in a Senate Energy Committee that a power generating capacity supply shortage does exist.

The current power supply and demand situation highlight the Philippines’ problem with energy security, particularly energy power supply problems.

More so, since there has been a moratorium on new coal power plants. Banning new coal-fired plants is a step in the right direction but without proper planning, the moratorium also leaves the country in a more vulnerable position. We are left with very limited options for baseload power plants, namely diesel, gas, and geothermal.

Geothermal power can act as a baseload plant, which is why it’s a great substitute for traditional sources of power. We can use geothermal to replace coal-fired plants.

Plus, new geothermal technologies are emerging. For example, there’s Google’s partnership with Fervo and Dandelion energy.

Fervo is developing the world’s next geothermal project, which will offer an “always-on” carbon-free resource. The company is working on how to use advanced drilling, analytics techniques, fibre-optic sensing, artificial intelligence and machine learning. Fervo aims to use AI and machine learning so the geothermal plants are more effective in responding to energy demands while fiber-optic cables can collect real-time data on temperature and flow of the geothermal resources so the best existing geothermal resources can be identified.

As for Dandelion, it’s making home geothermal heating more accessible. So far, the firm has installed hundreds of geothermal heating sites in New York and is currently improving its drilling technology to make residential drilling and heat pump installation easier and also more competitive with the current fossil fuels.

All these new technologies and developments in geothermal energy development should bode well for us as the Philippines have massive geothermal energy sources. Addressing the challenges hindering the growth of geothermal energy development in the country swiftly will go a long way in providing more baseload power and more alternatives for the consumers.

Thus, it’s important for us to review the concept of additionality and how our failure to provide investors with a premium is keeping us from using other sources of power for baseload. Our regulators need to incentivize investors. The government can no longer engage in exploration and development so it’s up to the private sector to make something happen that would not otherwise have happened or simply put help make more geothermal power more available.

All Is Not Lost

The world was on its way to massive energy transitions before the pandemic came. Governments were announcing ambitious clean energy targets and banks were shying away from funding coal projects. Big businesses, too were flexing their muscles, announcing 100 percent renewable energy targets to be met in the next few decades.

However, the COVID-19 pandemic, one of the major shocks in major history, happened. It caused disruptions in every business, mobility, and everyday life. This pandemic also caused the most severe economic recession since World War II.

As the world grapples with the effects of the COVID-19 pandemic, has all been lost when it comes to clean energy transition? Are governments less keen on keeping up with their clean energy goals and Paris Agreement targets?

Not all bets are off said Boston Consulting Group (BGC) Center for Energy Impact. COVID-19 may have changed the economic calculus of many governments but these could bode well for renewable energy development.

The consulting group studied how regions around the world are adopting evolving stimulus measures that are altering energy transition plans. The study noted that Europe’s clean energy shift is likely to move forward while some hard-hit countries in South Asia, Africa, and Latin America’s ability to promote energy transitions are severely constrained. It also said that the adoption of renewable and electrification of transport in Northeast and Southeast Asia are likely to increase.

BGC said some countries are pushing forward with their clean energy plans as they have suffered less adverse health and economic impacts from COVID-19. Many leading Asian economies such as Singapore, Malaysia, China, Japan, and South Korea are in a good position to make substantial energy infrastructure-related investments required to make the energy transitions. These countries, after all, are likely to gain the most by aggressively investing in renewable energy generation. These Asian countries have also adopted policy reforms and stimulus measures aimed at increasing industrial competitiveness.

BGC also looked back at history to determine how governments’ responses to economic recessions influence the energy sector’s trajectory.

Back in the global recession of 2007 to 2009, various governments implemented green stimulus programs justifying such moves by saying that a greater commitment to renewable energy development could jolt economic development and offer long-term competitive benefits. 

Green energy policy measures back then were not entirely brought about by climate change concerns. The Paris Agreement did not exist back then. BGC stressed that the European Union and the United States governments directed stimulus spending towards renewables to generate new installation, domestic construction, and manufacturing jobs.

Governments too can bank on renewable energy development to drive economic activities during this pandemic. A report by the International Renewable Energy Agency (IRENA) released last year showed that accelerating investments in renewable energy can help economies recover as they can spur the global gross domestic product (GDP) by almost $98 billion between 2020 and 2050. Renewable energy development can also quadruple the number of jobs over the next three decades.

BGC recognized in its report that the COVID-19 pandemic and the economic recession that comes with it are quite different from the 2007 to 2009 global recession. The collapse of the economy back then required governments to stimulate and sustain new economic activity while the present recession is forcing governments to allot more resources to combat the health crisis while minimizing the impacts of unprecedented short-term employment. Governments are more focused on keeping the economy afloat given their smaller tax revenues and higher spending, rather than jump-starting new economic activity.

In the Philippines, we can expect a much slower energy transition. Aside from the fact that the government’s lukewarm reception to renewable energy before the pandemic, the Philippines also has trouble getting back to its feet economically speaking. As I write this, we are on the fifth week of the enhanced community quarantine or ECQ part 2. The recent jobs report also showed that 4.2 million Filipinos lost their jobs while 7.9 million took pay cuts in February alone. 

According to BGC, “the worse a country is affected by the pandemic, the less likely its government and businesses are to be able to focus on materially altering its energy infrastructure.” It added that energy transitions require a stable economic and social environment to pour substantial investments in energy infrastructure. As the Philippines is badly affected by the pandemic, our country’s clean energy transition will probably be slower.

But this is not to say that the Philippines is in a hopeless situation regarding the clean energy transition. There has been good news last year, after all.

For one, the Department of Energy (DOE) implemented a moratorium on the approval of new coal contracts. It was a move that surprised many as the DOE previously rigorously defended its technology-neutral stand. 

Second, Yuchengco-led Rizal Commercial Banking Corporation surprisingly declared that it would stop funding local coal-fired power projects, following the footsteps of international banks like US third-biggest bank, Citigroup, Sumitomo Mitsui Banking Corporation of Japan, South Africa’s ABSA bank, and Mizuho Financial Group. Such a bold move deserves the country’s gratitude for pioneering this much needed change in our energy landscape.

The Philippines, however, has to make some policy adjustments to attract low-cost funding for renewable energy development. As I have been saying, requiring a higher level of fixed-price contracts is long overdue. Likewise, I have been advocating for a portfolio approach to energy planning so that the tariffs are also based on this portfolio approach.

I’m not alone in these assertions. A study by S&P Global entitled, “How is COVID-19 Impacting the Energy Transition” noted that global investment appetite for green energy remains strong but sustaining appetites requires either fixed-price auctions or long-term visibility in terms of power price agreements. As I have always argued in the last, fixed price contracts will lead to lower power rates for the man on the street.

The Philippines has so much to gain in shifting to renewables swiftly. Even before the pandemic, our government was aiming to become an upper-middle-income country status by 2022. Sustaining economic growth will require more electricity, and local electricity demand is seen to increase by an average of 6.7% annually.

Plus, we need energy security. This pandemic should teach us that it is necessary to end our reliance on imported fossil fuel to power our nation. Just imagine the devastating effect had Indonesia closed its borders and decided to stop exports of its coal. Thankfully, it didn’t happen, but by now we should be working on ensuring our local energy supply.

And experts after experts predict that it would be cheaper to build renewable energy plans than continue the use of existing coal-fired plants, which eventually would become stranded assets.

We are facing monumental challenges in the Philippines as the coronavirus continues to claim lives and cause havoc in our economy. But hopefully, we continue our quest for a faster clean energy transition as more renewables will help us in our economic recovery and ensure energy security. As they say, we need to build back better.

A Stronger Case for Distributed Energy

Apart from disaster resilience, the country will do well in welcoming more distributed energy systems because of other benefits. Photo c/o http://www.advisian.com

Time and time again, thousands of Filipinos are left in the darkness after destructive typhoons hit us.

Just a few weeks ago, Tropical Depression Auring left some residents of Surigao del Norte and Davao Oriental without electricity although the outages didn’t last that long. Auring, after all, was merely classified as a Tropical Depression and didn’t wreck as much havoc as the three typhoons that we experienced last year.

In the last quarter of 2020, Typhoon Quinta, Super Typhoon Rolly, and Typhoon Ulysses battered the country, leaving massive destruction and causing major power outages. The Bicol Region suffered a total power blackout due to these typhoons. 

According to the National Electrification Administration (NEA), the country suffered some Php500 million worth of damages to the utility system because of these three typhoons.

It’s a given that the Philippines will always suffer from catastrophic typhoons given its location. On average, the country is visited by at least 20 typhoons annually, five of which are destructive. We can’t change our location but we can invest in resiliency measures.

 For the Energy Sector, this means revisiting our energy systems, and reinvesting in distributed energy and smart grids

As I have mentioned in a previous post, many countries are already moving away from traditional central power production and are moving toward distributed energy production. The Philippines must follow suit as distributed energy will bring many benefits to Filipinos.

Disaster resilience is one benefit. Our current centralized systems require power lines spanning long distances, which proves detrimental for us when natural disasters happen. Damage to a single line can leave thousands without electricity, which is why it’s hard to restore power immediately. Power distributors, cooperatives, and the transmission company will first have to assess which lines are damaged and affected. Only then can linemen start physically restoring power. Power restoration after a calamity is risky and sometimes results in the deaths of some linemen.

Apart from disaster resilience, the country will do well in welcoming more distributed energy systems because of other benefits.

A recent study in the United States conducted by Vibrant Clean Energy found out that investing in local solar and wind energy, storage, and distributed energy technologies can save the US some $473 billion in power bills from now and year 2050. This amount of savings the research said is feasible if the US invests heavily and uses solar and wind power and distributed energy to power businesses, farms, homes, and schools.

The research also revealed that investments in distributed energy and other technologies that can power 25 percent of US homes are the most efficient way of meeting the country’s climate goals while generating 2 million jobs along the way. And as I have discussed above distributed energy can also help boost the resilience of communities that are dealing with wildly variant weather patterns.

Speaking of farms renewables and distributed energy can also help our agricultural sector.

Recently the Department of Agriculture (DA) and the Department of Energy (DOE) announced that they will jointly undertake pilot renewable energy (RE) projects for the agriculture and fishery sectors in strategic areas of the country. The goal is to promote the use of clean energy in boosting food security. 

Some of the pilot RE projects will include off-grid electrification in corn, rice, and sugar cane farms and the use of solar-powered systems for aquaponics, hydroponics, crop irrigation, and poultry egg incubators and hatchers. The pilot projects will help jumpstart the Renewable Energy Program for the Agriculture and Fishery Sector (REPAFS).

The REPAFS will eventually serve as the blueprint for efficiently and effectively integrating renewables in the agriculture and fishery sector to enhance productivity and ensure sustainability and environmental protection.

The REPAFs will benefit from distributed energy and renewables. Areas that heavily rely on variable energy resources such as wind and solar are better off investing in distributed energy systems as renewable power can be deployed to help balance the grid and improve system reliability.

In this regard we are looking at off-grid solar with battery solutions to be implemented in such areas. One system we are seriously looking into will allow almost a 24-hour electrical source to power  a TV, radio, and a set of lights. And the system will cost below what it currently costs NPC to provide electricity to SPUG areas. We are also exploring collaboration with Land Bank of the Philippines (LBP) to provide the financing needed for the farmers and fishermen.

Distributed energy can also help power rates become more affordable as consumers can sell back power to the grid or receive compensation for allowing the use of their storage systems to help stabilize the grid.

Plus, distributed generation can help breakdown monopolies in power distribution. A study by the Massachusetts Institute of Technology (MIT) entitled, “Utility of the Future” noted that present electricity distribution systems create a natural monopoly as regulators tend to be clueless about the distribution utilities’ managerial inefficiencies and costs. This in turn allows DUs to justify their higher operating and convince regulators to pass the additional costs to consumers.

Distributed energy systems work differently as they bank on other advanced technologies such as advanced metering, energy management systems, and dynamic-based pricing, all of which offer more transparency on pricing.

The transmission and distribution businesses were once conceded as natural monopolies, but technological changes proved that transmission and distribution need not be dominated by a single or few players. 

The transmission and distribution businesses were once conceded as natural monopolies, but technological changes proved that transmission and distribution need not be dominated by a single or few players. Around the world, the energy sector is undergoing massive changes given the many technological advancements and the need to address climate change. It’s high time the Philippines joins other countries that are moving away from centralized distribution as Filipinos will benefit more from distributed energy.

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.

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%