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%

Race Against The Clock

 

A study revealed that 77 percent of the major cities in the world will experience drastic changes in climate conditions by 2050. I won’t be around by then but my grandchildren will be around. So this is important to me. 

Crowther Lab, a research group based in Switzerland studied the impact on 250 major cities’ temperature if the world’s temperature reaches 2 degree Celsius. The study is the first global analysis of the likely changes in climate conditions in major cities due to global warming.

The researchers found out that a fifth of the world’s cities will see unprecedented climate changes including intense dry and rainy seasons. These would include Singapore, Kuala Lumpur, Jakarta, Madrid, Seattle, London, and Moscow to name a few.

Just how drastic will the changes be? The study says summers and winters in Europe will be warmer with 3.5 degree Celsius to 4.7 degree Celsius average increases. Another way of imagining it is by measuring the temperature change, which is by thinking that a city would shift by 620 miles further south.

Naturally, the cities farthest away from the equator will experience the most changes in the average temperature. But those near the equator or in the tropics such as Kuala Lumpur, Singapore and Jakarta will feel the strongest impacts of climate change. 

These changes don’t bode well for major cities says Jean Francis-Bastin, the lead author of the report. “It is a change in climate conditions that is likely to increase the risk of flooding and extreme drought,” said Francis-Bastin. 

The Philippines and not just Manila will be greatly affected by climate change, too.

The Global Peace Index 2019, released last June showed that the Philippines is the country most susceptible to hazards due to climate change.

The study revealed that 47 percent of our country’s population is located in areas highly exposed to climate hazards such as tropical cyclones, tsunami, floods, and drought.

Our Southeast Asia neighbors such as Bangladesh, Myanmar, Indonesia also made it to the list of the countries being at the highest risk because of climate change.

Manila also ranked seventh with most risk to a single hazard while our neighbor, Vietnam landed the first spot for this category.

Indeed, the Philippines and the rest of the world are constantly reminded to take serious efforts in limiting the effects of climate change. And we need to act fast as stressed by Francis-Bastin: “We definitely and very quickly need to change the way we are living on the planet. Otherwise, we are just going to have more and more droughts, flooding and extreme events.”.

Fortunately, nations responded to these warnings as early as 2015 by committing to limit global warming to just 1.5 c in the 2015 Paris Climate Change accord. But how is the world faring?

Unfortunately, the world’s temperature continues to increase. In 2018, the world recorded its fourth warmest year on record. 

But this is not to say that nations are not making any progress at all in decarbonizing the world. On the contrary, data show increases in investments in renewable energy and rapid developments in the use of clean power around the world. 

For example, the Bloomberg New Energy Finance (BNEF) showed that 2018 was the fifth consecutive year that investments in renewable energy exceeded the $300 billion mark.

Similarly, the Business Renewables Center of Rocky Mountain Institute (RMI) also showed that in 2018, the United States renewables market has almost doubled its figure of corporate off-site deals since 2015

As most know, shifting to renewable power is one of the best ways to help limit the effects of climate change. But are these investments and developments enough? 

Apparently not, says the United Nations Development Goals report 2019 after tagging climate change as “the defining issue of our time and the greatest challenge to sustainable development.”

The UN Under-Secretary-General for Economic and Social Affairs, Liu Zhenmin, in his introduction to the report stressed that cutting greenhouse gas emissions is the most crucial task to mitigate the effects of climate change. He noted that “As we are already seeing, the compounded effects will be catastrophic and irreversible: increasing ocean acidification, coastal erosion, extreme weather conditions, the frequency and severity of natural disasters, continuing land degradation, loss of vital species and the collapse of ecosystems.”

Unfortunately, current scenarios and actions to help the environment are not enough. The world may be seeing an increase in renewable investments but the  UN report emphasized that investments in fossil fuels still outpaced the $781billion recorded in 2016 as the figure is significantly higher than the  $332.1 billion investments in clean power in 2018.

Indeed, we are racing against time if we want to save our environment for the future generations. Drastic actions must be taken. The UN report emphasized it best by saying “Unprecedented changes in all aspects of society will be required to avoid the worst effects of climate change.”

References:

https://www.channelnewsasia.com/news/singapore/singapore-kuala-lumpur-unprecedented-climate-change-2050-11710274

https://solarindustrymag.com/report-2018-a-record-breaking-year-for-corporate-renewable-energy-deals/

https://about.bnef.com/blog/clean-energy-investment-exceeded-300-billion-2018

https://news.abs-cbn.com/spotlight/06/15/19/country-most-threatened-by-climate-change-study-says-its-philippines

The Biggest Loser

Around half of the world’s energy needs will come from renewable energy by 2050. That’s according to the latest Bloomberg New Energy Finance (BNEF) report.

The study stressed that renewable’s domination in the next three decades will occur along with the expected 62 percent demand increase for power and an additional $13.3 trillion worth of renewable energy projects.

All these scenarios are feasible as the cost of renewables has been plummeting in the last few years, the report stresses.  Since 2010, solar and wind costs have dropped by 85  and 49 percent, respectively. Battery storage costs have also declined by 85 percent.

The BNEF says solar and wind power will supply half of the world’s electricity while other renewable energy sources such as geothermal, fuel cells and devices will contribute around 21 percent.

Coal, on the other hand, will be the biggest loser in the power sector as its share in the global generation will decline to 12 percent by 2050 from around 37 percent today.

Europe is leading the shift to cleaner and sustainable energy. The region is expected to source around 92 percent of its power needs from renewable energy. China and India are also expected to source roughly two-thirds of its power from wind and solar by 2050 while the United States will get around 43 percent of its power needs from renewables.

In contrast, the Philippines is expected to increase the share of coal-fired generators in the next 30 years according to the Asia Pacific Energy Research Center (Aperc).

In its latest Energy Demand and Supply outlook report, Aperc stressed that coal is likely to contribute 39 percent of the country’s power needs by 2050 or three percent more than its current 36 percent share. On the other hand, renewable energy is seen to account for 20 percent of the Philippines power supply in 2050, which is lesser than its present 24 percent contribution.

Aperc’s projections are based on business as usual (BAU) scenario where existing policies and current trends stay the same. “Large increases in fossil fuel generation, particularly coal which triples, overshadow a more than doubling of renewable generation in the BAU,” the report says.

Aperc notes that allowing coal power to dominate our energy mix will make the country more vulnerable as the Philippines’ net energy imports will have to double. Promoting renewables and diversifying trade will be important for maintaining energy security,” Aperc said.

Our country’s dependence on fossil fuel imports also come at a high cost according to the international research group, Climate Analytics. Its report shared during recent climate talks in Germany showed that the Philippines fuel imports in 2017 are equivalent to 3.5 percent of its gross domestic product or around $11 billion.

The report also stresses that the country will benefit from shifting to renewable energy since doing so will decrease the external cost from air pollution. Climate Analytics pegged the annual average air pollution cost savings around $1.1 billion by 2025.

Adding more renewable energy in the country’s power mix is feasible, the international research group says. The report cites several studies revealing that covering merely 1.5 percent of the Philippines land area with solar installation can generate around 792 terawatt hours of power, a figure that’s 10 times the country’s total power generated in 2016.

Clearly, a shift to renewable energy is possible for nations including the Philippines. And around the world, coal is expected to be the biggest loser by 2050. Meanwhile, our country may also end up as one of the sorriest fools should we allow coal to continue to dominate our power mix.

Juan de la Cruz becomes the biggest loser.

References:

https://www.bloomberg.com/news/articles/2019-06-18/the-world-will-get-half-its-power-from-wind-and-solar-by-2050

https://news.mb.com.ph/2019/06/22/climate-analytics-report-cites-potentials-of-renewable-in-the-philippines

/https://business.inquirer.net/272280/as-ph-economy-grows-coal-remains-king-says-think-tank#ixzz5s1l138er

Let’s Not Forget About The Jobs

The reminders to world leaders and governments to shift to green energy to help the environment are endless given that we only have a few years left to minimize the effects of climate change. There is also clamour for greater use of renewable energy to ensure energy security for all.

Arguably, environmental impact and energy security are two of the most commonly cited and discussed reasons why governments and private entities are urged to have more renewable energy in their portfolio, if not aim for 100 percent use of clean energy.

But there’s another direct benefit in paving the way for greener power: job generation. Creating more employment opportunities through renewable energy may take a backseat in advocating for renewable energy. Nevertheless, providing more work for people is another benefit of building more renewable energy plants and infrastructure. There are, after all, millions of jobs created by the renewable energy sector around the world. 

Recently, the International Renewable Energy Agency (IRENA) released its Renewable Energy and Jobs Annual Review 2019, which showed that some 11 million were employed by the sector around the world in 2018. The jobs provided last year is higher than the 10.3 million posted in 2017. The 11 million jobs provided by the renewable energy sector is almost 3.7 million more compared to 2012 when IRENA first started its yearly job report.

The rising number of employment generated by the sector is partly attributable to the world’s desire for low carbon economic growth as stressed by IRENA Director-General Francesco La Camera who said: “Beyond pursuing climate goals, many governments have prioritised renewables as a driver of low-carbon economic growth. Diversification of the supply chain has broadened the sector’s geographic footprint beyond a few leading markets, as more countries link sustainable technology choices to broader socio-economic benefits.”

The report also noted that most employment opportunities were concentrated in a few countries like China, United States, Brazil, India, and some European Union countries. Almost a third of the jobs generated last year came from the Solar PV industry. It helped that off-grid solar sales are on the rise, which in turn increases the chances of spurring economic activities in isolated areas in various countries.

The Philippines made it in the top 10 countries for wind employment.  According to IRENA, the top 10 countries for wind employment provide 85 percent of wind jobs. The Philippines proudly landed the 10th spot on the list as the country has employed around 16,900 jobs in the wind energy sector. Unfortunately for our country, the number of jobs for Filipinos in the Solar PV sector declined as there were only 20,800 employed in 2018, lower than the 34,000 recorded in 2017. This is largely due, I believe, in the non-resumption of the FIT program for the Philippines.

That’s rather sad to hear since a study by Greenpeace entitled “Green is Gold: How Renewable Energy Can Save Us money and Generate Jobs” noted that the Philippines can generate as much as  4.5 to 5.5 kWh/m2/day as the country is a tropical one. This means that our solar power industry can generate plenty of employment since research by the University of California, Berkeley showed 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.”

There will be more jobs as we harness more power from the sun. The same Greenpeace report noted that a 10 MW solar power plant can provide 1000 people during the construction phase alone as well as an additional 100 full-time employees. In the case of our solar farm in Subic, we managed to train and hire indigenous people thus making them even more productive in their own lands.

JCI

Renewable energy development create jobs. At Emerging Power Inc, we hired and tirade indigenous people thus helping the community along the way. Photo c/o https://www.emergingpowerinc.com

The above figures are just for solar energy. Other renewables such as wind, geothermal and hydro, to name a few could provide employment for thousands of Filipinos as well.

Luckily for us, our country is blessed with so many natural resources. We can harness these resources to save our environment, ensure energy security for all, and provide employment for Filipinos. 

Unfortunately, policies and regulations have restricted the growth of the renewable energy industry. Just take our geothermal power sector as an example. We were once the second biggest geothermal power producer in the world. Sadly, we are now just ranked third as Indonesia has produced 1,800 megawatts (MW) whereas the Philippines decreased its output from 1850 MW to 1600 MW.

Yes, our country enjoys abundant natural resources. But we have to find a way to make renewable energy development a priority in the government’s agenda so that we can enjoy the many benefits of green power including more jobs for Filipinos.

References:

 IRENA Renewable Energy and Jobs Annual Review 2019

“Green is Gold: How Renewable Energy Can Save Us Money and Generate Jobs”. Greenpeace

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Towards A More Distributed Energy Future

Recently, the Department of Energy (DOE) has announced that it is finalizing the rules on distributed and small scale scale renewable energy projects in off-grid areas in the country. While this should have been done years ago, at least distributed generation is getting its fair share of attention. And the circular should go beyond just generation, it should now allow local groups or communities to establish, for themselves, a distributed energy platform. I have discussed this in another blog where I emphasized the realities of the 21st century in power distribution.

The draft circular entitled “Guidelines Governing the Development, Registration and Administration of Distributed, Small-Grid Renewable Energy Projects and Facilities” aims to promote the development and utilization of Renewable Energy (RE) resources in isolated or off-grid areas through qualified RE developers.

The DOE stresses that the guidelines are in line with the government’s efforts to achieve 100 percent electrification in the country. The Energy Department added that the new guidelines will also help in expanding Distributed Energy Resources (DER) and Distributed Generation (DG) in the country. The former refers to any technology that allows those with distributed generation facilities to be sold back to the grid as permitted by regulators while the latter is  any technology that produces energy outside of the grid. The challenge here, of course, is how much will the “grid” purchase the generated power?  This poses the same problem as “net metering” where power distributors undercut the rooftop solar owners by paying them only the “average” power generation rate.  As solar produces only during the day, the power distributors get an arbitrage by buying low during peak hours.

Under the draft circular, RE developers must apply and register their small-grid facilities of not more than one megawatt capacity. Again, limiting it to 1 megawatt does not make sense.  The whole idea of distributed generation does not imply limits in generation. Hopefully the DOE will see this flaw and amend the circular.

Admittedly, the new guidelines are a welcome development as DGs and DERs are helpful in achieving 100 percent electrification rate for countries, especially those that are archipelagic such as the Philippines. I hope, however, the DOE will push the envelope even further.

DER technologies, which consist of mostly energy generation and storage systems such as batteries and flywheels that are located near the end users are becoming rampant.  Around the world, power systems are moving away from centralized distribution as energy mixes are now integrating DERs,  according to a study of the Massachusetts Institute of Technology (MIT) entitled, “Utility of the Future”. This means that the traditional model of distribution where consumers source energy from a single utility with the help of main transmission lines are slowly being replaced by DERs.

The growth of DERs is due to a variety of factors, the MIT study says. For one, more nations are shifting away from traditional sources of power and are adding more renewable sources into their energy mix. The study notes that the growth of renewable energy is happening partly due to and in parallel with the world’s focus on decarbonizing power systems to combat climate change. As such, many advanced nations are leveraging DERs technologies to distribute cleaner power to decarbonize their countries.

DER system

Around the world, power systems are moving away from centralized distribution as energy mixes are now integrating DERs. Photo c/o of Siemens.com

Welcoming DERs bodes well for the Philippines. The main benefit of DERs is that its distributed nature allows for cheaper, more effective energy distribution services, especially for those without access to centralized resources such as our off-grid islands. 

Renewable energy and DERs mean cheaper power for off-grid areas especially in the Philippines. Various studies have stressed the importance of renewables in achieving electrification at cheaper costs for the country. 

For example, the study entitled, “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids,” noted that there’s roughly Php10 billion in savings if the Philippines rely on RE instead of traditional sources of power for off-grid areas or missionary areas. “Small island grids powered by solar, wind, and other renewable energy could reduce dependence on expensively imported fossil fuel generation without compromising the availability of power and grid reliability,” the reported noted.

According to the DOE the Philippines’ electrification rate is at 89 percent. There are still around three million Filipino homes without electricity as of the end of 2018. These DERs then would be helpful in providing stable power to these households.

Aside from helping the off-grid areas achieve electrification, there are still many benefits in integrating DERs in our power system even in on-grid areas. This is because as the MIT study stressed, DERs help competition flourish in the energy sector given. After all, these technologies are changing the way electricity service delivery by altering the use and management of distribution systems. 

The MIT report stressed that current electricity distribution systems create a natural monopoly since regulators are blind to the distribution utilities’ actual cost and managerial efficiencies. This creates an opportunity for distribution utilities to increase their profit by merely convincing regulators that they have higher operating costs than they actually do, which is then passed on to consumers. 

The same cannot be said of DERs along with other technological advancements and mechanisms in the energy sector such as dynamic-based prices, advanced metering and energy management systems. These all require efficient price signal and information control systems.

Indeed, moving to a distributed energy system has many advantages. But changes in regulations must take place, too. Our Energy Department and regulators by this time should be rolling up their sleeves and getting ready to work for a more distributed energy system in the country for the benefit of the Filipino consumers.

References:

https://www.philstar.com/business/2019/05/27/1921099/doe-issue-new-rules-small-re-projects

Utility of the Future by Massachusetts Institute of Technology

https://business.inquirer.net/271715/napocor-sets-bidding-for-2-bohol-projects#ixzz5pmIont8q