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%

Amid fears of global economic recession, let’s worry about high power rates, too

Those who regularly read the business news would know that the US-China trade war has been hogging the headlines way back in 2017.

Two years ago, the United States launched an investigation into China’s trading policies and imposed tariffs on Chinese products worth billions of dollars a year after. Beijing, naturally retaliated.

The trade war between these two countries escalated after China allowed its currency, the Yuan to depreciate for the first time in over 10 years. This move was criticized and China was called a currency manipulator by the US.

I will not delve on how the trade war will place the Philippines in an advantageous or disadvantageous position. I leave that to economists.

Now, perhaps you are wondering why am I writing about this trade war when my expertise is the energy sector?

The answer is simple. The trade war, just like other major global developments in the Philippines  hurt the Philippine peso since global issues such as the spat between the US and China affect emerging economies such as ours.

For example, the peso sank to Php51.955 from Php51.79, down by 16.5 centavos on August 6 after the US tagged China as a currency manipulator. A trader quoted by a Business Word report said that “The peso weakened significantly due to demand for safe-haven currencies after the US Treasury Department labelled China as a ‘currency manipulator,’ further heightening current tensions between the US and China.”

According to S&P Global Ratings director Andrew Wood early August,  the Philippine Peso has been weakening as the trade and currency war of the two giant economies makes currencies vulnerable to downward pressure. “The Philippines and India have relatively strong external profiles, stronger than Indonesia, but they have proven to be relatively vulnerable when we do have these global contagion effects in the currency markets in the past. So the peso and Indian rupee could also be somewhat vulnerable to downward pressure,” Wood said

But the row between China and the US is not the only thing that’s affecting the performance of the Philippine Peso against the dollar.

peso dollar

Some forecasts say that the peso could be on the softer side and go as low as Php 53.50 against the dollar. Photo c/o Business world

For example, worries over a pending global economic recession last August 15 weakened the peso where trading day ended from 52.498 to a dollar from a 52.28 close a day before. “The peso depreciated as a potential U.S. recession pushed investors towards risk aversion,” a BPI Research market report said. It added  that a possible US economic slowdown and reports that Germany posted zero economic growth in the second quarter also caused the Pesos’ depreciation.

Some forecasts say that the peso could be on the softer side and go as low as Php 53.50 against the dollar or even slight below the P54 level if worries over a global economic recession worsen. For example, Mizuho Bank head of economics and strategy Vishnu Varathan as quoted by ABS-CBS news said that “For most of the next half, we’re looking at the peso on the softer side,” he said.

So, what does a weak peso mean for Filipino consumers?

As I have been pointing out, fluctuations to the peso dollar exchange will hurt the Filipino consumers.

I have discussed this at length in many posts. But let me reiterate that our energy planners love for a “floating” power sales agreements (PSAs) and reliance on traditional power sources can cause high energy rates. This is all thanks to the pass-on costs provision in our PSAs where consumers shoulder the cost of the falling peso against the dollar. Unfortunately, our reliance on coal, which we mostly export and pay for in US dollars means that we will pay higher electricity rates when the peso falls against the dollar. It also does not help that our independent power producers also have the majority of their billings in dollar denomination.

Yes, one can argue that the peso may also strengthen despite the forecasts of analysts. But it could also go the other way around.  Unfortunately, there’s no way of exactly predicting what will happen to the local currency. And there lies the problem with the floating PSAs. It leaves consumers in a vulnerable position.

So, again, we must revisit having fixed price contracts work for us as we watch how the Philippine peso fares against the US dollars amid the chaos in the global economy. Let us see the good in letting the consumers pay the  same amount for their electric bill for a specified period regardless of the performance of our local currency. This will ease the burden of consumers who pay more for energy when the peso is weak.

And while we’re at it, helping develop our renewable energy sector will also ease the burden of the Filipinos. Doing so will reduce the need to import traditional power sources that trade in US dollars.

Let the economists and analysts debate on what the government should do in light of the on-going trade wars and possible global economic slowdown. In the meantime, our energy planners should take a closer look at how these global issues will affect power rates and how we can ease the burden of consumers  by turning to renewable energy which can peg electricity rates at a fixed prices and eliminate the need to import raw materials for energy production.

I believe the world will be going towards energy independence as a goal for every household and community.  The reliance on big thermal plants and high voltage transmission networks will wane in the coming years.  Increasingly, electricity consumers will want to have more control of how and when they consume power in their homes.

This development of taking “power in their own hands” will mean that electricity consumers will be able to delink forex and global price risks.  And maybe with more independence, other supply and demand markets, other than WESM, may spring up independently.

Let me discuss these possibilities in my next blog.

References:

https://news.abs-cbn.com/business/08/19/19/peso-seen-in-p5150-p5350-vs-1-range-on-global-recession-worries

Peso sinks further on yuan move

Peso to trade sideways

https://www.philstar.com/business/2019/08/07/1941135/philippines-vulnerable-us-china-trade-tension-currency-war

https://www.pna.gov.ph/articles/1077961

The New Age of Grids

The Philippines finally appreciates the value of smart grids.

For starters, the upcoming 200-hectare New Clark City (NCC) located in Clark’s special economic zone will boast of having the first completely smart power grid in the Philippines.  The NCC, after all, is designed to be the country’s first smart, sustainable and disaster-resilient city.

NCC’s owner, the Bases Conversion and Development Authority (BCDA) already inked a deal with the Meralco-Marubeni Consortium to be the city’s power distributor. This, after the consortium, won the bidding with their proposed tariff bid of Php 0.6188 per kilowatt-hour (kWh). The tariff rate is lower than the Php1.25 kWh tariff ceiling set by the BCDA for power distribution.  It is also cheaper than the Php1.24 kWh rate of Mactan Electric, the lowest distribution supply metering tariff under the traditional distribution system.

The smart city will have state-of-the-art facilities on par with other smart cities around the world.  The smart grid in the NCC is seen to have better reliability standards and will allow customers to access real-time information from the distribution utility. Distribution lines will be underground adding to the aesthetics of an environmental-friendly city.

Plus, just recently, the National Electrification Administration (NEA) has announced that it has piloted a smart grid technology aimed at improving the reliability of a Batangas electric cooperative’s distribution system with the help of the Japan International Cooperation Agency. The technology to be used in this pilot is the Distribution Automation System that is expected to improve the distribution system reliability as well as lessen the duration of a power outage. These are all thanks to automation.

NEA says the smart grid technology will hopefully do wonders for the operational efficiency, particularly the reliability of the cooperatives’ system reliability.

Indeed, smart grids are now making their way to the Philippines. And why not when there are so many advantages in investing in modernizing our power distribution system?

For one, smart girds, unlike the traditional grids allows for two-way communication of electricity data thus providing real-time data collection on the power demand and supply during the transmission and distribution.  This means that the electrical grid can respond quickly to changes in the power demand, thanks to the grid’s controls, automation, computation, and equipment. The said cannot be said of the traditional grid that has a one-way interaction during generation and consumption.

smart-grid-Borg-2

Smart grids empowers consumers by providing real-time data on power demand and supply. Photo c/o telecomdrive.com

 

Smart grids also empower consumers by providing them with information on when the power demand is at its lowest or highest. This information allows them to schedule high energy-consuming activities such as ironing or running the washing machine when electricity costs are lowest. Plus, smart grid coverage lets consumers purchase their electricity straight from retail suppliers.

Another benefit of smart grids is its ability to integrate renewable energy into the system.

In the case of the NCC, the BCDA plans to integrate embedded generation that has renewable energy as its primary power source. The city can also source its power from rooftop solar PVs, waste-to-energy and natural gas, among others.

Clearly,  modernizing our power system with the help of smart grids is a great way to move forward. But, of course, regulations must also be updated as we shift to the smart grid.

Currently, the Philippines has no rules concerning smart grids. The Department of Energy has said that a roadmap for smart grids in the country is underway and will be released by the third quarter of this year in the form of a department circular.

Hopefully, this roadmap will be able to address issues regarding the use of smart grids such as smart meter, real-time dynamic pricing, and grid cybersecurity, to name a few. May it will pave the way for the proliferation of smart grids so that Filipino consumers can take advantage of such technological advancements.

Finally, let me say that the advent of smart grids will lead to the integration of ICT and power systems. This will lead further to the development of data centers nationwide, increase in the number of internet exchange servers, and eventually bring down the cost of both power and telecommunication services. The distribution grids that can adapt to these developments will be those that have the 21st technologies at their disposal. This will indeed help spur the development of the country. As I said, however, only competition in the distribution sector can speed this up.

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 

Overtaking Coal

For the first time, renewable energy has generated more electricity than coal in the United States. 

According to the Energy Information Administration (EIA), renewable power has overtaken coal generation last April by 16 percent. And renewables are expected to dominate the US power mix on May with EIA predicting that clean power will eclipse coal power by an additional 1.4 percent. 

Renewables dominating the energy mix of the United States is not a stroke of luck. In fact, clean power will consistently catch up with coal in the US in the near future says the Institute for Energy Economics and Financial Analysis (IEEFA): “Coal’s proponents may dismiss these monthly and quarterly ups and downs in generation share as unimportant, but we believe they are indicative of the fundamental disruption happening across the electric generation sector.”  

The IEEFA also foresees that renewable energy will generate more power consistently this year all the way to 2020 for the US. After all, coal’s share of the overall energy generation has been declining in the past few years from 45 percent in 2010 to 28 percent in 2018. By 2020, coal power is only expected to contribute just 24 percent of the needed power demand for the country.

The US is not the first country to achieve such a feat. Other countries have already managed to generate more power from renewables in the past.  One of the notable examples is Iceland, which produced 97 percent of the country’s household power requirements from wind in 2015. Its neighbor, Denmark also sourced 42 percent of its power from wind turbines in the same year. Similarly, Germany at one point was able to generate 78 percent of the day’s power demands from renewables.

image

Germany was able to generate 78 percent of the day’s power demands from renewables at one point. Photo c/o Time.com

The decline of coal power in the US is in sync with the developments in the global energy trends. According to the International Renewable Energy Agency (IRENA), a third of the world’s installed electricity generation capacity in 2018 was from renewables. This is because 2/3 of the added power capacity last year came from renewable power.

Renewable power’s greater share in many countries’ energy mix only shows that renewables are the key to sustainable future notes IRENA Director-General Adnan Z. Amin. “The strong growth in 2018 continues the remarkable trend of the last five years, which reflects an ongoing shift towards renewable power as the driver of global energy transformation.”

The shift to renewable power is much needed since experts have warned us that we only have a few years left to mitigate the effects of climate change. The United Nations in its report Intergovernmental Panel on Climate Change last year stressed that the world only has 12 years to keep global warming to a maximum of 1.5 °C. Otherwise, we will all suffer the risks of droughts, droughts, extreme heat, and poverty. 

Plus, recently, we were greeted with the news that the Earth’s carbon dioxide level is at an 800,000-year high. Our world has breached 415 part per million sometime this May, a level that has not been seen in millions of years according to data from the Scripps Institution of Oceanography at the University of California-San Diego.

Taking drastic actions to limit global warming then is imperative for all of us. This means we should be cutting carbon dioxide emissions swiftly by reducing our fossil fuel consumption, the primary producer of greenhouse gasses. Going to renewable power is one of the best ways to decarbonize countries, after all.

Sadly, and as I have been pointing out, the Philippines is nowhere near the accomplishments of other countries when it comes to shifting to greener and cleaner energy.  Clearly, some of the major developers and major international banks have told me that they are no longer allowed to develop and/or finance coal power projects.

According to IRENA, the Philippines, from 2009 to 2018 only increased the share of renewable energy in the total power mix from 4732 to 6482 megawatts(MW) or roughly 37 percent. This growth is significantly less when compared to some of our Southeast Asian neighbors. For example, Vietnam has managed to grow its renewable power capacity from 7323 MW to 18523 MW or almost 153 percent in the same period. Likewise, Thailand has added roughly 152 percent of renewables into its generating capacity from 4130 MW to 10411 MW as well.

Some argue, that the Philippines only has a small contribution to the world’s carbon footprint. This is probably true, but it does not change the fact that the use of coal and fuel for power generation remains as the biggest contributor to greenhouse gas emissions in the country. However, this is not the only point.  A more important perspective here is the fact that the presence of coal has the tendency of INCREASING power cost.  As I have always argued the volatility of coal prices and the exchange rates contribute greatly to higher power costs.

The Philippine Climate Change Assessment Working Group 3 Report released last year notes that 41.8 percent of GHG emissions of the country comes from coal and fuel used for power generation and continues to grow by 3.7 percent annually. So, yes, there is a need for the Philippines to take drastic steps in decarbonizing our nation. This is feasible only if renewable power dominates our energy mix. And the sooner we act the better for us Filipinos as our country remains one of the most vulnerable countries to climate change. 

Many countries are working harder to do share their share for the environment by turning to renewable power. Soon, nations will have more cleaner energy to use as they walk away from coal. The Philippines is nowhere near such a state. Yet, one can remain hopeful that we can soon see our country is also taking the fight against climate change by like other nations by allowing renewable energy to flourish and surpass coal power in the country.

References:

https://qz.com/1610977/solar-wind-plus-other-renewables-beat-coal-for-first-time-in-us/

https://cleantechnica.com/2016/02/04/how-11-countries-are-leading-the-shift-to-renewable-energy/

https://news.abs-cbn.com/news/11/20/18/greenhouse-gas-emission-in-ph-rising-report

IRENA RENEWABLE CAPACITY STATISTICS 2019

Press Release: Summary for Policymakers of IPCC Special Report on Global Warming of 1.5ºC approved by governments

http://www.ipcc.ch/pdf/session48/pr_181008_P48_spm_en.pdf

https://edition.cnn.com/2019/04/29/business/renewable-energy-coal-solar/index.html

https://www.forbes.com/sites/johnparnell/2019/04/03/one-third-of-worlds-power-plant-capacity-is-now-renewable/#5801d1043064

https://www.usatoday.com/story/news/world/2019/05/13/climate-change-co-2-levels-hit-415-parts-per-million-human-first/1186417001/

They’re Diversifying And We’re Not

Recently, Petronas, the Malaysian oil and gas company has announced that it will be dabbling in the renewable energy sector. The firm recently announced that it inked a deal with Singapore-based renewable energy firm specializing in solar panels, Amplus Energy Solutions.

Petronas said that its deal with Amplus is part of the firm’s strategy to develop solar power plants and rooftop project. This deal says Petronas CEO Tan Sri Wan Zulkiflee Wan Ariffin is the first step into the firm’s diversification.  “This acquisition reflects Petronas’ strategic intent to grow in the renewable energy space as part of our strategy to step out beyond oil and gas into the new energy business. This also represents our first international solar venture and we look forward to providing energy solutions to our customers in these high-growth energy markets.”

Petronas is not alone in turning to renewable power to serve their customers well and maximize their profits. In fact, many Southeast Asian energy companies that are highly dependent on fossil fuels are also entering the renewable energy market in order to meet the region’s demand for electricity.

For example, Thailand-based energy firm, Banpu sources 90 percent of its revenue from its coal plant, but recently entered the renewable energy market. “We will integrate coal with renewable energy with the aim of maximizing profit and meeting social needs,” Banpu’s CEO Somruedee Chaimongkol says.

Banpu, which operates in several Asian countries as well as the United States has installed some 150,000 Kilowatt hour worth of solar generators. The firm also plans to build 80,000-kilowatts wind farm in Vietnam by 2021.

Likewise, State-backed energy companies in Southeast Asia are adopting the same diversification strategy. For example, Tenaga Nasional, a Malaysia energy firm started the commercial operations of its 50,000 kWh solar power plant near Kuala Lumpur, which is one of the largest solar plants in the country. 

Similarly, Indonesia’s state-run utility PLN is tapping on the country’s geothermal potential by purchasing renewable energy generated by independent geothermal power producers.

Darajat_geothermal_plant_Chevron_Indonesia-1024x682

PLN’s Darajat Unit Geothermal Power Plant. PLN is buying renewable energy from independent power producers. Photo c/o http://www.thinkgeoenergy.com

These companies, which once only had coal in their portfolio are probably now seeing the value of energy diversification. 

In energy systems planning, there are three basic properties of diversifications, namely, balance, variety, and disparity as pointed out by Andy Stirling,  a professor of Science and Technology Policy at the University of Sussex.

Variety pertains to the number of energy supply options available. This is what these companies are aiming for as having varied energy types means more diversity in their portfolio.

On the other hand, balance refers to the reliance on each available energy source option available. This means an energy system is also considered more diverse if there are proportionate dependence on each energy source. Disparity pertains to the differences in each power option.

It’s not only companies that will benefit from having a diversified energy mix. As I keep repeating, nations too will be in an advantageous position if there is diversity in their energy system.

For example, the Philippines relies heavily on coal to meet energy demands. This means our power costs go up when prices of coal in the global market increase. It also does not help when the peso falls against the dollar as we import coal. Whether power consumers will pay higher electricity bills highly depends on world prices and the strength of the peso. And this is all because we source most of our energy needs from coal plants.

We also have to remember that fossil fuels are finite resources. What happens then when these resources are depleted?

This is why we need to diversify our the power mix. This means we should be able to source a majority of our power from sources that are not vulnerable to external factors such as exchange rate and global prices. And again, as I have been saying, renewable energy prices can be fixed for many years. Of course, we also have to prepare for the scenario when finite power sources are low in supply or worse, already gone.

On a side note, many see the Supreme Court decision as challenging the supply of power in the future. I think we should take a step back and think of this as an opportunity to re-think about the energy mix of the country.  We have an opportunity to inject more indigenous and renewable energy in the system. We should grab this chance.

Energy diversification indeed has many virtues. Energy companies with mostly coal power plants in their portfolios are now seeing the value of diversifying their energy sources. Sadly, the same cannot be said about our energy system, our planners and regulators in the country.

References:

https://asia.nikkei.com/Spotlight/Environment/Southeast-Asia-s-energy-majors-pivot-sharply-to-green-power2

https://www.power-technology.com/news/petronas-renewable-energy/

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