Energy Security Series Part 3: Infrastructure Issue

Recently, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) released a grim global report on climate change. The report, dubbed by the United Nations as “code red for humanity” revealed that the extreme weather is now being felt around the world and average global temperature increases that could have devastating effects will likely come sooner than expected.

The report said that human-caused climate change is already affecting every region across the world. Extreme weather has become more intense and frequent. And climate change’s effects will get worse over time. The report found that humans have increased the chances of extreme compound weather events like frequency of concurrent fire weather, droughts, and flooding.

Climate change has also brought big changes in the Philippines’ climate patterns. We are seeing massive flooding in recent years.

This December, we experienced the wrath of Typhoon Odette, which left hundreds dead and billions of iin damaged infrastructure. Some three million families are affected by power outages as the typhoon toppled electrical poles, and damaged transmission lines. Of course, it would take a while before power is fully restored in affected areas as the transmission company and electric cooperatives need to wait for floods to subside and to ensure that local conditions are safe enough for linemen and engineers.

Typhoon Odette toppled power lines and damaged transmission facilities. Photo c/o Rappler

The Philippines also experienced deadly and destructive weather disturbances last 2020.

In May of last year, the country had to deal with Typhoon Ambo. It was the first typhoon to hit the Philippines in 2020 and caused Php 2 billion damage to agriculture and infrastructure. It also left around 92,000 families homeless. Power restoration in the affected areas took weeks, months even. Sadly, some electric cooperatives lost their men to power restoration efforts.

There was also Typhoon Ulysses that unleashed torrential rain and powerful winds. This typhoon destroyed thousands of homes, killed dozens of people, and left swathes of Luzon heavily flooded. It was the deadliest tropical cyclone to hit the country in 2020.

Aside from Ulysses, the Philippines was also hit by Typhoons Quinta and Rolly in the last quarter of 2020. The National Electrification Administration (NEA) said that these three typhoons caused some Php500 million worth of damage to the utility system.

Plus, of course, there’s the COVID-19 pandemic that has restricted the movements of everyone. In the early months of the pandemic, there was a big issue about electric bills people received as many consumers received bills that were significantly higher than what they had consumed. Distribution utilities, after all, could not send their employees to read meters during the hard lockdown.

All these point to the fact that the Philippines needs to make its power infrastructure more resilient against natural disasters. We thus need to revisit our energy systems and start investing heavily in smart grids and distributed energy systems.

The global trend is to move away from the traditional central power production model and replace them with distributed energy production. As a country that is more prone to natural disasters, we should join the fray and move to decentralized power systems.

Decentralized power systems will make our infrastructure more resilient to disasters. Centralised power systems, after all, are characterized by power lines spanning long distances and are highly vulnerable to natural disasters. Damage to a single line due to natural disasters will leave thousands of homes without electricity. We only need to remember that it takes power distribution utility companies weeks even months to restore full power in areas affected by storms.

Electric cooperatives, power distributors, and the transmission company have to thoroughly assess the damage to the power line before the linemen can restore power physically. Power restoration after a calamity is a high-risk undertaking. Sadly, many have lost their lives in the physical restoration of electricity.

Centralized power systems, given their massive size, multiply the risk of disruption. A single felled tree can deprive plenty of homes of electricity. In contrast, decentralized systems create redundancies in the power system. Microgrids can easily disconnect from the main grid experiencing outages so they can run without any disruptions until the main grid is up and running again.

Centralized grid systems are also unable to differentiate end users. This means residential users are getting the same quality and amount of power as other establishments like hospitals and government centers. This means that during disasters, the system makes it challenging to provide electricity to the most crucial users or infrastructure.

Centralized grids typically can only be turned on or off, or simply put, either on one or everyone gets power. This inability to differentiate and direct power to the most crucial areas or infrastructure makes emergency and recovery efforts more difficult during calamities. Decentralizing electricity allows for the prioritization of essential infrastructure, cutting down hindrances to quick disaster recovery.

Now more than ever, we should be seeing the role of decentralized energy resources. Cities or towns that have been struck with a natural disaster can function better if essential infrastructure has continuous electricity. Hospitals that are now in full capacity, for example, have one less thing to worry about as they can continue their operations normally despite a disaster.

Aside from disaster resilience, distributed energy systems also offer more cost savings. It is also easily scalable. One study by Vibrant Clean Energy in the United States showed that investing in renewable energy, storage, and distributed energy technologies can save the US around $473 billion in electricity bills from now to 2050.

Plus, distributed energy and other related technologies offer massive employment opportunities. The study of Vibrant Clean Energy showed that distributed energy resources can provide two million jobs if 25 percent of US homes invest in DERs and related technologies.

Consumers also enjoy plenty of benefits in distributed energy systems as they can either receive compensation for allowing the use of their storage systems in stabilizing the grid or by selling back electricity to the main grid.

Distributed energy systems also help in breaking down monopolies in power distribution. As I have discussed in a separate post, power distribution is not monopolistic by nature as monopolies only become a monopoly due to regulation. Distribution energy systems offer better transparency on pricing like energy management systems, advanced metering, dynamic-based pricing, and more options for power consumers.

There are also other tools relying on renewable energy that can be used during disasters. For example, we currently have a technology that can convert any river, lake, contaminated borehole or even flood water into clean drinking water by state-of-the art desalination units running purely on solar power. The desalination units that can be connected to the grid or a combination of solar and grid generator so the units can run 24/7. At a minimum these desalination units can provide potable drinking water for 500 to 700 individuals. The units can be fitted with a 5-kilowatt hour (kWh) Solar Panel system so it can operate round the clock.

The Philippines is always dealing with natural disasters. Year after year we will be facing the same threats, which according to the United Nations are about to get worse over time. The technology we need to make our power infrastructure more resilient is now available. The Philippines only need to realize their value and make the most of what they have to offer.

The Cost of Being Outdated

Numerous studies reveal the benefits of shifting to more renewable energy. These research papers debunk the myth that RE is more expensive and rather stresses that in the long-run, greener forms of energy may be cheaper if one is to consider many factors including cost of oil importation and effects on health and environment, to name a few.

One such study is the recently released “Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids¬” by the Energy Economics and Financial Analysis (IEEFA) and Institute for Climate and Sustainable Cities (ICSC).

According to the report, the Philippines is likely to save more than P10 billion annually if we are to replace diesel-fired power plants with renewables in off-grid islands or areas that are not connected to the grid.

For these off-grid islands, energy is provided by the small power utilities group or SPUG under the National Power Corporation (NAPOCOR) or by Independent Power Producers (IPPs). According to the report, there are 310 SPUG and IPPs combined with a total dependable capacity of 267 MW with mini-grids that uses oil-powered plants. The cost of generating electricity in these islands are subsidized under the Universal Charge for Missionary Electrification (UCME) of NAPOCOR where fuel costs account for 75% of the NPC-SPUG cost of power generation.

The reliance on oil for energy needs comes at a significant cost as fuel account for 75% of the NPC-SPUG cost of power generation. The cost of generating electricity in these islands are subsidized under the Universal Charge for Missionary Electrification (UCME). The researchers point out that P60 billion are spent on subsidies even if these areas only generate 0.49% of the overall generated power in the country and 6% of the total energy demand.

With the falling costs of RE technologies, the study noted that great savings can be made A swift transition to RE for these off-grid islands is possible says the researchers, except the country’s policies and regulations, are outdated: “Barriers to small island grid uptake of modern renewable energy power include outdated regulations that have not kept up with technology.”

The researchers emphasized that the present system fails to provide incentives to buy cheaper sources of power, which unfortunately causes the slow the shift towards RE in these areas “This system tends to be biased against renewable generation because franchise managers would rather stick with diesel generation they are used to, even though more expensive.”

The authors recommend for the Energy Department to provide incentives to the SPUG to hybridize their power plants as well as for the National Electrification Administration (NEA) to order electricity cooperatives to be neutral in their purchase of energy. After all, the researchers concluded that “Small island grids powered by solar, wind, and other renewable energy can reduce dependence on expensive imported fossil fuel generation without compromising availability of power and grid reliability.”

In a previous post, I have tackled the problem of energy poverty as some 1.2 billion individuals are without electricity. Unfortunately, our country is suffering, too from the lack of access to power.  We are in fact being left behind in terms of electrification in the region.

hybrid thailand

Photo c/o http://www.thai-german-cooperation.info

The Philippines is almost at the bottom of the list in South East Asia when we talk about national electrification rate which is at 79% while our neighbors such as Malaysia, Singapore, and Brunei have already achieved 100%. Thailand, Vietnam, Laos and Indonesia have impressive numbers at 99%, 97%, 87%, and 81%, respectively. We are at the bottom three along with Cambodia and Myanmar.

Indeed, there is a need to hasten in reviewing our policies to catch up with our needs especially since we are aiming for more inclusive growth.

The big picture is actually very simple: The Philippines should exploit and encourage the development of all renewable energy resources for the simple reason that: a) no need for fuel importation and thus saving foreign exchange; b) the Philippine economy will be shielded from wild swings in the global energy markets; and c) electricity prices will be stable over the long-term.

Clearly, falling prices of renewable energy aren’t enough for a major shift towards renewable energy. A problematic regulatory system must be addressed if we want cleaner and cheaper sources of energy.

The lack of foresight, willpower and competence can be a bane for the growth of any sector. And our power sector is one of those that stands to gain if only regulators competently enact changes needed to help our country develop.

References:

Electricity-Sector Opportunities in the Philippines: The Case for Wind- and Solar-Powered Small Island Grids

World Economic Outlook 2015 data base. International Energy Agency http://www.worldenergyoutlook.org/resources/energydevelopment