Redouble Efforts to Address Doubled Threats

A recent study revealed that the number of intense floods and storms could double within 13 years due to rising carbon dioxide worldwide, threatening the environment and the world’s socio-economic progress. In particular, the results showed that floods and storms are likely to increase by nine percent for every one percent rise in the carbon dioxide level.

The research, entitled “Impacts of Carbon Dioxide Emissions on Global Intense Hydrometeorological Disasters” used climate data from 155 countries, collected over 46 years from 1970 to 2016. The study concluded that the continuous increase in atmospheric carbon dioxide in the last 40 years was significantly correlated with the rise of extreme disasters.

The research also stressed that the Philippines could face more devastating natural disasters, particularly storms and typhoons. This is because the country faced roughly nine extreme hydrometeorogical disasters yearly, significantly higher when compared to the single disaster per year of other countries.

One of the authors of the study, Vinod Thomas, as quoted in an article in The Inquirer, warned that “One more extreme event in the Philippines, for example, one more Supertyphoon ‘Yolanda’, Typhoon ‘Pablo’ or Tropical Storm ‘Ondoy’ (Ketsana), would strain the country’s ability to cope.” The strain on the country’s infrastructure can be severe. We need to re-think on our resiliency strategies given this inevitable fact.

The authors concluded that the world needs more investments in disaster risk reduction and mitigation and the Philippines has to redouble its efforts in climate change adaptation. “But all the adaptation in the world will not be enough if we do not mitigate…The Philippines has to cut back on the use of coal and fossil fuels, and go all out for wind and solar power.”

This recently released study isn’t the first to call for more action on climate change mitigation and adaptation measures. We have all been at the receiving end of warnings telling us to limit carbon dioxide emissions by shifting to cleaner power or we’ll all suffer the wrath of natural disasters.

For example, David Eckstein, a Germanwatch policy advisor on climate finance and investments, has previously warned that “Countries like Haiti, Philippines, and Pakistan are repeatedly hit by extreme weather events and have no time to fully recover. That underlines the importance of reliable financial support mechanisms for poor countries like these not only in climate change adaptation but also for dealing with climate-induced loss and damage.” 

typhoon c:o reuters

Countries like the Philippines are repeatedly hit by extreme weather events and have no time to fully recover says David Eckstein, a Germanwatch policy advisor on climate finance and investments. Photo c/o Reuters

Yet, despite these dire warnings, coal remains the king of our local power mix. In 2018, coal made up 52.05 of our energy mix. On the other hand, renewable energy only contributed less than a fourth at 22.7 percent. This figure isn’t likely to improve since 80 percent of the committed energy projects are still coal power plants as a Greenpeace noted in a report. Naysayers will point out that any contribution in RE from the Philippines will amount to nothing. I think that view is very shortsighted. The sooner that we, as a country, learn the ways of sustainable energy, the better it is for our children and their children.

Our country needs to do its share in limiting the world’s carbon dioxide level. The Philippines is one of the countries that suffer the most from extreme weather events. Thus, we need to rely more on renewable power than coal. 

Paving the way for renewables to flourish in our country requires additional infrastructure, particularly, smart grids and distributed energy resource. Let us remember, that these two are key technologies in renewable energy development. 

It is also imperative for us to beef up on our energy resilience With all the warnings that the Philippines is one of the countries that suffer and will suffer most from extreme weather events. We need to put our money in putting up distributed generation systems and smart grids while we work harder on climate change mitigation and adaptation measures.

And we can make this shift if we also invest in smart grid and distributed energy. These two are key technologies in renewable energy development. 

The smart grid offers an electric power system capable of integrating the actions of all users from the power generators to users. This means integrations of higher levels of renewable energy is possible with smart grids, unlike the rigid and inflexible grids. Distributed Energy Resources or DERs, on the other hand, allow are small-scaled power generation or storage technologies that offer an alternative to the traditional electric power system. It allows for power generation near where electricity will be used. 

Plus, smart grids and DERs help in making our country more resilient to the impact of natural disasters. Let’s remember that power loss is rampant after we get hit by typhoons given our centralized energy system requires long power lines to deliver electricity. Weather disturbances often compromise power lines simultaneously, leaving thousands of countrymen without electricity. Thus, having smart grids and DERs will help decentralize power production where only a few will suffer power loss after disaster strikes.

As we rally for a greater share of renewable power in our energy mix, we should also invest more in smart grids and distributed energy. Replacing coal with renewable power while slowly moving away from the traditional way of transmission and distribution is key to fighting climate change and increasing our energy resilience.


PH faces disasters ‘others haven’t seen’

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


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.

Moving Forward: Introducing Competition in Power Distribution

Around the globe, significant changes are taking place in the power sector, particularly in the distribution of energy given the advances in technology. Many countries are gearing up to take advantage of new technologies to help reduce the cost of power, among other reasons.

For example, the European Union (EU) is paving the way for its electricity system to be more efficient by encouraging consumers to use intermittent renewables at different times of the day to save on power and lower their electricity bills. At this time, the EU is working on policies to make it possible.

Those who use more power during off-peak demand or when renewable energy technologies are running on their peak will be given incentives also known as the dynamic pricing scheme.

Other European countries like Spain and Nordic states are already implementing the dynamic pricing. In the long run, EU envisions that customers’ appliances such as washing machines or dryers will run automatically during the day when the sun is shining at its brightest or during windy days. This dynamic pricing scheme is expected to save as much each household an estimated average of €400 annually with the help, of course, of smart meters and smart grids.

Some may be doubtful of EU’s vision and label it as too ambitious. But EU’s goal is achievable. After all, breaking away from the traditional model of the distribution of having power stations at one end with the customers on the other end of the supply chain is long overdue.

Consumers now should have the option of selecting their preferred kind of energy, source, and even meters. This is possible except our tolerance for monopoly has limited the choices available to us consumers, a point stressed by several experts.

For example, Nobel Prize awardee Vernon Smith, who as early in the 1980s, argued that deregulation of the electricity market is possible if there is competition for generation, transmission and even distribution.

In his paper, Currents of Competition in Electricity Markets, he stressed that “Competition is now evident on the fringes of power generation, and a foundation is in place for deregulating not only generation but possibly transmission and distribution as well.”

The economics professor pointed out that regulators have encouraged monopoly in electricity markets rather than implement rules that promote competition: “ An examination of the electric power industry as it exists today reveals a tremendous untapped potential for the development of competitive markets. Regulation has been applied far too broadly to the electric power industry. As a result, policies intended to restrain monopoly power have instead propagated that power.”

smart meters 2

Smart meters in Europe. Changes in the consumption and provision of electricity driven by emerging technologies are taking place and making way for more options in power consumption. Photo c/o

A recent paper, Utility of the Future by Massachusetts Institute of Technology (MIT), discusses how changes in the consumption and provision of electricity driven by emerging technologies are taking place and making way for more options in power consumption.

One of the goals of the research is to identify inefficient barriers to the integration of cost-effective new sources of electricity services to help create a level playing field for the provision and consumption of power services.

One of the recommendations of the study is that “the structure of the electricity industry should be carefully re-evaluated to minimize conflict. It is critical to establish a level playing field for the competitive provision of electricity services by traditional generators, network providers, and distributed energy resources.”

The study further stressed that it is essential to review how markets work to make way for new technologies and their integration into the electricity system: “Wholesale market design should be improved to better integrate distributed resources, reward greater flexibility, and create a level playing field for all technologies.”

And it seems that the researchers are addressing our local regulators with their recommendations. It is no secret that I have been calling out for revisions in our policies that would pave the way for new players so that Filipino consumers can enjoy lower power costs especially since new technologies are emerging.

Time and time again I have been calling the attention of the Department of Energy (DOE) to take drastic measures to promote competition rather than protect private interests as this is the essence of the Electric Power Industry Reform Act (EPIRA).

Unfortunately, despite the passage of this law, the welfare of the Filipino consumers takes a backseat while private interests in the distribution sector prevail as manifested in different ways.

For example, currently, our energy regulators are disallowing other franchise holders to enter the market where a Distribution Utility (DU) is already in place, which against runs counter to the essence of promoting competition.

This was the same point made by Smith in his paper when he stressed that “There are numerous ways to introduce competition into electric power distribution. Perhaps the most obvious is to eliminate state policies which grant distributors exclusive operating permits. Customers should have the right to bypass distributors and contract directly with generator owners.”

If one understands basic economics, then it is evident that having more players in the market would always push down prices and create a more efficient delivery of goods and services because this is what competition among businesses does. Preventing the encroachment of another player in an already franchised area will only result in a monopoly where consumers will have to endure higher prices and less efficient service delivery. There is no incentive for the lone provider to improve the services and lower down costs, anyway.

Our flawed power procurement rules should also be reviewed. At present the Energy Regulatory Commission (ERC) procurement rules do not require DUs or Electric Cooperatives (ECs) to differentiate between baseload, peaking and mid-merit, and fail to take account that some power sources are better used for baseload and others for peaking or mid-merit. The classic example is the use of coal-fired power plants during mid-merit, which when done, diminishes the cost advantages of the plant. Such practice results in inefficient deployment of energy sources.

Unfortunately, procurement rules do not differentiate the power requirements to the detriment of the consumers as they are not enjoying the cost advantages of a particular power source. Instead, our practice only benefits the DUs or ECs.

There is a remedy for this as the ERC can refuse to grant Power Sales Agreements (PSAs) that do not define the limits on the use of a particular power source. We can use each energy source more efficiently and at the same time help level the playing field for generators if the ERC puts such restrictions in the PSAs.

These are just some of the few issues that prevent competition to flourish within the power distribution sector. There are more that requires the attention of our regulators. Change is necessary if we want to move to where the EU is heading.

There are many reasons why countries and regions like EU are embracing technology such as the concept of dynamic pricing by changing and drafting new regulations. Lowering the cost of power rates is just one of them.

The Filipinos can enjoy lower power prices, too. They can even choose where or from whom to source their power as well as select their meters rather than merely accept the ones from the distributor. Consumers can also become generators and distributors themselves if they wish. All these are possible if major policy shifts take place and when our regulators finally prioritize the welfare of the public rather than those of the few.


Currents of Competition in Electricity Markets by Vernon L. Smith

Utility of the Future by Massachusetts Institute of Technology

Run Your Dishwasher When the Sun Shines; Dynamic Power Pricing Grows

For European utilities, demand for dynamic pricing on the rise