December 11, 2013

Philippine DOE to Add More Renewable Energy in Grid by 2014

In 2014, enough renewable energy to power 126,700 households will feed into the National Power Grid, a first step for the Philippines in its pursuit of energy self-sufficiency and green energy.

During a December 3 press conference, the Department of Energy (DOE) announced it just approved various renewable energy developers to generate 633.5 megawatts (MW) of electricity which will make its way to the country's power mix sometime in 2014.

Most of the approved projects are wind (339.5 MW) and solar (80 MW), types of renewable energy which do not exist or are negligible in the country's power supply. To date, only the Bangui Bay Wind Power Project in Ilocos Norte (33 MW) and the CEPALCO Solar Power Plant in Cagayan de Oro (1 MW) supply wind and solar energy to the grid.

The approval of these RE projects is to fulfill the Renewable Energy Act of 2008 which mandates that the government develop the country's renewable energy resources to promote a shift to more sustainable, reliable and affordable energy.

The announcement comes a month after clean energy advocates criticized the DOE for its slow implementation of the Renewable Energy Act and approval of 17 additional coal-fired plants.

The approved renewable energy developers are now aggressively pursuing the construction of their projects to benefit from the feed-in-tariff (FiT) rates put in place by the DOE.

FiT rates are guaranteed fixed prices for RE energy applicable for 20 years that assure the RE developers they will earn and recover their expenses.

The DOE also activated other fiscal incentives to attract more RE developers to the Philippines, said Mario Marasigan, director of the Renewable Energy Management Bureau of the DOE.

"All RE developers are enjoying income tax holidays for 7 years and then when that's finished, they pay an income tax rate of only 10%. If they procure your technologies from abroad, they get duty-free importation for 10 years. If before, 60% of the net income goes to the government, the RE law changes that to 1% of the gross income."

Cost to consumers

But will more RE add to the electricity bill of the average Filipino?

Adding RE to the grid will add less than two centavos to the electricity bill, according to DOE's computations. Thus for a household with a monthly consumption of 300 kilowatts per hour (KWH), this will mean an additional monthly cost of P5.40.

Aside from the just-approved batch of RE developers, there are still pending applications for 74 RE projects with a combined capacity of 726 MW. By 2030, the DOE hopes to increase renewable energy generation to at least 15,304 MW. Right now, existing RE suppliers are generating around 5,400 MW – enough to power more than 2.7 million households.

To those who grumble about the projected price increase, Marasigan urged them they look into the many benefits of RE.

RE is unlimited, clean and free compared to depletable, dirty and expensive fossil fuel energy.

The country's dependence on fossil fuel energy has made the price of electricity in the Philippines among the highest in Asia. This is because we get our energy from imported coal and natural gas which exposes prices consumers pay to volatile international oil prices.

Prices for coal have more than doubled since 2010 and are expected to rise, according to the International Energy Agency. Around 67% of power in the Philippines is sourced from fossil fuels like coal and natural gas, which, aside from being expensive, are also depletable resources. One day, the world will run out of them.

Coal also has many costs which don't figure in the electricity bill but are paid by society in other ways.
Fossil fuel energy is the world's leading carbon emitting technology spewing toxic gases in the air. Air pollution costs the Philippine economy around P65.6 billion annually. Around 5,000 premature deaths may be due to respiratory and cardiovascular diseases from Manila air pollution alone, according to a study by Greenpeace.

RE has huge potential to create more jobs in the Philippines. It has already created more than 5 million jobs all over the world. A single 10MW solar plant hires 1,000 people for construction and 100 full-time employees while one geothermal plant alone hires 2,582 employees, according to a 2012 Greenpeace study. Seven biomass projects can generate around 78,000 jobs.

Coal here to stay

But despite the DOE's push for RE, Marasigan admitted the Philippines will be stuck with coal-fired power plants for many years to come.

"We cannot do away with fossil fuels, at least in our lifetime. The demand [for energy in the Philippines] is still increasing and that's why we still have to accommodate coal," he explained.

"f you remove existing coal plants, you will have brown-outs. So what we are doing now is replacing the coal plants in the pipeline with clean energy."

But he gave assurances the DOE sees coal as merely a temporary measure to fill in the large gaps in the country's power system.

To date, 30% of Filipino households remain off the grid. Demand for energy in the Philippines is growing by 7% a year. Without more generation, the country – particularly Luzon – will face a power crisis by 2015.

When asked about the 17 coal-fired power plants said to be in the pipeline, Marasigan said, "Even if DOE had approved the concept of a coal power plant, it doesn't mean that coal power plant will be developed. When you say committed projects, it doesn't mean it will push through. There are lots of parameters to be considered."

He cited examples of coal plants which have not yet pushed through because of fierce opposition from environmentalists, health advocates and other cause-oriented groups like the one in Clark, Pampanga and Aborlan, Palawan.

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