Beat the Energy Gap

bridging the energy gap philippines

In recent years, the Philippines has taken the top spot in South East Asia as far as Renewable Energy (RE) development is concerned. This was a well-planned initiative that was accomplished primarily by enticing energy technology experts and institutional investors to lead the charge in developing this sector. To support this, the government passed legislation and adopted what is called the Feed-In Tariff (FIT) system, in order to lessen the business risk of investors.

Under the FIT, a minute percentage of what you are charged on your electric bill – 0.54%, to be exact – is allocated to help fund RE growth. Indeed, it is a wonderful way for people to contribute a small part to help Mother Earth and leave something positive for future generations. This is a shared responsibility, after all.

Given this, I must reiterate how very commendable it is that our country is taking the necessary measures in trying to preserve our planet. Fossil fuels can have terrible effects on the environment, and RE is definitely a step in the right direction. Clean energy sources such as solar power, hydroelectric, geothermal, etc. are all more sustainable in the long run. They provide us more energy security since it would mean that we won’t have to import fuel from other countries, and we would have our own plants and RE centers in the country. It’s also good for the economy: based on a report done by the World Wildlife Fund (WWF) entitled “RE Thinking Energy,” the costs for renewable energy have been decreasing considerably in the past years, and can most likely lower the cost of electricity at the consumer level.

I mentioned that fact in passing in the previous column, but let’s now take a look at some quantifiable figures. According to a 2016 study conducted by the Philippine Electricity Market Corp. (PEMC), market prices were reduced nearly 50 percent with the inclusion of FIT-eligible plants in the market. The PEMC analyzed the financial impact of FIT in the Wholesale Electricity Spot Market (WESM), the country’s power spot market, in the span of approximately one year. Moreover, it took into consideration that FIT-eligible RE plants are placed in the market under a “merit order” basis, which means its generating capacity is a priority in dispatch to the grid. The study concluded that the integration of the FIT-eligible RE plants in the market resulted in a cost reduction of P4.04 billion, or P0.0567 per kwh, in the case study span of 11 months.

Ultimately, when our supply of RE increases substantially, supply-and-demand forces will further drive energy prices down. However, this can only be achieved when the FIT and its implementing rules and regulations are properly implemented and fulfilled. I maintain my previously stated position that the Energy Regulatory Commission (ERC) should fulfill all its contractual obligations with the FIT-qualified resources, mainly in disbursing FIT Allowances.

Regie Casas and JJ Soriano from the Confederation of Solar Power Developers of the Philippines (CSDP), for example, reiterated a growing RE industry concern that investors have received the short end of stick even after making substantial contributions to the nation. At present, after more than a year after the deadline of their completion, repeated appeals for the government to honor its FIT and FIT Allowance commitments have fallen on deaf ears. So what do you think large-scale investors do when they find out that a country has a tendency to break its promises? They go to other countries, of course. This is a crying shame, because these companies and individuals believed in the Philippines and its potential, only to be left holding a (so far) empty bag.

As they say, every action has an equal and opposite reaction, especially when it comes to something as delicate and vital as the protection of our environment. We must continue to do our part – whether it be on a macro or micro scale – in order to contribute to our planet’s well-being. As a nation, we are positioned to take a giant step with our renewable energy sector, for our country, for our world, and for our future generations. Whether that step is backwards or forwards, that is now up to us. 

Source: Domini M. Torrevillas (The Philippine Star)

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