Monday, September 24, 2012

Energy Econ 7: Renewables, FIT, RPS and Climate

Two months ago, I had a friendly discourse with fellow UPSE alumni in our yahoogroups about the Renewable Energy (RE) law, the feed in tariff (FIT), renewable portfolio standards (RPS), the Energy Regulatory Commission (ERC) and climate.

Very civil discourse focused on content and issues, not personalities. Unlike in my recent debate with some anti-coal fanatics who cannot sustain a debate on issues and would quickly slide into personally attacking those who support a coal power plant or those who cast doubts on the renewables. See the 23+ pages debate here,  Energy Econ 6: Intolerance in Anti-Coal Hysteria, Cadiz Coal Project, September 17, 2012.

Before that, let me insert this good chart about the estimated generation cost of various power sources in the US about four years from now.

Reposted with discussion by Willis Eschenbach, The Dark Future of Solar ElectricityDecember 03, 2011.

Here is our discussion. The related tables and charts mentioned here are posted in my article,
Energy Econ 2: Renewable Energy and High Electricity Prices, July 30, 2012.

I am inserting below some photos of wind and solar farms, both the cute and the ugly. Another long paper, about 11 pages including the two images, enjoy!

July 28-30, 2012

Eto na, eto na, how climate alarmism and racket would further rob more money from us, energy consumers.

The guys who were clapping their hands in making our energy prices become even higher are among the champions of climate alarmism racket:

See my brief discussion how Tony la Vina, WWF and Greenpeace fear of being followed even on twitter by people who question their warming religion,

The WB and ADB climate and energy loans racket should be jumping also with joy with this development. 

About 2 or 3 years ago, PDE organized a forum in UPSE about "burning planet and climate mitigation" something like that. The 2 speakers were the head of the Carbon Finance Solutions (CAFIS) and the chief economist of ADB, a Japanese I think. Among those who gave welcome remarks were SE faculty member and now NEDA chief Arsi Balisacan and Prof. Noel de Dios.

During the open forum, I explicitly argued that the things that the CAFIS and ADB guys are saying are based on very wrong premise -- that of an ever-warming, unequivocally warming world due to more CO2 emission due to more humanity's modernization. The most recent temperature data, air and tropospheric temp., land and sea surface temp., are declining or at least flat-lining despite rising CO2 concentration reaching around 390 ppm.

Know what the CAFIS and ADB guys said? They are no scientists and they cannot comment on those things, but what they offer are means to mitigate man-made warming and climate change, adapt humanity to such CC.

Hogwash. They cannot defend a corrupted political science by the UN (IPCC, FCCC, UNEP, etc.) masquerading as climate science, but we should nonetheless accept their proposals -- more climate loans, more RE loans, more carbon regulations and taxation, etc.

And this RE law and the FIT scheme, along with the renewable portfolio standards (RPS) or mandatory, coercively enforced, minimum percentage of power to be sourced from RE companies, are running along those large-scale rackets.

The ADB, along with the UN and WB, should be ashamed. But I think shame is not part of their genes because they keep repeating the bleeding heart mantra of "saving the planet". What they really mean I think is saving their pockets and high flying lifestyle.

Any brave warming propagandists, man-made climate change campaigners and loan racketers, please stand up. UPSE or other groups can possibly sponsor a public debate on this endless warming racket. My beef is that there is not a single brave soul in the warming racket willing to defend this high level scam. But I really wish to be disproven. 

-- Nonoy

Looks like we got stuffed again! That's what happens when you've got technocrats, bureaucrats, and politicians running the show. We lack power and the solution is to give us more expensive power. Ocean power my foot! Whenever you increase the cost of power in a poor economy, you exacerbate the lack of power. Any enterprise that needs crutches, especially on market share, has no reason for being. The science is out there; it's the warped philosophy that stinks!

-- Ed Miguel

I remember a number of groups tried to fight it at the  ERC, but only  after the fact...and of course  lost The problem was that the poor govt  bureaucrats really have little choice but to implement this perverse policy, because it IS  the law. Not entirely their fault. The real wonder is how it became law in the first place without us knowing. It somehow managed to  excape the public radar/scrutiny along the way. The public debates seemed to have started only after the law was already passed.

Well, one way the public can fight back, is to remember the names of every politician who co-authored. Some of them will be  contenders  in the coming local and national elections. They can each be made to account at every step  along the campaign trail. And their opponents can also be fed some fodder. Make some stink. Especially if you believe they sold you crap. If word gets around, they just might relent and retract a bad law before election time. (Maybe). Bring the battle back to their backyard, where it should have erupted in the first place..

-- Gary Makasiar

Right Gary, we are actually helpless because the FIT, RPS and related rackets are in the law. In fairness to the ERC, they postponed its implementation for 3 years, instead of just 1 year as stated in RA 9513.

The legislators who enacted this law actually played along cha-cha, tango, with the climate alarmists headed by then DOE Sec. Vince Perez, his buddies in the WWF where he quickly migrated when his term at DOE ended, Greenpeace karaoke, Oxfam, Tony la Vina, Migs Zubiri, etc. And as I repeatedly argued, ADB and WB fanned the hype by conducting several "save the planet" fora and meetings for heads of governments, their environment and energy officials, and at the end of the day, they say "help save the planet, we got billions of $ to lend to you."

Of course the mother of all this corruption is the corrupt UN itself. They said that less rain and more drought is proof of AGW (anthropogenic global warming). Less snow is proof of AGW. Now they say more rain and more flood is proof of AGW and man-made CC, more snow is proof of AGW. And that is how they managed to gather the Kyoto Protocol, then the various UN FCCC annual global meetings in search of part 2 to Kyoto which will expire end of this year.

One solution to reverse this racket is to have another law that will repeal RA 9513. But again, it's another uphill battle as the bleeding heart planet saviors, the UN, multilaterals, DENR, DOE, CCC, the WWF-Greenpeace-Oxfam triumvirate along with their local partners, will oppose. 

-- Nonoy

August 2-3, 2012


I gather from your info that the ERC is two years behind the deadline provided by law. Is this correct? In other words, they are already in violation and still no one yet has been hailed to court. And no one  has yet dared hail them to court either. That could be good news. It means  they can even delay their decision indefinitely  at almost zero additional risk to themselves. Somebody should convey the message, that they have a unique opportunity  to be national heroes.

FIT is really a worrisome development, and its logic fails at several fronts simultaneously. Is there any other country that has been similarly hostaged like us, at the altar of RE???? 

I dont get how they were able to calculate the needed cross-subsidy per kwh. for the diff RE types. I had expected that the absolute value will  have to depend on the  actual contribution or generation from an RE form, at any given point in time, relative to the total power sold on all grids. . Since all those magnitudes keep changing  over time, it baffles me how  they came up with only one fixed figure for each type of RE. Their mathematics is obviously too advanced for me.

And if RE power technologies are really  that desirable, its contribution should therefore be expanded. which means there will even be less and less conventional power to carry the burden of the subsidy as more RE capacity is loaded onto the system. In layman's terms, that means the subsidy burden  per CE(conventional energy) kwh will also spike,  since its contribution to the grid will be continuously dwindling. decision

Finally, if the reason for the cross-taxation is  cleaner air, then the entire population, incl our foreign visitors , (not just local power-users) should be made to share that burden. In other words,  it seems like the type of expense that a national government should logically shoulder since it benefits everyone without discrimination. Or at least the cleaner air benefits cannot be internalized to  just a few. Or to just power-users.  It doesnt seem right that only power users be singled out and made to pay. An alternative approach  is to slap a carbon-penalty-tax on  power generated from  CE (conventional energy or carbon-emitting)  technology, assuming deadly  carbon emissions are for real,  and then make the REs compete freely. Under this scheme, government at least gets to generate tax revenues. Under the ERC scheme, government gets nothing. Everything goes to the RE sector.  And rates  are set at levels that ensure their survival  (including the least efficient among them...)

What is worse is that due to uncertainties surrounding solar and wind power (unreliable and fluctuating intensities), the grids will need a back-up system. And guess what it will be called?  You guessed right, conventional power systems. In the end , we will have to duplicate RE capacity just the same, with conventional power,  for the occasions that RE will fail to deliver. We will end up with fully redundant systems. Both soon heavily  underutilized. It wouldn’t hurt so much, if each kwh from  the default system (in this case, the RE systems) were priced at their incremental running costs,  or close to zero. Just like nuclear. But the chances of that happening are bleak,  precisely because of the FIT scheme. Nuclear would be a more attractive proposition than RE and wont have the carbon handicap of fossils either. Of course, there is the issue of spent fuels, and the risk of even just one meltdown. But at least that industry charges close to zero running costs.  With RE, we end up getting stiffed twice...first from atrociously expensive FIT cross-subsidies, and second, from the seriously-underutilized capacity redundancy. It is just one absurd contradiction after another. While investment banker mercenaries are laughing all the way to the bank, gloating over the need to raise funds for the installation of un-reliable RE technologies, and then, a second round of raising funds  to build  the more-reliable conventional power systems to serve as back-up. That is called a double whammy. Maybe, somebody should whisper to those over-eager ERC honchos that their country needs them to sleep on their jobs a little  bit longer. ,  Noy Anunda, ikaw na! Tell them...whats a few more years between fiends.... they shall not be  risking much  more. They are already in legal violation anyway

-- Gary M.

Hi Gary,

to your questions/comments:

1. ERC is two years behind the deadline provided by law. Is this correct?

Yes. RA 9513 was signed December 16, 2008, became effective early 2009. The FIT was supposed to be announced within one year or early 2010 but was finally announced (and implemented?) July 2012 or 2 1/2 years delayed. The main reason for the delay I think, is the opposition to FIT implementation by many groups, the FEF among them, although I think some FEF guys also support the FIT silently. Tama ba Alex, Romy?

2. Is there any other country that has been similarly hostaged like us, at the altar of RE???? 

From the presentation by Vince Perez at the ADB on those renewable/clean energy things, he showed that China, Indonesia, Korea and Thailand, aside from the Philippines, also have FIT scheme. But the difference is that these 4 countries do not have renewable portfolio standard (RPS) or mandatory/minimum percentage of power generation to be sourced from RE. I showed portions of Vince Perez' slides here,  Energy rationing 2: The Renewable Energy (RE) law

So the Philippines' RE law is really more rent-seeking or more parasitic than the RE laws or policies in Asia. I think this is consistent with the WWF bragging that the Philippines is #1 worldwide every year, in the glorify darkness for 1 hour, aka Earth Hour lunacy, of the WWF.

3.  if RE power technologies are really  that desirable, its contribution should therefore be expanded.

Yes, the RE law really aims that way. Aside from FIT and RPS, REs here are also given (a) capital subsidies or rebates, (b) tax credits, (c) VAT reduction, (d) tradable renewable energy certificates (RECs), (e) access to public financing (via ADB and WB loans?).

Lots of give aways that are not given to conventional energy sources. It's clear and plain energy cronyism, in the name of saving the planet from global warming.

4. due to uncertainties surrounding solar and wind power (unreliable and fluctuating intensities), the grids will need a back-up system. And guess what it will be called?  You guessed right, conventional power systems.

Right on the money. Power redundancy yet we pay for expensive FIT. And many solar companies are closing in the US, Europe, despite their government subsidies and loan guarantees to them, partly or largely because their generation cost is simply high. Another example aside from Solyndra in the US, is Abound Solar, also in the US. From Reuters,

"Abound was still in the earlier stages of technology and commercial development and despite over $220 million in private investment and $70 million drawn from its $400 million U.S. Department of Energy (DOE) loan guarantee, simply didn't have the cost and downstream reach to survive in the tumultuous solar market."

In Germany, some 800,000 people are without electricity due to spiraling energy prices there, again despite heavy German government subsidies to the renewables,

5. somebody should whisper to those over-eager ERC honchos that their country needs them to sleep on their jobs a little  bit longer.

Not possible. Even the Ayalas and the Sys, them who sit on the board of WWF, have also jumped into RE cronyism because of sure profit while brandishing in their malls and real estate projects that they also helped save the planet.

I think the only solution is to have another law that will amend or repeal RA 9513 and abolish the FIT, RPS and other schemes. But again, this is an uphill battle given the huge number of trying-hard earth saviors among the population.

But there is one simple and cute way we can help. If someone sends you photos of those cute wind farms in Ilocos, or those flashy solar farms, do not forward or glorify those photos. These are the same RE farms that will punch additional holes in our pocket as energy consumers.

Lest the average earth saver demonize me, I am not against RE farms per se. They are cute, they are renewables. What I am against is the mandatory, coercive subsidies to be given to those power sources and companies.

I will blog about this thread once again, thanks again for the blanket permission to post your comments Gary.


-- Nonoy 

If the other countries dont impose mandatory minimum capacities or percentages, then their nationals  are not really hostaged to the same extent we are. 

We are pitifully  caught between a rock and a hard place. What a petrifyng thought.  
There may be a chance to get the law amended, if we all forewarn  the good authors of the law that they will publicly be asked to account for the  financial burden  they inflicted on the entire electorate, making our export industries less competitive as well in the process, when they kickstart  their  campaign  for the next elections.

(Noy, if my memory serves me right, the blanket permission to post came with some conditions that I trust you will respect.) It is news to me that you think  Romy is silently supporting FIT, altho I am aware he represents  Ayala interests in some corporate boards. And Ayala is rumored to have purchased equity interests in RE technologies, (possibly because of the RE law and the guaranteed incentives). Altho  I overheard otherwise  just last weekend  (that he could  be  a closet objector) . Well, rumors fly fast and easy and talk is cheap. The only expensive thing we are sure of at this point,  RE & FIT.

In any cartel, the first cheaters get to pocket the most benefits. Those who dont allow themselves to be fooled into supporting an unlikely scheme as this , stand to make a killing, if   they stay with cheaper conventional systems that the gullible will increasingly abandon. The worse part is that  the non-conformers  will 'carbon-pollute' the entire planet anyway. Surely, in the land of the blind, the ASTIG-matic is king!

-- Gary M

Hi Gary,

Yes, the absence of RPS scheme in China, Thailand, Indonesia, Korea's FIT system possibly explains why their energy prices are not that high. In our case, we already have the highest power rates in Asia without the FIT, so when the FIT racket kicks in, our power rates will become even more expensive. 

I know that Romy B. ever since is against the FIT; problem is that he works for the Ayalas as a consultant or board member somewhere, and the Ayalas, along with almost all taipans in the country, are high profile earth savers, so they put in money for the RE racket. So Romy cannot be a high profile opponent of the FIT.

Now we see the dots. The Ayalas, Sys, Gokongweis, etc sit on the board of WWF. These taipans jump into the save the planet and green earth bandwagon, like the RE racket, eco-bags promo, etc., and the WWF cadres but coward ideologues move to ensure that the FIT racket is fully implemented which brings more money to the Ayalas, Vince Perez and other earth savers.

More proof why I keep saying that the WWF and other earth savers are a bunch of noisy but coward eco ideologues?

1. Sometime in November 2009 or Nov. 2010, I gave a talk on the climate racket at the Rotary Club of Makati Urdaneta. Fine, I showed lots of graphs, charts, satellite pics, that there is nothing alarming about climate cycles of warming-cooling-warming-cooling, that we are only alarmed by alarmism.

Then one club member, Dr. Joji Tan, said that the following week, her cousin, the WWF top guru, Lory Tan, will be their club speaker to speak on the same topic, Joji asked me if I can be a panelist to ask questions after Lory's talk, I immediately said Yes. In my mind, it was one cool way to debate a warming guru.

About three days before the scheduled talk of Lory Tan, I got a call from their club, kung pwede, I don't come na lang to be a panelist, since it might cause some divisiveness in the club on the issue. Well what can I do, you got disinvited, so ok. Of course my friend in the club would not admit that Lory or other WWF honchos is a coward if questioned point blank with really difficult data.

2. Months before that, I emailed Lory and Yeb Sano of WWF about my presentations in other groups about the issue. The response is usual: the sound of silence. Later on, Yeb Sano would migrate from a WWF campaigner to a government bureaucrat aka one of the commissioners of the climate change commission (CCC) and hence, would be representing the Philippines in various global climate junkets, along with Tony la Vina, known as UN FCCC meetings, and the various pre-summit meetings held every 2 months on average.

3. April 22, 2009, aka "Earth Day" I also gave a talk at the Rotary Club of Makati McKinley about climate. It was a depressing day for the warmists because April-May each year are the driest, warmist months of the year. But that day, or that week, and the succeeding weeks, it was raining almost everyday. Anyway, my co-speaker there was Ms. Tony Loyzaga (?), the head of the Manila Observatory. I spoke before her, and I was explicit in my presentation that the UN IPCC is a liar when it comes to their AGW claim. Since the Manila Observatory, along with PAGASA, is among the local partners of the IPCC in generating local "proof" of alarming global warming, I expected Ms. Loyzaga to question some of my presentations, but she did not. Her presentation was about how prone the Philippines is to CC like the fiction story called ever-rising sea level.

I would be happy if this email will be forwarded once again to the WWF eco nuts so they will summon some courage to disprove that they are not cowards when challenge to a debate.

-- Nonoy

Noy, not all who jump into the bandwagon do so for the exact same reasons. others may jsut be fending off a public relations backlash without necessarily genuflecting at the altar...... for instance, you could publicly renounce your beliefs and join them too, and be a spy.(but i suppose your friends there have  anticipated that already with the kind of noise you make)  anyway, have you checked if those  biodegradable plastic shopping bags work?

On a related note, it is time we start a serious  public debate/discussion  regarding public transport systems and road-use polcy. who is the upseea expert on that? Can we hear from him? o ikaw din yun..?i

we dont have the FIT yet, so it  would be premature to blame our higher power rates on FIT. there mus be  another culprit(s). One is that we dont have an identical fuel mix, because we are not all similarly endowed (especially with capital and forex exchange resources). Many of them  have relied on 'cheaper' nuclear power way ahead of everybody else's curve (japan, france, us, uk, west g, etc). the trade off they have accepted  is that they chose  risk plant technical  malfunctions as happened in chernobyl or 3 mile island or japan. tahn be hunkered down by  more expensive fossil fuels. after a plant malfunctions, i am not sure how their accounting practices go. if a plant is pulled out from the power grid, it is possible they also yank it  off the power sector accounting books with permission of the multilateral institutions, lest the third world badmouths the nuclear industry which they were also trying to prop up for possible exports to developing nd emerging economies. ..their central govts may have chosen  to underwrite the clean-up costs from their general revenues, than risk public outcry if they imposed same on power consumers.. .that way,  the clean-up  costs prolly get reflected only in the national budget accounts, and not on power accounts, relieving power tariffs  of upward pressure. That would give the impression (ilusion?) of  cheaper power. But there is possibly another culprit. our EPIRA needs reviewing, if not outright repealing. it certainly was not necesssary.

-- Gary M.

You're a gunslinger Noysky so they don't want to go to OK Corral with you. What they want is token opposition that will fold easily to make their side look good. That's not you; you're scorched earth man!

-- Ed Miguel

See also:
Fat-Free Econ 16: Coal, Climate and Government, July 17, 2012
Energy Econ 3: Market Reforms in India's Electricity Sector, July 30, 2012
Energy Econ 4: Oil Prices and Taxes, August 27, 2012
Energy Econ 5: Coal Power in Cadiz, Negros Occidental, September 06, 2012

No comments: