* This is my column in BusinessWorld on February 26, 2018.
“When PV Solar rely on up to 67% of revenues from
subsidies, the state becomes a counter-party that is critical to sustaining the
firm’s financial viability. Vagaries of politics imply constantly changing
priorities, making for a fickle advocate.”
— Ricardo Barcelona,
author of Energy Investment: An Adaptive Approach to
Profiting from Uncertainties (2017).
This is a lesson and reality that will be hard to
appreciate for solar energy advocates and developers, that without politics,
without forcing and coercing energy consumers to subsidize, directly or
indirectly, solar, wind, and other renewables, their advocacy is a losing
proposition.
Last Thursday, Feb. 22, I attended the Energy Policy
Development Program (EPDP) lecture at the UP School of Economics (UPSE), my
alma mater. The speaker was Mr. Leandro Leviste, president of Solar Philippines
and his presentation was “Cheap Electricity for a First World Philippines: The
24/7 Solar-Storage Revolution.”
Mr. Leviste boldly declared in his presentation that
“Solar is now the least cost for all peaking, mid-merit and baseload
requirements, and will thus comprise the vast majority of additional power
generation capacity from hereon in the Philippines.”
This is simply not true. If solar is indeed “least cost,”
solar developers should have stopped asking for rising feed-in-tariff (FiT) or
guaranteed high price for 20 years under the Renewable Energy (RE) law of 2008.
FIT rates for solar batch 1 (2015 entrants) were
P9.68/kWh in 2015, P9.91 in 2016 and P10.26 in 2017. For solar batch 2 (2016
entrants), P8.69/kWh in 2016 and P8.89 in 2017. Solar and wind developers are
feasting on billions of pesos of additional, expensive electricity slam-dunked
on hapless consumers on top of the 11-12 different charges in their monthly
electricity bill.
During the open forum, I asked Mr. Leviste two questions:
(1) Will you support the abolition of RE law of 2008
since your presentation shows plenty of improvements and cost reduction for
solar, meaning they can survive without FiT, RPS, other subsidies and mandates?
(2) You advocate large-scale solar development in the
Philippines, therefore you advocate large-scale deforestation of the country?
You showed a big picture of your solar farm in Batangas, zero tree there,
anti-green. Solar hates shades – from clouds and trees.
His response to #1 was Yes, we can abolish the RE law but
we should also abolish the EPIRA law of 2001, the pass-through cost provisions.
To question #2, he said that there are trees outside the solar farm and there
are moves to plant crops under the solar panels.
Meaning his answer to #1 is No. On #2, precisely that
trees are allowed only outside the solar farm because solar hates shades from
trees. While many environmentalists including Sen. Loren Legarda repeatedly say
“Plant trees to save the planet,” solar developers like Leandro Leviste are
implicitly saying “remove and kill all trees (in solar farms) to save the
planet.” The irony of green environmentalism.
The call for “green, environmentally-sustainable energy”
is repeatedly echoed in the Philippines and other countries. And many of these
advocates are unaware that in the annual report, “World Energy Trilemma Index”
by the World Energy Council (WEC), the Philippines is #1 out of 125 countries
for several years now in environmental sustainability.
WEC is a UN-accredited global energy body composed of
3,000+ organizations from 90+ countries (governments, private and state
corporations, academe, etc) NGOs, other energy stakeholders). The Trilemma
index is composed of three factors, briefly defined as:
Energy security: effective energy supply from domestic
and external sources, reliability of infrastructure and ability of energy
providers to meet current and future demand.
Energy equity: accessibility and affordability of energy
supply across the population.
Environmental stability: achievement of energy
efficiencies and development of energy supply from renewable and other
low-carbon sources (see table).
(The indicators represent economies as follows, from left
to right: Singapore, Japan, Hong Kong, South Korea, Malaysia, Thailand,
Indonesia, China, Vietnam, and India)
The Philippines is #1 out of 125 countries covered in
Environmental Sustainability. There is high reliance on conventional renewables
like big hydro and geothermal, plus newly added variable renewables. There is
no need to aspire for rank #0.5 worldwide
Ranking 95th, we are low in energy equity because of our
expensive electricity, which is 3rd highest in Asia, next to Japan and Hong
Kong.
We place 63rd in energy security — in the middle — and we
still need to add big conventional plants like coal to give us 24/7 stable,
dispatchable energy to meet demand.
To conclude, these words from Ric Barcelona resonate:
“When subsidies are set as the costs differences, the
‘correct’ level is indeterminate. As power prices increase, renewables need
lesser subsidies but nevertheless continue to collect. When this happens,
consumers would coax regulators to claw back the subsidies because renewables
are raking it in at consumers’ expense.”
---------------
See also:
BWorld 188, Estimating electricity price hikes resulting from TRAIN, March 10, 2018.
BWorld 190, TRAIN, inflation and the stock market, March 15, 2018
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