* This is my column in BusinessWorld last April 16, 2018.
“You must be ready to give up even the most attractive
ideas when experiment shows them to be wrong.” — Alessandro Volta (1745-1827,
Italian scientist who invented one of the first electric batteries known as a
voltaic pile)
This quote should be remembered by people who keep on
insisting the urban legend that we can banish coal power in our lives soon,
that wind, solar, and other intermittent renewables can provide 100% of our
electricity needs. That is far out.
Despite the Renewable Energy (RE) law of 2008, despite
the generous subsidy to RE companies via feed-in-tariff (FiT) — which provides
subsidies for REs for 20 years — wind and solar can provide only 2% of the
country’s energy needs as of 2017. Coal, for its part, provided one-half of our
total national electricity needs (see table).
These numbers show that as of 2017, (a) coal installed
capacity was only 36% of total but its actual power generation was almost 50%
of total; (b) oil-based plants constituted 17% of installed capacity but
generated only 4% of total because these oil plants are used mainly as peaking
plants or they run only during peak demand hours to prevent blackouts.
Among renewables, geothermal and hydro provide the bulk
of power generation. Solar-wind have nearly 6% of installed capacity but
contributed only 2% of power generation.
And this brings us to four recent energy reports in
BusinessWorld last week.
1. PHL announces large-scale renewable projects (April
12).
2. DoE studying shift in energy mix to 50% baseload
(April 11).
3. DoE may step in as licensing body for retail power
suppliers (April 12).
4. Boracay closure to raise Aklan power rates,
legislators say (April 12).
Report #1 is about the Board of Investments
(BoI)-approved eight solar projects worth P86B ($1.7B) to be rolled out from
October. The largest is the Iba-Palauig 2 Solar Project, 140 MW worth P19B.
Second largest are two projects in Cavite, 392 MW valued at P17.3B. That is a
lot of money that asserts that solar can be a reliable source for the
Philippines.
Report #2 is about the DoE studying a change in its
previous energy mix policy of 70-20-10 for baseload (power plants running
24/7), mid-merit, and peaking plants respectively, to a new policy of 50-40-10
for baseload, flexible, and peaking plants respectively.
DoE projects that from 2018-2025, a total of 8,618 MW new
capacity will be added to the country’s power grid, 6,325 MW of which will come
from coal plants.
Report #3 is about the DoE studying the legality of being
the issuer of licenses for retail electricity suppliers (RES), a function by
the Energy Regulatory Commission (ERC) governing the implementation of retail
competition and open access (RCOA).
RCOA is among the beautiful provisions of the EPIRA law
of 2001 because it allows electricity consumers the option to choose their own
power suppliers. But RCOA was issued an indefinite temporary restraining order
(TRO) by the Supreme Court on Feb. 21, 2017.
Consumers can set their own conditions from their RES.
Thus, some consumers can demand that they be supplied 100% only from renewables
even if the price is higher. The Green Energy Option (GEO) of RE law of 2008
encourages this. Meanwhile, some consumers can demand that they be supplied
100% only from cheap and stable sources.
Report #4 is about Aklan Electric Cooperative (AKELCO)
seeking to recoup losses of about P17-M a month associated with the closure of
Boracay for six months. It has a power purchase agreement (PPA) with four power
generators for 42 MW and they are required to pay for them whether the power is
used or not. So AKELCO will increase its rates by P1.62/kWh to the rest of
Aklan electricity consumers.
Report #1 does not heed the advice of Alessandro Volta
and actual data on Philippines power generation and hence, run the risk of bad
investments in the future.
Report #2 and new policy will convert some of those new
coal plants to become mid-merit instead of baseload. This policy reversal might
sour future investments in reliable coal power.
Report #3 is positive, affirming consumers’ rights to
choose their own energy mix. The DoE should ultimately shy away from announcing
its preferred energy mix.
Report #4 shows that the arbitrary closure of Boracay is
bad not only for businesses in the island but also for businesses and
households in the entire Aklan province.
Government, both Malacañang and DoE, should learn more to
respect consumer freedom.
--------------See also:
BWorld 201, Expanded environmental rights and anti-coal drama, April 05, 2018
BWorld 202, Tourism, casinos, and Boracay, April 08, 2018
BWorld 203, TRAIN, inflation and PPP, April 10, 2018
BWorld 204, Mining attractiveness index and the Philippines, April 30, 2018
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