* This is my article in BusinessWorld last Monday, May 28, 2018.
Last week, May 22, a BusinessWorld report said “DoE
forecast for peak power demand exceeded on May 17” referring to 10,688 MW peak
demand in the Luzon grid on May 17 reported by the National Grid Corp. of the
Philippines (NGCP) vs peak demand in 2017 of 10,054 MW.
The increase of 634 MW or 6.3% increase can be considered
as positive disruption. Demand for electricity to power various economic
activities by households and corporations including those with 24/7 operations
remains high and they approximate GDP growth.
Reports of more renewable investments and installations,
wind-solar especially, are not “disruptors” because in 2017 or nine years after
the enactment of RE law of 2008, solar-wind contribution to total electricity
generation in the Philippines constituted only a measly and near-negligible two
percent (2%).
Reports also of more battery storage for intermittent
wind-solar can neither be considered as a “disruptor” because those batteries
do not produce electricity. If it is cloudy or raining then there is no extra
solar power to store; if the wind does not blow then there is no extra wind
power to store.
During the BusinessWorld Economic Forum 2018 last May 18
at Grand Hyatt BGC, among the speakers were Kristine Romano of McKinsey &
Company, and Luis Miguel Aboitiz of Aboitiz Power Corporation. Ms. Romano partly
mentioned that innovations in the energy sector is among the big disruptors in
the world today. Mr. Aboitiz skirted discussing his sector and mentioned more
about the challenges and opportunities of endless innovation and disruption in
many sectors.
And we go back to renewables touted as disruptor to “save
the planet” (save from what, rains and floods?) and there is one belief or myth
that continues to persist — that the cost of wind-solar technology is declining
quickly so the cost to generate electricity from them will decline too.
Intermittent or variable renewable energy sources (VREs)
are given feed in tariff (FIT) or guaranteed price subsidies for 20 years,
among many other perks, by the RE law of 2008 (RA 9513). What happened to this
scheme?
First, the FIT rates given to RE developers keep rising
yearly, despite the touted decline in the cost of wind-solar, and second, the
estimated revenues per kWh is are highest for wind-solar and lowest for run of
river (RoR) hydro (see table).
Bangui Wind 1 and 2, built in 2005 then August 2008 or
before the enactment of RE law in 2008, a bit anomalous, were also given
special FIT rates: P6.63/kWh in 2015; P7.05 in 2016; P7.26 in 2017; and P7.53
in 2018.
Then also last week, May 21, the ERC has granted the rise
in FIT-Allowance (FIT-All) in our monthly electricity bill from 18.30
centavos/kWh to 25.32 centavos /kWh starting June 2018 billing. This is to
cover under-recoveries in 2017 alone.
And that explains the negative disruption in the Philippines
electricity market. Energy coming from “free” solar and wind and “declining”
technology cost actually result in even more expensive electricity.
This higher FIT-All rate includes only under-recoveries
until 2017. Under-recoveries this year not included yet, so a higher rate of
probably 33 centavos/kWh can be expected in late 2018.
The environmental and RE lobbyists succeeded in making
cheaper coal become more expensive via higher coal tax of P50/ton in 2018,
P100/ton in 2019, and P150/ton in 2020 under the TRAIN law. Taxes for oil used
by power plants also went up as well and expanded VAT application to
transmission charges.
Expensive electricity is wrong.
Adding more intermittent, brownout-friendly, and
expensive VREs like wind-solar is wrong. Adding battery storage will reduce the
intermittency but will definitely raise the cost to consumers further.
Government should take the side of consumers who desire
cheaper, stable electricity. Government should stop its double standards in energy
taxation, slapping higher excise tax for reliable oil and coal plants but
exempting from excise tax the unreliable, unstable, intermittent VREs
especially wind-solar.
------------
See also:
BWorld 210, Electricity competition, EPIRA, and WESM, May 16, 2018
BWorld 214, Disruption in global economic power, May 24, 2018
BWorld podcast 2, TNVS fare and surge control are wrong, May 26, 2018
No comments:
Post a Comment