* This is my column in BusinessWorld on August 13, 2018.
This title is rooted from three recent reports in BusinessWorld:
1. DoE gives up chair of PHL Electricity Market (Aug. 1),
2. PHL to become ASEAN’s most coal-dependent economy by
2030 — ADB (Aug. 4), and
3. Renewables firms hoping to unify lobbying efforts
(Aug. 7).
Report #1 is the realization of a provision in Electric
Power Industry Reform Act (EPIRA) law of 2001 that an independent market
operator (IMO) be created to operate the Wholesale Electricity Spot Market
(WESM), which was created in June 2006. For more than a decade, the Philippine
Electricity Market Corporation (PEMC) as market operator was a DoE-chaired and
controlled body and hence, was not an independent entity.
I attended the PEMC Chairmanship Turnover Ceremony last
July 31 at the PEMC office in Ortigas.
DoE Secretary Cusi has officially turned over PEMC Board
Chairmanship to Mr. Jose Aboboto, one of the private industry players in WESM.
Atty. Oscar Ala remains as PEMC president.
The IMO technical and secretariat function will be done
by the Independent Electricity Market Operator of the Philippines (IEMOP)
headed by its first President, Atty. Francis Saturnino “Nino” Juan. In the
ASEAN, only the Philippines and Singapore have an electricity market between
power producers and distributors/suppliers.
Report #2 may send alarm bells to the climate alarmism
and anti-coal movement as if Philippine coal consumption is already substantial
and may yet increase. Our coal use in 2017 of 13 million tons oil equivalent
(mtoe) was only 1/9 of Japan, 1/7 of South Korea, 1/4 of Indonesia’s 57 mtoe,
1/2 of Vietnam’s 28 mtoe.
In addition, our total primary energy supply (TPES, sum
of domestic production plus imports minus exports) is also very small at only
0.52 tons of oil equivalent (toe) per capita in 2016, or only 1/10 of South
Korea and 1/9 of Singapore.
Our average electricity consumption is also very small,
only 744 kWh per capita in 2015, or only 1/14 of South Korea and 1/12 of
Singapore (see table).
One can conclude that among the big reasons why South
Korea, Japan, Singapore, Hong Kong, others are developed is because they have
huge energy and electricity consumption. Energy precedes development that is
why it is foolish to over-regulate and over-tax power generation, transmission,
distribution and pricing. When power supply is huge relative to demand, there
is no other way for the price to go but down, resulting in cheaper electricity
for consumers.
Singapore has very low coal consumption because it is
largely using natural gas, about 98% of its total power generation. New Zealand
is more dependent on hydro and other renewables like biomass, geothermal.
Report #3 is about the fear of renewable energy (RE)
developers especially wind-solar that the DoE will insist on a competitive
selection process (CSP) instead of a “Swiss challenge” for distribution
utilities and electric cooperatives in getting their power supply contract.
Related to this is the fear of the RE lobby that their tax perks like exemption
from VAT, income tax holidays, etc. will be removed under TRAIN 2 bill now in
Congress.
A good compromise between expensive, unstable electricity
by the RE lobby vs cheaper, stable electricity by the consumers, is to have a
uniform feed in tariff (FIT) for all variable REs — wind, solar, biomass and
run-of-river hydro — to the lowest FIT level of P5+/kWh. Solar-wind currently
get P9+ to P10+/kwh of FIT or guaranteed high price for 20 years.
Solar-wind developers and campaigners keep repeating the
mantra of “wind-solar technology are improving very fast, their prices are
declining very fast.” If so, their high FIT should be adjusted downwards
because high FIT automatically negates that mantra.
If the EPIRA was implemented without distortions like RE
law of 2008, we should have cheaper and more reliable electricity market in the
country by now. Which reiterates the fact that more competition, not state
favoritism, is more conducive to the economy.
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See also:
BWorld 236, Two years of Duterte energy policies, August 02, 2018
BWorld 237, The sharing economy index, August 03, 2018
BWorld 238, Trademark ban and health alarmism, August 4, 2018
BWorld 239, Dutertenomics' debt addiction, August 12, 2018
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