BWorld 221, Mindanao power development, reality vs illusion

* This is my column in BusinessWorld last Monday, June 11.

From 2006 to 2013, the Mindanao grid had only 1,900 to 2,000 MW of installed power capacity, mostly sourced from hydropower facilities that provide higher output during the rainy season but declines during the summer.

As a result, power shortages lasting several hours a day are experienced during dry spells.

In 2014, the supply situation improved.

Total installed power capacity increased to 2,211, rising once more to 2,414 MW in 2015.

Starting 2016, the situation improved further with capacity reaching 3,162 MW and later rising to 3,559 MW in 2017, with the help mostly of coal power plants. The last two years showed significant power surpluses that competing power plants were bidding as low as P2.50/kWh in generation cost.

As of end-2017, coal power constituted 39% of installed capacity but actual electricity production was 53% of total because of coal’s reliability and higher capacity factor. Oil-based plants constituted 26% of installed capacity but actual electricity output was only 7% because they were peaking plants and were seldom used.

The committed projects (financing, construction stage) and indicative projects (planning and proposal stage) are shown below.

 The Department of Energy (DoE) projects that from 2016 to 2040, the Mindanao grid will need additional capacity of 10,200 MW (6,300 baseload, 3,200 mid-merit, 700 peaking).

Early this month, a paper was presented at the UP School of Economics (UPSE), entitled “Cost-Effectiveness of Maximum Renewable Energy Penetration in the Mindanao Power Grid” by Dr. Sven Teske of the Institute for Sustainable Futures (ISF), University of Technology, Sydney. The event was sponsored by the Institute for Climate and Sustainable Cities (ICSC) and Mindanao Development Authority.

I was not there so I asked for a copy from UPSE, nothing came and perhaps ICSC did not give them a copy either. A friend of a friend sent me a paper by Dr. Teske last year which could be the basis of his presentation.

The IFS and Dr. Teske made a weird scenario of Mindanao capacity 6x that of DoE scenario. Their scenario is based on heavy renewable energy plus storage (RE+S) and RE plus dispatch (RE+D) and the following assumptions: (1) coal, oil and diesel plants phased out by 2050, (2) of the 3,200 mid-merit target by 2040, half to come from gas plants, half from hydro and biomass, (3) significant increase in solar and wind, (4) increase in storage especially battery (2,491 MW in 2050), and (5) interconnection with neighboring islands.

The weird ISF paper as propagated by the ICSC is obviously a product of the solar-wind lobby, partly by the gas lobby too. Compare what the industry players would actually invest, 410 MW of solar-wind indicative projects, vs what ISF-ICSC lobby of 37,496 MW or 91.5x larger, which is hallucination and illusion.

Electricity consumers in Mindanao and elsewhere simply want two things: stable electricity available 24/7 no brownout even for a minute, and cheap or competitive.

Solar and wind are not cheap.

If they are, we should have abolished by now the feed-in-tariff (FIT) scheme or guaranteed high price for 20 years, then the planned mandatory or obligatory renewable portfolio standards (RPS).

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See also:

BWorld 210, Electricity competition, EPIRA, and WESM, May 16, 2018 

BWorld 216, Positive and negative disruptions in the electricity market, May 31, 2018

BWorld 218, Tobacco taxation, smuggling and plain packaging, June 07, 2018 

BWorld 219, The US-North Korea summit and the global economy, June 20, 2018 

BWorld 220, Trade imbalances, protectionism and rhetoric, June 15, 2018

Energy 107, Avoiding brownouts due to gensets, not solar battery

This story contains half-truths and hence, can be considered as fake news.

https://www.energy-storage.news/news/no-more-brownouts-philippines-town-hails-arrival-of-tesla-battery

Five reasons why:

(1) “Leviste to bring cheaper, more reliable power to areas poorly served by utilities”

à Solar + battery will never be cheap in the short-term. Long term perhaps. I think Leviste’s current cost of solar + battery is at least P5.90/kWh (higher than P4/kWh for coal, natgas, others) and it cannot produce electricity 24 hours straight especially when it is cloudy and raining for many hours during daytime.

(2) “project utilising 2MW of PV panels… 2MWh of Tesla's Powerpack battery… and 2MW of diesel backup.”

à Imagine that?  solar PV + Tesla battery + diesel genset, that cannot be cheap. With higher diesel prices because of TRAIN, gensets would cost at least P10-15/kWh. They will need the genset to run every night, 365 nights a year because there are days and weeks where the Sun doesn’t shine (monsoon season, 1-2 weeks, sometimes 3 weeks, of rains and thick clouds non-stop).

(3) “supply reliable power 24 hours a day, over the entire year, at 50% less than the full cost of the local electric supply”

à Partly true because islands that run on power barges and huge gensets and hence, run on 100% oil really have high electricity cost, between P10-25/kWh depending on the remoteness of the island. But they are not mentioning this comparison.

(4) “This includes a 5,000MW proposal to replace all planned coal plants with solar-plus-storage.”

à Outright disinformation and dishonesty. To have 1MW of installed solar PV will need about 1.2 to 1.5 hectare of land. So if one targets 5,000 MW installed solar, one will need 6,000 to 7,500 hectares of land, zero crops, zero tree because solar hates shade from any tree. And with only about 18% capacity factor (36% day time, zero at night), a 5,000 MW solar plant can actually produce only 900 MW on average, not 5,000 MW.

(5) “Mindoro, while particularly badly affected, is by far the only part of the Philippines where brownouts impair productivity and quality of life.”

à Wrong. Many islands and provinces still have regular “Earth Hours” until now. Palawan, Masbate, Romblon, Marinduque, etc.

Mindoro island, composed of two provinces Mindoro Or. and Occ. is growing very fast because of the RORO system where hundreds (or thousand plus?) of cars, motorcycles, buses and trucks traverse daily from Manila/Batangas to Panay island (4 provinces of Aklan, Antique, Capiz, Iloilo) and vice versa. A number of big tourism areas like Puerto Galera, Abra de Ilog. Mindoro does not have its own power plant. It is time that it must have its own, at least a medium-size 100 MW coal or hydro plant.

A more appropriate title would be "No more brownouts! Philippines town hails arrival of diesel genset."

A genset will give electricity 24/7 even if the Sun does not shine for weeks due to monsoon rains and daily thick clouds. Just put diesel continuously and have regular maintenance. The cost though will be 3x to 5x or more than that of a coal plant or hydro plant. Mindoro has lots of rivers because the island has plenty of big and tall mountains. Big and small hydro, run-of-river hydro should be feasible in some areas.

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See also:

Energy 104, Ric Barcelona on energy investment and subsidies, December 12, 2017 

Energy 105, When both world oil prices and domestic oil taxes are rising, January 14, 2018 

Energy 106, US oil output now 10+ mbpd, February 08, 2018

BWorld 191, Solar insecurity, energy stability and affordability

* 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.”

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See also:

BWorld 188, Estimating electricity price hikes resulting from TRAIN, March 10, 2018. 

BWorld 189, Distortions in TRAIN 1 should be corrected by TRAIN 2, March 14, 2018 

BWorld 190, TRAIN, inflation and the stock market, March 15, 2018

Energy 100, Bjorn Lomborg on World energy mix

I am reposting here a post by Bjørn Lomborg in his fb wall early today. Thanks for this great piece, Bjorn.

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The world is mostly run on fossil fuels (81.4%). Nuclear makes up 5% with 13.6% from renewables. Solar panels and wind turbines contribute less than 0.7%.

When you hear 13.6% renewables, you will likely think 'wow, things are going pretty well with the change-over to renewables'. But these are not the ones you hear about. The biggest contributor is wood, used in the poor world to cook and keep warm. This leads to terrible indoor air pollution – it is actually the world's deadliest environmental problem, killing some 4.3 million people each year. We should definitely hope the poor will have to use *less* polluting wood in the future.

The other main contributors of renewables are biofuels (e.g. the American forests, cut down and shipped across the Atlantic to be burnt in European power plants to be called green and CO₂ neutral) and hydropower. In total, that makes up 12.1%. The last 1.5% comes mostly from geothermal energy (0.54%) and wind turbines (0.53%) along with solar heaters in China, tidal power etc. (0.29%) and solar panels (0.13%).

Contrary to the weight of news stories on how solar and wind is taking over the world, solar panels and wind turbines really make up a very small part of the global energy mix. (I started out coloring solar panels yellow, but the thin sliver at the top became invisible.)

Sources: The International Energy Agency has released their latest Renewable Energy Information 2017, http://www.oecd-ilibrary.org/.../renewables-information.... It contains 488 pages of data, with preliminary data for the rich world for 2016, but for the entire world for 2015. Unfortunately, the data is not free.

Since solar PV constitutes such a small part of the energy supply, the International Energy Agency combines it with tidal, solar CSP and solar thermal (the water heaters on rooftops for direct hot water). In 2014, the split was 34% for solar PV, 0% for tidal, 6% for CSP and 60% for thermal, so I applied the same split to the data for 2015.

All data is Total Primary Energy Supply, which is the International Energy Agency's own main measure, also used in all their graphs for global energy balances.

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See also:

Energy 97, Solar can replace coal power in the PH? July 03, 2017

Energy 98, Wind-lover S. Australia has highest electricity rates in the world, August 14, 2017 

Energy 99, Germany's FDP questioning or ditching Energiewende, October 04, 2017

Energy 97, Solar can replace coal power in the PH?

There is a funny claim by the President of Solar Philippines, also son of Sen. Loren Legarda, Leandro Leviste. Reported in BWorld today.

Look at his claim: solar at P5.39/kWh vs average generation cost from different sources at P8.17/kWh.

These numbers seem like jokes. Here’s why.

1. The average generation charges of Meralco were P4.85/kWh in May and P4.37/kWh in June 2017, which already includes the more expensive peaking plants. These are almost half of Mr. Leviste’s P8.17/kWh data. Where did he get that number, perhaps from one of the inefficient electric cooperatives in the country?

See table below. These power plants are mostly coal and natural gas. #7 “Others” are mostly peaking plants from TMO, Panay, Toledo and 1590 Energy Corp., see their low dispatch rate of 13.3% and low energy share of only 1.4% of total, meaning they run only during peak hours, few hours a day.

Source: http://corporate-downloadables-rates-archive-generation.s3.amazonaws.com/1498532289.cc4df9f40e1e8a8e42127b9ad1c5f0de.pdf

2. Mr. Leviste’s P5.39/kWh solar price is cool, if true. Because solar feed in tariff (FIT) or guaranteed price for 20 years is almost double that price. Solar plants that were granted FIT in 2015 would be getting P10.26/kWh this 2017.

3. Solar has low capacity factor, only about 18% (about 36% day time, zero at night time). When it’s day time but cloudy and raining, solar output will be low, capacity factor below 30%. If the solar plant will divert part of this for storage in battery so that it can produce power at night, then the already low solar output will become even lower. Plus the cost of huge batteries, they can quickly raise the price of solar to perhaps 2x of what Mr. Leviste claims.

So to answer the question in the title, the quick answer is NO. Intermittent, expensive solar energy can not replace stable, predictable and cheaper energy like coal and natgas. 

Government should step back from price control in energy via assured, guaranteed high price for solar-wind-biomass-ror hydro. Also step back from priority and mandatory feed of variable renewables like wind-solar in the grid that contributes to grid instability due to intermittent, easy-come-easy-go energy sources.
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See also:

Energy 94, Developing Asia's love affair with coal, May 07, 2017 

Energy 95, Al Gore's $15-T carbon tax racket, May 12, 2017 

Energy 96, ACEF 2017 at ADB, panel on private sector in renewables, June 09, 2017

BWorld 120, Five myths of solar-wind energy

* This is my article in BusinessWorld on March 20, 2017

Variable renewable energy (RE) like wind and solar are far out from giving humanity sufficient, stable, and cheap electricity to sustain growth and fight poverty. For the simple reasons that they are very intermittent and expensive. Below are five of the common myths that we hear and read about wind and solar.

1. Solar, wind, biomass, and other REs will replace fossil fuels as major global energy sources in the near future.

Wrong. From the projections by the two of the world’s biggest oil and gas companies, these REs, which may also include geothermal, will produce only 8.5% of global energy demand (Exxon Mobil data) or 6% (British Petroleum data) by 2025.

2. The share of coal, gas, and nuclear will further decline as the world moves towards implementing the Paris Agreement of 2015.

Wrong. From both EM and BP projections, there is no let up in global use and demand for fossil fuel and nuclear sources in the near future. This is for the simple reason that people anywhere dislike power interruption even for one minute, much more frequent and involuntary outages lasting many hours, daily or weekly.

3. Solar and wind are cheaper than coal now, their overall costs will keep falling.

Wrong. The feed-in-tariff (FiT) rates or guaranteed price for 20 years for solar-wind keep rising, not declining. For first group of solar entrants, their FiT rates in Pesos/kWh were 9.68 in 2015, 9.91 in 2016, and 10.26 in 2017. For second group of solar entrants, their FiT rates were 8.69 in 2016 and 8.89 in 2017.

For wind power first group of entrants, their FiT rates in Pesos/kWh were 8.53 in 2015, 8.90, in 2016 and 9.19 in 2017. For second group of wind entrants, their FiT rates were 7.40 in 2016 and 7.72 in 2017. Only the sun and wind are free but the panels, switchyards, cables, wind turbines, towers, access roads, etc. are not.

Current power prices in Mindanao are only around P2.80/kwh as many new huge coal plants compete with each other along with hydro and geothermal plants. No additional charges.

4. Solar and wind have no social cost (SC) while the SC of coal is very high.

Wrong. Solar and wind are very land-intensive and, as a result, more areas for food, commercial, and forest production are diverted to accommodate more solar and wind farms. To have 1 MW of installed solar power, one will need about 1.5 hectare of land. So to have a 300 MW solar plant, one will need about 450 hectares of land; San Miguel power has a 300-MW coal plant in Mindanao sitting on only 30 hectares of land, or hectare/MW ratio of only 0.1 for coal vs. 1.5 for solar.

Since solar has a low capacity factor, only 18% of its installed capacity -- from 450 hectares of land with installed power of 300 MW -- can actually produce only around 54 MW.

Majestic solar, 66.3 MW in CEZA, Rosario, Cavite is not included here because it is a rooftop facility and hence, does not occupy extra land area.

5. Carbon dioxide (CO2) pollution and emission from coal power plants will further warm the planet.

Wrong. CO2 is not a pollutant or evil gas. It is a useful gas, the gas that we humans and our animals exhale, the gas that our rice, corn, flowers, trees and other plants use to produce their own food via photosynthesis. More CO2 means more plant growth, more food production, more trees regenerating naturally, which have cooling effect on land surface.

The above five myths were among the topics discussed during the World Wildlife Fund (WWF) and Institute for Climate and Sustainable Cities (ICSC) “Roundtable on Philippine Energy Security and Competitiveness” last Friday, March 17 at UPSE in Diliman, Quezon City. The main speaker was Dr. Majah Ravago of UPSE and EPDP and she presented the main EPDP paper, Filipino 2040 Energy. The five reactors included Jose “Viking” Logarta of the ICSC and Dr. Christoph Menke of Trier University of Applied Sciences in Germany. Dr. Menke discussed the GIZ paper criticizing the EPDP paper.

Governments should not create regulations that distort the energy market away from real competition. Insisting on dishonest claims like “carbon pollution” and “renewables to save the planet” only lead to more expensive and unstable energy supply, wasteful use of land and other natural resources.

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See also: 

BWorld 114, Brownouts, ancillary services and transmission charge, March 23, 2017 

BWorld 117, Energy bureaucracy, electric cooperatives and NEA, March 28, 2017 

BWorld 118, Regulate this, prohibit that: bureaucracies in transportation, March 30, 2017 

BWorld 119, Seven myths in the mining debate, April 07, 2017

BWorld 114, Brownouts, ancillary services and transmission charge

* This is my article in BusinessWorld last February 23, 2017.

Rotational and scheduled brownouts for several hours about once a month, then unscheduled short brownouts from time to time, have become a regular experience in the two provinces of Negros island. Despite the installation of many huge solar plants in recent years.

    

I am currently in Sagay hospital in Negros Occidental to visit my seriously sick father. Last night, there was brownout for about 10 minutes, the hospital’s generator set immediately takes over to supply electricity to their patients and staff.

The Facebook page of the Central Negros Electric Cooperative (CENECO) gives frequent advisory of power interruption that lasts for nine hours (8 a.m. to 5 p.m.) until this month.

Stories and testimonies of frequent brownouts in many cities and municipalities of Negros Oriental in 2016 are also reported in dumagueteinfo.com.

In June 2016, the Department of Energy (DoE) said that line congestion is building up in Negros Occidental due to many solar power plants operating in the province. The abrupt influx of solar power plants is causing the main line, transmission and interconnection lines to congest (Sun Star Bacolod, June 10, 2016).

This month, Negros Occidental Electric Cooperative (NOCECO) explained that one of the main reasons of higher electricity is the increase in the transmission charge from P1.0538/kWh in January 2017 to P1.1777/kWh in February 2017 or an increase of 0.1239/kWh. The transmission rate hike is due to the increase in the ancillary service charges of the National Grid Corporation of the Philippines (NGCP).

There are at least two issues here. First is the presence of more brownouts in Negros island despite its having the most number of installed solar power plants per sq. km. of land in the whole country, more than 300 MW.

Solar power is very unstable and intermittent, zero output at night and very low output when it is cloudy, or power fluctuates wildly if clouds come and go in minutes. So there should be more ancillary services or standby power plants, usually natural gas or diesel plants, that should quickly provide power when thick clouds come and when evening comes. Still, this causes power fluctuations that damage machines, engines and appliances running on electricity and the leadership of Negros chamber of commerce and industry have pointed this out to the DoE and NGCP last year.

Second, how is the NGCP regulated and accounted in its transmission charge pricing and assets management?

Power generation is deregulated and hence, the extent of competition among many players is the main regulator of the generation charge. Distribution charge is regulated by the Energy Regulatory Commission (ERC) because distribution utilities (DUs) like Meralco and the roughly 119 electric cooperatives (ECs) nationwide are all monopolies in their respective franchise areas.

So while there are 120+ distribution monopolies composed of private DUs and ECs, the NGCP is a single, national monopoly in power transmission.

There are 12 different charges in our monthly electricity bill. The top six in the table below, and these five charges with lesser rates: (7) universal charge, (8) cross subsidy charge, (9) lifeline rate subsidy, (10) senior citizen subsidy, and (11) feed in tariff allowance (FiT-All). No. (12) are value-added tax (VAT) and other government taxes, these are huge too but not included in the table because they are unrelated to the electricity system.

Of these 12 different charges, subsidies and taxes, the smallest is #10 while the fastest growing is #11, FiT-All: P0.04/kWh in 2015, 0.124/kWh in 2016, and set to rise to P0.23-P0.25/kWh this 2017, the ERC still has to decide on the Transco petition for FiT-All hike (see table).

Notice in the table above the following: (1) In 2013 vs. 2017, all five charges have declined in rates in 2017 except transmission charge which has remained practically the same at P0.91/kWh. And (2) In 2014 vs. 2015, a similar pattern where all five charges have declined in rates in 2015 except transmission charge which has even increased to nearly P1/kWh.

The possible explanations why the transmission charge by NGCP seems to be the odd man out among the top six charges are (1) rising cost of more ancillary services as more intermittent solar-wind power are added into the grid, (2) it passes its own system loss to the transmission charge, (3) it simply behaves like a typical monopoly, revenue-maximizing as consumers and other players have zero option of other service supplier/s.

Brownouts and expensive electricity, these are ironic events in our modern world. We should have stable and cheap electricity, no brownouts even for one minute except after heavy storms and typhoons that knock down electrical posts and power lines.

Government should step back in some heavy regulations like forcing intermittent solar-wind into the grid which can discourage some developers who can build stable and cheaper power like coal and natgas plants. And giving high price guaranty for 20 years to renewables like wind-solar is wrong and punishing the consumers. Technology changes very fast, the costs of solar and wind equipment are falling fast, so why lock the high price for 20 years? This is wrong.

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See also:

BWorld 111, Electric cooperatives and unstable power supply, March 01, 2017

BWorld 112, Asia Liberty Forum 2017 in Mumbai, March 01, 2017 
BWorld 113, Peace talks with CPP-NDF for another 30 years? March 04, 2017

BWorld 108, Rising feed in tariff (FIT) due to more wind-solar power

* This is my article in BusinessWorld last January 24, 2017.

Cheaper electricity and stable energy supply are among the important components to have fast and sustainable economic growth.

On Jan. 17, the Philippine Electricity Market Corp. (PEMC) sent a press release saying that “effective settlement spot prices (ESSPs) in the wholesale electricity spot market (WESM) plunged to P2.28/kWH for the December 2016 billing period which is the lowest since January 2011. ESSPs refer to the average prices paid by wholesale customers for energy purchased from the spot market.” That is good news as various players using fossil fuel sources like coal, natural gas, and oil, are fiercely competing with each other in generating electricity. WESM was created by EPIRA of 2001.

On the same day, the Department of Energy (DoE) posted a “Request for comments on the draft Department Circular entitled ‘Declaring the launch of WESM in Mindanao’ (on Jan. 26, 2016) and providing for transition arrangements.” Another good news because finally, there will be a formal spot market for power producers and electric cooperatives that will guide a competitive and deregulated market, benefitting the consumers.

Last Dec. 23, 2016, the Energy Regulatory Commission (ERC) posted a request for public comments until Dec. 30 regarding the petition of three wind developers -- Trans-Asia Renewable Energy Corporation (TAREC), Alternergy Wind One Corporation (AWOC), and Petrowind Energy, Inc. (PWEI) -- that their feed in tariff (FiT) or guaranteed price for 20 years of P7.40/kWh be raised to P7.93/kWh, citing various cost escalations. That was bad news because expensive electricity is never a virtue. I sent a letter to ERC Commissioner Salazar arguing that they say No to the petition.

And last Dec. 6, 2016, the ERC published in a newspaper a National Transmission Corp. (TransCo) petition asking for a FiT allowance (FiT-All) of 22.91 centavos/kWh starting January 2017. That’s also bad news because FiT payments by consumers keep rising fast. From an introductory price of only 4 centavos/kWh in 2015, became 12.40 centavos/kWh in 2016, and almost 23 centavos/kWh this year.

Now two factors will raise the FiT-All for 2017 beyond 23 centavos. (1) ERC will not be able to act on this by January or not even February 2017, that means there will be price underrecoveries that must be added to the original requested price. And (2) with low WESM prices the past few months -- P3.19/kWh last September, P2.91/kWh last October, P2.54/kWh last November (data from Meralco), and the P2.28/kWh ESSP last December -- this means that FiT-All will go up. This allowance is the difference between FiT rates (highest prices are solar of P10+/kWh this year due to price escalation, followed by wind, then biomass, cheapest is run of river hydro) and average WESM prices. Or FiT-ALL = FiT rates -- WESM prices

Expensive electricity is the hallmark of renewable energy favoritism anywhere in the world.

Understand that in my previous columns, it was shown that the main beneficiaries of expensive electricity from renewables in the Philippines are not ordinary firms but huge companies: the Lopez group (EDC Burgos wind) and Ayala group (Northern Luzon UPC Caparispisan wind, and Northwind Bangui) who got P8.53/kWh FiT and combined revenues of about P4.3 billion in 2015 alone.

Let us check Germany’s renewables output. The chart below is for the last three months, Oct. 23, 2016 to Jan. 22, 2017.

Last Jan. 8, its total electricity consumption was 57.4 GW and here are the renewables output that day: solar 0.23 GW, onshore wind 1.53 GW, and offshore wind 0.39, or a total output of only 2.15 GW from these three renewables (see chart).

A total of only 2.1 GW was generated by solar-wind sources or only 3.7% of 57.4 GW power demand. If Germany relied solely on wind-solar, that would have meant massive, large-scale, and catastrophic blackouts. Germany of course was saved by the power plants that it wants to banish someday -- fossil fuel sources like coal and natural gas plus nuke power, within Germany and from energy imports from its European neighbors -- and which it kept running. So we did not hear or read such massive blackouts in Europe’s biggest economy.

Aside from expensive direct cost of wind and solar in Germany due to FiT, there is additional indirect cost of higher transmission cost. From a news report, “The Energiewende is running up against its limits” last Oct. 21, 2016 (http://energypost.eu/energiewende-running-limits/)

“German transmission system operator Tennet recently announced an 80% increase in its transmission fees because of the high construction costs of new power lines to accommodate renewable energy. A study of the Düsseldorf Institute for Competition Economics found that by 2025 costs of the Energiewende could exceed €25,000 for an average four-person household.”

The Joint Congressional Power Commission should consider introducing a law in the future that will abolish the RE Act of 2008 (RA 9513). Penalizing the energy consumers to further enrich the favored and crony firms in renewable energy is wrong.

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See also:

BWorld 104, Top 10 positive news in Asian trade, January 14, 2017
BWorld 106, Top 10 projections for Asian economies, January 23, 2017 

BWorld 107, Top 10 myths for oil tax hike, January 28, 2017

Agri Econ 25, On DA's plan for solar irrigation

This news report today caught my attention. It smells like a huge racket and waste. On average, it takes 1.5 to 2 hectares of land to install 1 MW (or 1,000 kW) solar capacity, of which only around 180 kW of actual electricity output because of low capacity factor, only 18%. 

So DA plans to convert some rice land into solar farms to generate very little solar power? Lousy. And P20 B of taxpayers money for solar? Very similar to $500 M ADB loan (nearly P20 B) for 100,000 e-tricycles nationwide, which new DOE Sec. Cusi later has junked and saved future taxpayers of another source of huge public debt.

Pumping water from below the ground is energy intensive, you normally need a big and powerful water pump to draw water from below the surface. And solar is very intermittent. Power output is fluctuating by seconds, or by minute at least. Just a band of clouds passing by can significantly bring down solar output. Without a battery or voltage regulator or similar instruments, power fluctuation from a solar is a perfect formula to damage and shorten the lifespan of an appliance or an engine.

A friend posted this photo of solar irrigation. It seems a no-brainer. Irrigation water level is almost at same level as the rice field, then very little energy would be needed to divert the water. The quicker, less costly option is to raise the dam's or water impounding's height to divert the water anywhere you want it to go.

I think about 90% of all irrigation system in the country use surface water via dams, small and big.

Farmers economize on land space. That is why the pathway between the plots is narrow, only single file of people can walk. Now the DA's plan is to allocate a big area for solar farm. Again, 1.5 to 2 hectares/1 MW of solar installed cap, and actual electricity output is 180 kW, for 2 hectares of solar farm. Wasteful use of land.

The best, most economical irrigation system is to use surface water, not underground water, via dams and water impounding projects. Have more dams, more water impounding, let the law of gravity work on the water, little or zero need for electricity or irrigation pump/engine or solar.

Every year, every single year, zero exception, the problem of many people in the country is too much water, too much flood, water is not a problem. The problem is that huge volume of water is not stored and impounded, they quickly go down as flash flood and wreak havoc downstream.

For P20B in a single year, that can create many small and medium-size dams nationwide.

When I posted this in my fb wall, a number of strangers came and commented on my wall. Some of them do not like public criticism of public pronouncements of public officials who intend to use public tax money. For them, people should just say "amen" and accept the tax-tax-tax policy of the government to fund even idiotic proposals.

If the news headline is "DA to request P20B for more dams and water impounding projects in 2018", I would clap it, applaud it. There are at least 3 advantages of this option: (1) reduce flash flooding during the rainy days and months, (2) release some water when the rains have stopped, (3) have small fishery area or swimming pool for the locals. No need to pump water from below the ground because surface water is too much, too many floods during the moonsoon and typhoon season.

Back in 2004, I saw some of Japan's mountains from a plane, I saw one river with about 7 dams on various levels; another river in another mountain which have about 5-6 dams, and so on. So during heavy rains, potential flash flood is minimized because the water is impounded on those 7 dams. When the rains have stopped, there is option to release the water to allow more space for the dams to take in excess water in another round of heavy rains. Or to hold it there for mini-hydro power, or irrigation, or for fishery and recreation. We only have few dams in the country.

Dams need not be huge and gigantic and contain several million cu.m. of water. They can be small, even micro size if regular water intake is small.

Perhaps some groups or companies just want to be solar pushers (no different from drug pushers) and enjoy the P20B of tax money for a single year for this project alone.

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See also:
Agri Econ 22, Why "peak food" hypothesis is wrong, December 25, 2015 

Agri Econ 23, Why forever Agrarian Reform should stop, March 09, 2016 

Agri Econ 24, Greenpeace voodoo science vs GMOs, July 07, 2016

Energy 86, Germany's RE on a wild ride

I am reposting two articles from NTZ below.

(1) ‘Manager Magazin’ Reports How Renewable Electricity Is TakingGermany On A Wild Ride, 28 December 2016

It’s the paradox of the German Energiewende (transition to green energy): power exchange market prices are lower than ever before, yet consumers are paying the highest prices ever – with no stop in the increases in sight. Moreover, the more green electricity that is fed into the grid, the more coal that gets burned…

Today German Manager Magazin here brings us up to date on the country’s “greening” power grid — taking a look at the control center of grid operating company Tennet. Manager Magazin calls it the heart of the German Energiewende. Here a team of engineers decide how much gets fed into the various grids and which windparks are allowed to feed in and which aren’t.

Today the task has become a challenging balancing act. According to Manager Magazin, facility manager Volker Weinreich says “we have to intervene more often than ever to keep the power grid stable. We are getting closer and closer to the limit.”

The reason for the grid instability: the growing amount of erratic renewable energy being fed in, foremost wind and sun. Manager Magazin writes that there are always four workers monitoring the frequency at the Tennet control center, just outside Hannover, making sure that it stays near 50 Hz. Too much instability would mean a the “worst imaginable disaster: grid collapse and blackout“.

Manager Magazin reports Germany now has a huge oversupply of power flooding into the grid and thus causing prices on the electricity exchanges to plummet to levels never seen before. Yet, renewable electricity producers are guaranteed, in most cases over a period of 20 years, exorbitant high prices for their energy. This means power companies have to purchase at a high price, yet can get only very little for it on the exchange markets.

The German business magazine then writes that once again consumers will be getting the serious shaft, as the feed-in subsidy consumers are forced to pay will climb another 0.53 cents-euro in 2017, bringing the total feed in tariff for power consumers to 6.88 cents-euro for every kilowatt hour they consume.

Bavaria faces Industrial power blackout

Another huge problem is that by 2022 Germany will be shutting down the remaining nuclear power plants, a source that much of Germany’s industrial south relies on. In the meantime, the necessary transmission lines to transport wind power from the North Sea to the south are not getting built due to protests and permitting bottlenecks. This puts Bavaria’s heavy industry at risk. manager writes that the transmission lines are not expected to be completed by 2025!

In Part 3 of its report, manager Magazin reports that operating a power grid has become more complex and costly, due to the renewable power, and that the Energiewende has turned into “ecological foolishness“.  Weinreich describes how on stormy days wind parks are forced to shut down to keep the grid from frying. And the more wind turbines that come online, the more often wind parks need to be shut down. This makes them even more inefficient...

Weinreich reports that the grid is so unstable that in 2015 it was necessary for Tennet to intervene some 1400 times. In the old conventional power days, it used to be only “a few times a year“.

In Part 4, Manager Magazin reports that all the intervention and shutdowns of runaway wind parks are “costing billions” for the consumers. Alone in 2017 Tennet says grid operating fees will rise 80%, translating to 30 euros more burden each year for each household. The money of course ends up flowing from poor consumers and into the pockets of wealthy solar and wind park operators and investors.

(2) Analysis: Adding More Solar, Wind Power IncreasesDependence On Fossil Fuels, ‘Doubles’ CO2 Emissions, 24 November 2016

A 2011 decision to phase out nuclear power by 2022  has meant that renewables like wind and solar power are expected to swiftly take the place of nuclear energy on the German power grid.  The portion of Germany’s power generation from wind and solar (renewables) has indeed risen dramatically in the last 10 years:

https://www.cleanenergywire.org/sites/default/files/styles/lightbox_image/public/images/article/2015/12/power-generation-source-2015-ageb-dez-2.png?itok=rQP5nEXC

And despite the steep, expensive rise in power generated by renewables since about 2000, Germany still obtained about 44% of its power from coal as of 2014, which is a higher share than in the United States (33% as of 2015)…

“As more solar and wind generators come online, … the demand will rise for more backup power from fossil fuel plants.”

The full article, entitled “Rise in renewable energy will require more use of fossil fuels”  also points out that wind turbines often produce a tiny fraction (1 percent?) of their claimed potential, meaning the gap must be filled by fossil fuels:

Wind provided just 33 megawatts of power statewide in the midafternoon, less than 1% of the potential from wind farms capable of producing 4,000 megawatts of electricity….

wind and solar energy must be backed up by other sources, typically gas-fired generators. As more solar and wind energy generators come online, fulfilling a legal mandate to produce one-third of California’s electricity by 2020, the demand will rise for more backup power from fossil fuel plants. 

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See also:
Energy 83, The PEMC-NGCP Electricity Summit 2016, low ESSPs last October and high FIT-All next year, November 22, 2016 
Energy 84, CCC's anti-coal, anti-fossil fuel lobbying, December 02, 2016 
Energy 85, Trump transition team questions for US DOE, December 17, 2016

Energy 82, Jarius Bondoc on FIT for renewables

I am reposting the article of Jarius Bondoc in his column in Philippine Star today. My comments and discussions after his paper.

Enough is enough. Developers of renewable energy (RE) must stop making us electricity users subsidize their insolvent solar and wind farms. They’re already wheedling P8 billion a year from us. That windfall, called feed-in tariff (FIT) in our monthly bill, enables their clean energy to compete with cheap but dirty coal. Yet precisely because the FIT is free money for them, they feel no compulsion to improve their output and bring down costs. And now they have the gall to ask for even higher subsidies starting next month.

RE inflicts a double whammy on our monthly electricity bill. The FIT subsidy of 12.4 centavos per kilowatt-hour per se swells the bill by two percent. Worse, RE further inflates the cost of generating electricity to almost 50 percent. That’s because the mix of power sources that go into the generation grid is such that 30 percent must come from the inefficient but favored RE plants.

Why is RE inefficient? That’s for the developers to explain. For decades they’ve been enjoying state subsidies worldwide to improve. Yet solar farms are only 23-percent capable of converting and storing sunlight to power. It even costs more electricity to produce one solar panel than the energy it will produce when laid out under the sun. That production process even uses acids and oxides that emit greenhouse gases and create waste, National Geographic reports. Statistics for wind are worse. The mills even directly kill flocks of birds and bats that fly into the rotors, as well as add to noise pollution. As it is now, RE worsens climate change.

To justify their subsidies, RE developers must point to a bogeyman: coal. Hiding their own bad effects on health and environment, they demonize coal as a killer fuel. They want the Philippines to switch to more RE and lessen coal from the present 39 percent of the generation mix. In truth, however, coal has become cleaner than it was three decades ago. Pollution is basically the result of wasteful processes. But coal plants have tremendously improved efficiencies, and this reduced waste and pollution. That is why Europe, where environment laws are strictest, has coal making up 25 percent of the generation mix.

Cases long have been made against subsidies to certain industries. Congress, controlled in the ‘60s-’70s by sugar barons, allocated billions of pesos a year to subsidize the plantations and central mills. Supposedly it was to enable the hacienderos to compete with foreigners, upgrade their facilities, and uplift their farm workers. The result is well documented. The sacada seasonal workers became poorer than ever, the plantation and mill technologies remained backward, while the hacienderos used the subsidies to buy Rolls Royces and Aston Martins.

That is what’s happening today. FIT subsidies of P8 billion a year are now blocked off for the next two to three decades for the new RE oligarchs. Some of them are relatives of the very politicos who imposed the FIT subsidies. Living off us electricity consumers, they will not improve their technologies or raise salaries of their workers or bring down their costs to below that of their hated coal. Why should they, when that would mean erasing the excuse for their FIT subsidies. Meantime, Filipinos remain poor because electricity cost – the highest in Asia – discourages employment-generating investments and ultimate economic development.  We electricity consumers should not let those RE oligarchs buy up all the luxury condos and executive jets at our expense.

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Many good points by Jarius. May I add the following:

1. Feed in tariff (FIT) Allowance for renewables, especially wind and solar, is not P8 B a year, much larger than that. It's about P11 B in 2015, P20 B this year, and P23 B in 2017.

Source: Transco petition for FIT-All for 2016, ERC CASE NO. 2015-216 RC, p. 10.

2. On solar inefficiency, its capacity factor can range from only 18% (in PH, WESM data) to 23-25% in developed countries like the US.

3. On solar panels "production process even uses acids and oxides that emit greenhouse gases and create waste", more than that, solar farms require zero trees within and near the vicinity. On average, it takes 2 hectares of land to produce 1 MW of installed capacity.

Consider this solar farm in Calatagan, Batangas: 63 MW capacity on 160 hectares of land. Zero tree allowed. The main hindrance to solar power generation is shade -- from clouds and tall trees nearby.

So while many environmentalists say, "Plant trees to save the planet", the solar environmentalists say "Zero tree to save the planet."

4. On "electricity cost – the highest in Asia", more of 2nd highest after Japan. For the ASEAN, here's one data.

Source: M. Ravago, R. Fabella, R. Alonzo, R. Danao, and D. Mapa, “FILIPINO 2040 ENERGY: POWER SECURITY AND COMPETITIVENESS”, EPDP paper, October 2016, p.2.

Nonetheless, it is a good paper. Congrats, Jarius.
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See also:
Energy 79, Germany Energiewende's €520 Billion Cost By 2025, October 17, 2016 
Energy 80, Power outages in 2010, October 21, 2016 
Energy 81, Trump's climate and energy policies, November 12, 2016

BWorld 76, Solar can never power the PH and Asia

* This is my 3rd article in the special issue, BusinessWorld Anniversary Report last July 25, 2016. Due to limited space, the table was not shown but the arguments and texts are retained.

The rapid pace of economic growth in East Asia over the past two to three decades coincided with, or was facilitated by, high energy capacity largely coming from coal power plants.

This is shown by the numbers below covering two decades. Electricity generation and solar power consumption are expressed in terawatt hours (TWh, 1 TW = 1 million MW), coal consumption is expressed in million tons oil equivalent (mtoe), and GDP size is valued at Purchasing Power Parity (PPP).

The table on the right shows the following:

1. The Philippines has a small electricity production, only 83 TWh in 2015 or just one-half (1/2) that of Vietnam and Thailand and only one-third (1/3) that of Indonesia. This is a reflection of its low installed power capacity relative to its neighbors.

2. China and Vietnam have significantly expanded their electricity production in the last two decades by nearly 500% and 1,000%, respectively. This coincided with, or significantly contributed to, their high GDP expansion of 769% and 426% respectively for the same period. China has a very high level of coal use, 1,920 mtoe in 2015 while Vietnam has a very high % expansion of coal use, 616% in just two decades.

3. Of the 12 Asian economies listed, only three — Japan, Thailand and Hong Kong — did not experience 200+% expansion or quadrupling of GDP size after two decades. They are also the three economies plus Pakistan, that did not experience high expansion in electricity generation and coal use.

4. The eight other Asian economies have benefited from higher electricity generation, higher coal use, and coincided with or facilitated higher GDP size expansion in just two decades.

5. Solar power consumption in Asia remains very small. Less than 0.05 TWh in 2015 for six of the 12 economies — Vietnam, Hong Kong, Malaysia, Philippines, Singapore and Thailand. Thus, statements that many Asian economies have (a) significantly embraced new renewables like solar, and (b) their use of coal power is declining as they shift towards more solar and wind power – are preposterous.

During the BusinessWorld Economic Forum last July 12, 2016, the subject of Philippines’ power and energy policies was mentioned several times by different speakers.

In his keynote speech, First Pacific Co. Ltd. managing director, said that “The recent heightened interest in renewables is understandable. But let me say this: for now, renewables cost more than conventional power, which means higher power prices. There’s a cost to protecting our environment — no such thing as free lunch.” He added that we are heading towards sufficient power capacity and majority of these power plants are coal.

DoF Secretary Carlos Dominguez III partly mentioned the importance of a realistic energy mix that will not burden the consumers with high electricity prices.

In the panel on Disruption, Solar Philippines’ President Leandro Leviste argued that “solar is now cheaper than coal.” He added that batteries to stabilize solar output that currently costs an additional P2.50 per kWh to solar power can significantly drop by one-half by 2020. Still, he argued, that solar + battery prices, solar can replace all gas, oil, and diesel in the Philippines.

In the panel on Infrastructure Capacity, Eric Francia, President & CEO of Ayala Corporation Energy Holdings, Inc. showed one slide where the Philippines’ power capacity 2014 was only 15.6 GW vs. Vietnam’s 40+ GW.

Finally, in the same panel on Capacity, Erramon Aboitiz, President & CEO of Aboitiz Equity Ventures, Inc. (AEVI) said that the Electric Power Industry Reform Act of 2001 (EPIRA, RA 9136) is working. It stopped the financial drain of government with heavy NPC monopoly losses and debts, attracted investments from the private sector and competition has driven down power rates. He rightfully argued that in deciding the energy mix, affordability to consumers and stability of power supply should be a priority for the government. The open access and retail competition provision give customers the power of choice.

There are several ways that expensive solar energy will burden the consumers in the coming years. One, the high feed in tariff (FiT) of P8.69/kWh in 2015, that becomes P9.69/kWh in 2016, that will become roughly P10.70 by 2017, and further rise in 2018 and beyond as indexation to inflation rate and other factors are inserted. Two, this ever-rising solar price is assured for 20 years for each FiT-eligible solar company. Three, even consumers in Mindanao who are not connected to the Visayas-Luzon grids and not part of WESM energy trading are forced to pay this expensive FiT. Four, the priority or mandatory dispatch into the grid even if cheaper sources like coal that can be sold at marginal price of only P1 to P1.50/kWh during off-peak demand hours and days are available. And five, the impending renewable portfolio standard (RPS) will force, coerce and arm-twist many or all the distribution utilities (DUs) in the country to buy a minimum percentage from expensive renewables, the additional cost will be passed on to the consumers.

The government should step out of energy rationing and cronyism. Consumers should be given the freedom to choose, to buy from cheaper energy and avoid expensive electricity. Current legislation via the RE law of 2008 (RA 9513) that institutionalizes energy cronyism should be amended or abolished. This is one policy measure that President Duterte and DoE Secretary Cusi can consider in the next six years.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow. 

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See also:
BWorld 66, Renewable portfolio standard and electricity prices, June 26, 2016
BWorld 70, Wind power firms corner billions of FIT money, July 09, 2016 
BWorld 73, Transco and the big beneficiaries of feed in tariff, July 27, 2016
BWorld 74, Pres. Duterte's anti-corruption programs and Transparency Intl., July 30, 2016 
BWorld 75, How to profit from urban congestion, July 30, 2016