BY developing and tapping the potentials of solar rooftop energy, the Philippines can lower the cost of power and improve national energy security, the Institute for Energy Economics and Financial Analytics (IEEFA) said.
A published report of the IEEFA entitled “Unlocking Rooftop Solar in the Philippines” noted that the Philippines has one of the highest-priced electricity rates among the 10-member Asean, but concluded that wise policy choices going forward can drive the uptake of solar power generation through programs that ensure power supply at lower prices.
The report sees rooftop solar power generation lowering electricity costs to P2.50 per kilowatt-hour (kWh) (excluding financing expenses) and triggering $2.8 billion or P1.5 trillion in new investment by 2030.
“The government is in a position to change the longstanding status quo, which disproportionally puts fuel-price and foreign-exchange risk on consumers, while utilities and power generators remain insulated from market changes,” Sara Jane Ahmed, an IEEFA energy finance analyst and author of the report said in a news statement posted on its website.
“As a result, power suppliers have no incentive to transition away from coal and diesel or to hedge against price-change and currency risks,” she added.
The report described how the Philippines continues to lag in global trends toward power-sector modernization, which are gaining momentum around rapidly-declining costs and technological advances in renewable energy (RE), energy efficiency, and distributed storage.
The report noted further that the Philippine Board of Investments has already approved eight solar projects through the Solar Philippines Commercial Rooftop Projects Inc. worth P85.96 billion, or $1.65 billion. A conservative estimate of 8 gigawatts (GW) of solar installations by 2030 has 35 percent of that coming from rooftop solar, an investment value of $ 2.8 billion.
“These trends present an enormous opportunity to replace imported-coal and imported-diesel models with indigenous alternatives,” Ahmed said. “Solar, wind, run-of-river hydro, geothermal, biogas and storage are competitive, viable domestic options that can be combined to create a cheaper, more diverse and secure energy system.”
Every kilowatt of installed rooftop solar means a reduction in the need for imported coal and diesel power, Ahmed added. This phenomenon alone could save the Philippines up to $2.2 billion annually in its current account deficits as well as $200 million per year in diesel subsidies.
To cite just two examples of recent RE deflation in the Philippines, the Manila Electric Company (Meralco) in March of this year received the country’s lowest wind electricity generation bid ever on a new 150-megawatt (MW) wind turbine project in the Rizal province, for P3.50 per kilowatt-hour (kWh). Solar is competing similarly, with Meralco having contracted for a P 2.99-per kWh, 50-MW capacity plant.
Coal-fired power generation, by comparison, costs upwards at P 3.8 to P5.5 per kWh, and the true cost of imported diesel-fired power ranges from P15 to P28 per kWh.
Rooftop solar costs P2.50 per kWh (without financing expenses) to 5.3 per kWh (with financing expenses), utility-scale solar power can cost as little as P2.99 per kWh, wind is P3.5 per kWh, geothermal is P3.5-4.5 per kWh, and run-of-river hydro costs P3 to P6.2 per kWh, it says.
3 major hurdles
The report identified three major hurdles, namely regulatory, administrative and financial.
Regulatory hurdle includes what it described as unwieldy requirements around “distribution impact studies” and distribution asset studies alongside assorted other solar-permit rules as well as resistance to net billing that allows end-users to generate electricity from solar rooftop for their own use, and either sell any excess energy to the distribution utility at current wholesale prices or be fairly credited.
The administrative hurdle pertains to the inadequate transparency around customer “load profiles” which show consumption patterns that are crucial to understanding usage and institutional resistance to net-metering.
Lastly, the financial hurdle is all about restricting affordability of and accessibility to rooftop solar.
“Development of all more affordable options is still hampered by costly and unnecessary red tape,” Ahmed said. “The Philippine government can help break the logjam by adopting policies that inject more diversity—and more energy security—into the electricity system while helping lower consumer costs by enabling the uptake of cheaper, cleaner options such as rooftop solar,” the report said.
“More important, fossil fuel subsidies and electricity-sector losses are a growing drag on economic growth in the Philippines. Current plans for fossil fuel generation would instill a long-term dependence on fossil fuel imports, which would lead to more national debt, devaluation of the currency and an increase in inflation, all of which would destabilize the Philippine economy.”
Image credits: Bloomberg
