Here comes the sun…and the wind, and water

With a favorable policy framework in place, RE finds a window for widening market share, as fossil fuels reel from a demand drop at the height of pandemic lockdowns, but the verdict is still out on whether they can permanently replace the latter.

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FOSSIL fuels, oil in particular, were hit hard as land, air and sea travel ground to a screeching halt during the first few months of the pandemic.

Coal-fired power plants, which continue to account for more than 50 percent of the country’s power generation mix, suffered almost as much due to a plunge in demand for power. Renewable energy (RE), on the other hand, has proven to be more resilient in face of an unprecedented public health crisis.

These recent developments may have prompted the International Energy Agency (IEA) to ask in its latest report: Can these be signs that RE would permanently take the place of fossil fuel?

The Department of Energy (DOE) said lockdown measures have evidently resulted in a steep decline in energy demand by over 30 percent. Moreover, 10 percent of petroleum retail stores out of the 9,492 total outlets were either forced to cease operations or permanently close shop due to a diminishing demand for petroleum products.

DOE directors assigned in the power and oil industries, however, maintain the demand slump is only temporary and sales is expected to rebound as government eases quarantine measures.

“Definitely temporary, which is already starting to recover. Once the commercial and industrial activities fully resume, the demand will surely be there,” said Mario Marasigan of the DOE’s Electric Power Industry Management Bureau.

DOE Director for Oil Management Bureau (OIMB) Rino Abad said the supply and demand for petroleum products decreased around March to May before it started to increase around June up to the present. “It always directly behaves with the quarantine implementation. The stricter the quarantine, the lower demand for petrol products,” Abad observed.

Senate Energy Committee Head Sherwin Gatchalian said it is too early to tell if we are seeing the end of fossil fuels, which dominate the country’s energy mix.

According to the DOE’s 2019 Primary Mix data, the share of oil in the country’s energy mix stood at 32 percent; coal, 28.8 percent; natural gas, 6 percent; hydro, 4 percent; geothermal, 15.2 percent; and 14.1 percent for other RE.

To meet its energy needs, the Philippines harnesses the types of energy available to it. The share of oil, as always, is higher due to the country’s transportation needs and requirements.

“It might be too early to say if fossil fuels, like oil, is dead because there are things that can’t be replaced right away. Airplanes, for instance, utilize jet fuel. Most vehicles on the road are using gasoline and diesel. I think, once we have the vaccine, travel demand will pick up again,” said Gatchalian.

During the pandemic, the DOE observed that RE facilities have shown resiliency as these attained sustained operation, contributing the needed supply albeit the demand for electricity went down due to stoppage of most of the business sectors. This is brought about by the mobility restrictions on imported fossil fuels, while indigenous RE resources are readily available locally.

Due to some isolated power outages from the grid or distribution network, people, particularly those with funds to spare, are slowly recognizing the advantage of having their own RE installations, such as solar panels and outdoor solar lights.

“While the share of RE generation in the power mix remains at about 21 percent, this pandemic provided an opportunity for the RE for further development. However, we cannot conclude nor confirm that RE is gaining momentum during pandemic. What is clear though is that the pandemic has shown areas of growth for wider RE applications—utility-scale, consumer choice and through electrifications of communities dependent on fossil fuel alone,” said Mylene Capongcol, DOE director for Renewable Energy Management Bureau (REMB).

In far-flung areas, Capongcol said, RE can supply both power applications like electrification through micro-hydro projects and solar PV, and non-power applications like refrigeration for vaccines, pumping potable water and ensuring that there will be lighting in birthing stations especially in off-grid, or island communities.

In terms of transportation, quarantine restrictions on movement and transport operations have resulted in a marked boom in bicycle use and electric personal mobility solutions. These include e-scooters, e-bikes, and e-mopeds, which are powered by batteries rather than petroleum.

With the reopening of economies under the new normal, the agency added that mainstreaming of these e-transport alternatives would provide a solution to limited parking space availability and traffic concerns of the pre-pandemic time.

“Consumers, like me, these days have more time to explore and try various things that are available for online purchase. Producers are getting more creative while consumers are getting more interested and would want to try out new things. The quarantine indeed provided RE opportunities,” DOE Undersecretary Felix William Fuentebella admitted.

Silver lining

While Covid-19 caused a significant decline in power demand, dropping by up to 40 percent at the height of the community quarantine in April, AC Energy Inc. saw a silver lining in this crisis.

Company President Eric Francia noted the continuous cost decline and efficiency gains in renewable technology. “Renewable plants can also be constructed in 12 to 18 months and could help address possible supply gaps,” he said.

Adding more variable RE must be complemented by flexible peaking capacity—hydro, gas, diesel—or battery storage. “Low oil and gas price helps manage the blended cost of renewables/hybrid competitive. This provides a good transition period for battery storage to achieve lower cost and greater efficiencies and provide the ideal complement to renewable energy. This would pave the way for a low-carbon future,” added Francia.

SMC Global Power said battery storage technology encourages the use of more RE in the long term, as storing power can address one of the main hindrances to wider adoption of renewable power, apart from high cost—and that is limited power source, such as sunlight or wind.

“Our approach has always been to deliberately utilize technology and our resources, to sustainably transition to better fuels. And in the midst of the pandemic, we continue to grow our generation portfolio to help our economy recover and provide much-needed jobs and livelihood. We actively study and keep up-to-date with environment-friendly technologies that can be effective in Philippine settings,” said SMC President Ramon Ang.

SMC Global Power maintains a mix of renewables and non-RE facilities. It is set to increase its environment-friendly power capacity with brand new LNG (liquefied natural gas) plants already being planned.  Apart from this, it has also invested significantly in battery storage technology.

With or without the pandemic, Aboitiz Power Corp. continues to maintain a balanced portfolio.

“Our push for ‘cleanergy’ has already been in place even before the pandemic. And as far as RE is concerned, we remain committed to our strategy, that significant capacity investments in the next 10 years will be cleanergy, closing the gap between thermal and cleanergy in our portfolio by 2029,” said President Emmanuel Rubio.

Indeed, renewables are benefitting from low oil prices and a slowdown in oil consumption, which may have led a consumer group to urge the government and the private sector to share these benefits to the consumers.

“The Philippine government has generous terms and incentives for RE projects. The windfall gains of developers using non-fossil fuels should be shared with consumers. The boon for RE should remove the need to escalate, or increase tariff incentives to be paid to developers,” said Laban Konsyumer Inc. President Victor Dimagiba.

Fossil fuel will rebound and come back soon unless renewables are much cheaper for the consumers, LKI said.

Given that major policies and programs have been promulgated to boost RE’s shares in the power generation mix, the DOE is now gearing towards enforcement and implementation of the mandatory policies like the Renewable Portfolio Standards (RPS) and the promotions for the voluntary RE Policy Mechanisms like Green Energy Option Program and the Net Metering Enhancement.

“RE is a game changer not because of the pandemic. It is because of the various RE policies in place. To support these, we have the Green Energy Auction Program that will facilitate the compliance of all distribution utilities and the generators,” Fuentebella stressed.

DOE officials stressed that smarter policies matter in order for the country to attain stable and secure power sources, be these renewables or fossil fuels.

Image credits: Bernard Testa

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