In the wake of the Russia-Ukraine conflict that resulted in a huge spike in coal and fuel prices in the world market, the Marcos administration was able to carry out reforms in the energy sector aimed at ensuring the stability of the country’s power supply.
After over a year in office, President Ferdinand “Bongbong” Marcos Jr. implemented immediate, short- and medium-term measures to create a robust energy system in the country, Department of Energy (DOE) Secretary Raphael Lotilla said.
Renewable energy (RE) remains the focus of this administration as the country has begun a gradual transition from coal to clean power. The goal is to achieve the target of increasing 35 percent of RE in the power generation mix by 2030 and 50 percent by 2040.
“We have adopted a game-changing reform by opening the RE sector to full 100 percent foreign ownership. As a result, we have been receiving a number of interests from foreign entities to invest in our RE sector, especially in the offshore wind (OSW) development,” said Lotilla.
Executive Order (EO) No. 21 directs the DOE to publish the policy and administrative framework for the efficient and optimal development of OSW resources in the country within 60 days from its issuance on April 19, 2023.
It seeks to harmonize and streamline permitting processes and leasing fees under a whole-of-government approach and fully implement the Energy Virtual One-Stop Shop (EVOSS) System to cover all relevant government agencies and bureaus.
“In the coming weeks, the DOE will issue the policy and administrative framework for the optimal development of OSW resources, including speeding up the approvals of necessary permits,” said Lotilla.
THROUGH the Board of Investments (BOI), the government also recently announced that RE projects had taken center stage, with approximately 80 percent of investment approved this year.
Recently, BlueFloat Energy announced its market entry in the Philippines through the acquisition of Wind Energy Service Contracts (WESCs) in four sites to be located in Bataan, Batangas, Cagayan and Ilocos, and Southern Mindoro.
BlueFloat has a total portfolio of offshore wind projects worth 32.4 gigawatts (GW) of planned capacity in ten countries across the globe, including Spain, France, Italy, Scotland, Australia, New Zealand, Taiwan, Colombia, Portugal, and the Philippines. The proposed Philippine projects collectively represent the largest single county planned initiative of BlueFloat at 7.6 GW.
ACEN Corp., the power arm of conglomerate Ayala Corp., acknowledged the administration’s strong policies on renewables.
“This is a welcome development,” said ACEN President Eric Francia.
He cited the 100 percent ownership for renewables and the significant 11GW capacity target for the green energy auction (GEA2) should spur investments in renewables.
However, the market responded to GEA2 targets with only around 30 percent subscription rate. The low investor turnout highlights the need to address critical issues of pricing and transmission.
“In order to encourage much needed renewables investments, price levels will hopefully be improved and reflect market realities. Generators should also be incentivized to build transmission connections and help augment the grid capacity and connectivity,” commented Francia.
Pricing adjustment mechanism
THE Energy Regulatory Commission (ERC), which set the rates for the GEA, has committed to adjust the pricing mechanism.
“All these concerns were taken into consideration. Those concerns need to be balanced because it involves a 20-year contract and consumers will be paying for these rates.
The number one lesson is we need to update the pricing dashboard. It’s been the same dashboard used for FIT (feed-in-tariff) but considering differences in technology and if we will have differentiated price per size then those should be reflected by the pricing dashboard.
We are working on this, definitely ready for next year. We will have a new pricing dashboard for that. Second, there would be closer coordination with the DOE on differentiation,” said ERC Chairperson Monalisa Dimalanta.
The ERC chair also cited its strong push to enforce existing rules as a contribution to the ongoing reform process in the power sector. “I think, it’s less of reforms but really enforcement of existing rules and procedures. One highlight after so many years is a reset of transmission rates,” Dimalanta cited.
Aboitiz Power Corp. also agreed that the GEA program is a considerable push to tap and maximize indigenous renewable energy sources within Philippine shores.
“In the past year, there were notable developments in the energy sector,” said Aboitiz Power President Emmanuel Rubio.
ASIDE from GEA, Rubio cited this administration’s strong interest to assess new technologies such as small modular reactors and liquefied natural gas (LNG); progress en route to full electrification by 2028 via the Sitio Electrification Program, in which business units of Aboitiz Power have proudly contributed; the launching of the ERC’s nationwide PSA (power supply agreement) caravan that assists electric cooperatives in addressing the high cost of electricity; and the resolution of power supply challenges at the onset of the Marcos administration, in which the 1,336MW coal-fired GNPD Dinginin facility greatly helped in shouldering the demands of the baseload.
“Aboitiz Power is pleased with these developments as they can accelerate the delivery of energy projects amidst fast-growing demand, plus bring the country closer to an energy system that is more stable, accessible, cost-effective and sustainable,” added Rubio.
However, the main challenge of renewables is intermittence, or the unreliable nature of renewable sources such as wind, solar, and hydropower.
Battery Energy Storage System (BESS) will enable renewable capacity to be stored, ready to be deployed even when solar or wind farms or hydropower plants are down.
And the BESS facilities of SMC Global Power Holdings, Corp. (SMCGP) will be the key to ensuring reliable power supply nationwide, even in far-off areas.
SMCGP is targeting to complete the installation of 1000MW of BESS within the next few months.
THE power arm of conglomerate SMC has already completed putting up 500MW of installed power storage capacity from its planned 32 BESS facilities. This is the very first and largest battery network in the Philippines by far.
While much still needs to be done, the DOE has committed to work on long-term solutions in accordance with the clear goals set by the President to develop indigenous sources of energy, particularly renewables. “We committed to pursue our mission and respond to emerging energy challenges and issues to ensure sustainable, stable, secure, accessible, and reasonably priced energy,” added Lotilla.
The country’s regulators and policymakers have also signaled their intentions of pushing for several welcome reforms in the power sector. These include improvement in the implementation of the Energy Virtual One-Stop Shop (EVOSS); crafting of policies on nuclear energy and off-shore wind power generation; reassessment of the secondary price cap; and evaluation and support of delayed transmission projects.
“These can serve to encourage more energy investments, hence, more competition, and complement the inevitable growth of more generation technologies. We support and participate in the government’s goal of developing a diverse and balanced power generation mix that will help sustain our nation’s growth,” added Rubio.