TWO years after Manila banned the construction of new coal-run power plants, the government has doubled its efforts to build more sustainable power systems and to ease the entry of new, cleaner and indigenous technological innovations.
Renewable energy (RE) policies and green energy auctions have kept the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) busy to raise the share of RE in the power generation mix to 35 percent by 2030 and 50 percent by 2040.
“The time for RE in the Philippines is now. The price of RE is competitive and we have enabling policies and government processes that facilitate RE development,” said DOE Undersecretary Rowena Guevara.
Solar photovoltaic, for example, was more than 80 percent cheaper in 2022 than in 2011, resulting in an increase in solar installations nationwide.
“It was bound to happen. After 12 years since the launch of the National Renewable Energy Program (NREP), the cost of RE technologies has drastically gone down,” said former DOE Undersecretary Jay Layug, who also served as the chairman of the National Renewable Energy Board (NREB).
With the assumption into office of President Ferdinand Marcos Jr. and the appointment of DOE Secretary Raphael Lotilla and ERC Commissioner Monalisa Dimalanta, the power industry has seen a dramatic shift in government policies towards RE.
100% foreign ownership
Armed with a legal opinion from the Department of Justice, Lotilla adopted a game-changing reform by opening the RE sector to full 100-percent foreign ownership. Another bold move was the issuance of an executive order which establishes a policy solely for a particular energy resource—offshore wind (OSW).
“We have not seen that in the past and that’s a good sign, meaning the government wants offshore wind very, very soon,” added Layug.
The country’s potential OSW resources was estimated at 178 gigawatts (GW). To date, the DOE has awarded 79 OSW contracts with total potential capacity of 61.93 GW, enough to supply the country’s future electricity demand.
Other policies that led to the faster entry of RE investments include the Green Energy Auction (GEA), Renewable Portfolio Standards (RPS), and preferential dispatch of RE in the spot market.
More RE projects will be constructed in a few years following two rounds of GEA that led to about 5,300MW of RE capacities committed for delivery between 2023 and 2026. GEA will be done yearly and will include emerging technologies such as OSW.
The DOE will also work on the transmission lines that are necessary in order to bring RE to the markets or where they are needed, as well as the energy storage systems (ESS) to complement the variable RE sources.
Apart from policy enhancements, incentives for RE projects are laid down under the 2022 Philippine Strategic Investment Priority Plan. There are also income-tax holidays, duty-free importation, and tax exemption of carbon credits provided under the Renewable Energy Act.
Through the Board of Investments, the government announced that RE projects have taken center stage, accounting for approximately 80 percent of investments approved for 2023.
These policies and incentives played a big role in charting the RE goals of power firms.
For instance, Alternergy Holdings Corp. has set a goal of up to 1,370 megawatts (MW) of additional wind, solar, run-of-river hydro, and ESS in its portfolio in the next five years.
Alternergy chairman and former energy secretary Vince Pérez recalled the groundwork for renewables started years ago with the crafting of the Renewable Energy Framework in 2003. At that time, prices of renewables were really “off the mark,” RE policies and regulatory mechanisms were absent, and there were no investors ready to venture into clean energy. Back then, he said, the vision was articulated.
“Since then, the RE industry has evolved. Renewable prices are very competitive; policies are in place and investments run in billions. There is great competition, confirming RE’s time has come, and this could only bode well for the electricity consumers and the environment as a whole,” he said.
ACEN Corp. intends to be the largest listed renewables platform in Southeast Asia, with a goal of reaching 20 GW of renewables capacity by 2030.
ACEN President Eric Francia said renewables have become more competitive amid the scaling and improvement of technology and the structural increase in fossil fuel prices as an offshoot of the global energy crisis.
He agreed that government policies help accelerate the scaling of renewables. As of last year, the RE share in the power generation mix stood at 22 percent.
“The last few decades were dominated by coal plants to help power the country’s growth. The next few decades will mark the renewables era, where RE will help power economic growth, drive electrification, and transition from fossil fuel to clean energy,” added Francia.
With government support and the development of technologies, Aboitiz Power Corp. said the industry will strive to meet the country’s goal. “The Philippines is fortunate to have an abundance of solar, wind, hydro and geothermal potential; making renewable energy an attractive option and an industry poised for growth,” said company president Emmanuel Rubio.
The message is clear. Government wants more renewables and the green shift is in full gear.
While everyone is eager to transition to 100-percent RE sources, some observed that the technology and infrastructure for renewables are still evolving in the country and are not yet at a scale where they can meet the energy demands consistently.
“Its inherent intermittencies hinder the country from scaling its use to much more significant proportions of the national energy mix.… AboitizPower believes that a diversified mix composed of all forms of energy—be it thermal or renewable—are needed in order to meet the supply-demand gap, make prices more competitive, and make the power supply mix more sustainable both now and in the years to come,” added Rubio.
The resiliency of infrastructure to natural calamities, and the country’s exposure to geopolitical conflicts also need to be addressed.