SUSTAINABLE energy management is a key issue among industry stakeholders. They all strive to strike a balance between profitability and social responsibility regardless of whether one is an advocate of renewable energy (RE) or clean-coal technology, or perhaps both fossil fuel and RE.
Take, for instance, the Manila Electric Co. (Meralco), which has been in the power business for over a century. Aware of the fact that markets and customers are constantly changing, the country’s largest power-distribution firm has started transforming itself from a distribution utility to become an “end-to-end energy solutions partner.”
“Our customer base is evolving with the growing population of millennials, which requires us to look beyond the hard assets and anticipate their emerging needs, changing consumption behavior and habits, and product and service expectations,” Meralco Chairman Manuel V. Pangilinan said.
The changing needs of a new generation of customers prompted the utility firm to disrupt its traditional business to give way to new technologies.
In the distribution business, Meralco now offers smart meters, smart grids, advanced metering infrastructure and prepaid electricity service, among others. These are all part of Meralco’s “Smart Grid Journey to 2027.”
Meralco’s power-generation arm is involved in a couple of coal-fired power projects, including a so-called first super-critical and ultra-super critical coal plants. These are expected to inject additional capacity to the Luzon grid.
Alongside plans to put up clean coal plants in the country, Meralco has also contracted and participated in the RE space. It has also formed its RE unit called Spectrum.
Another unit, e-Sakay, will be involved soon in operating transport service networks of charging stations, batteries and vehicles utilizing electric energy.
Jeffrey Tarayao, One Meralco Foundation president, said an integral component of Meralco’s mission, which is to be a responsible energy-solutions provider, is to ensure that sustainability principles are integrated in its business strategies and operations.
“These are best lived out when communities in our franchise areas are resilient, productive and are contributing to the economic, social and environmental goals of the country,” he said. “Leading innovations in our industry such as renewables and environment-friendly power generation, e-vehicles and a digitally enabled power distribution business plays a role in our continued commitment to support the nation’s continued progress.”
More than just a buzzword–SMC
San Miguel Corp. (SMC) President Ramon S. Ang said sustainability is integrated into the conglomerate’s business practices.
“Sustainability is more than a just a buzzword for us. We see it as an integral part of how we do business in SMC. In recent years, we have been increasingly integrating meaningful sustainability practices in all our businesses,” Ang said in an e-mail reply.
He said the company’s water sustainability project—where it targets to cut water use by 50 percent across all of SMC’s businesses—is driving accountability into its corporate culture and instilling a culture of conservation within the organization.
For its power unit, Ang said San Miguel Global Power Holdings Corp. maintains a diverse portfolio consisting of facilities that utilize new, clean-coal technology, RE and natural gas. This mix, Ang said, allows the company to balance the capacity needs of power users with the need to provide the lowest power rates, and to utilize renewables.
SMC Global Power is determined to increase its RE capacity in the next 10 years.
“In particular, we are looking at tidal energy, wind power and hydro,” Ang said.
Its new power plants also utilize circulating fluidized bed (CFB) combustion technology, among the most advanced pollution-mitigating technologies in the power industry.
Essentially, with CFB technology, emission levels from its power facilities are drastically cut. Ang cited the company’s Limay, Bataan, and Malita, Davao, plants that yield emissions way below government, and even World Bank, standards.
“These, along with our many other initiatives across the San Miguel Group, demonstrate our commitment to sustainability,” Ang said.
Wanted: balanced mix
Another leader in the power industry is Aboitiz Power Corp., which noted the Philippines is a leader in the environmental sustainability category.
“However, we rank lower in energy security or availability of enough power supply or energy equity, which affects the cost of power. This is what we seek to address,” said company chief operating officer Emmanuel Rubio in a recent forum.
To address this, Rubio said there should be a balanced-mix portfolio of generation assets. For Aboitiz Power, he said, a balanced mix allows it to maximize the use and dispatch of RE sources while taking advantage of the reliability and cost-efficiency of its thermal facilities.
“More than compliance, we make an effort to align with globally recognized standards and best practices, living our values and respecting the rights of our communities,” Rubio said in an interview.
AC ramps up RE portfolio
AC Energy Inc., the power unit of conglomerate Ayala Corp., has also set its sights on ramping up its RE portfolio as a way to attain sustainability in the power business.
“We have big ambitions to scale up renewables to 5 gigawatts by 2025. We hope to expand in the Philippines, especially when storage batteries become feasible. We will also expand regionally, especially where renewables are potentially strong,” said AC Energy President Eric Francia in a text message.
Sustainable business transformation in developing countries such as the Philippines is often approached with pessimism, mostly due to the challenges that it demands, not the least of which is cost. However, there are pioneering power firms engaged in RE proving that sustainability is an attainable goal, as well as a rewarding one.
Carbon-negative EDC
Lopez-led Energy Development Corp. (EDC), the country’s largest producer of geothermal energy, said in its 2017 Sustainability Report that it has effectively attained the status of a carbon-negative enterprise, the first in the Philippines to do so.
Its carbon footprint of a little over 790,000 carbon dioxide equivalent (CO2e) is only around 22 percent of the carbon absorption of all the trees it has planted in its environmental drive in the past four decades—in effect, even making it a carbon-negative enterprise, or what industry experts also call “climate positive.”
EDC is also the lone Filipino company included on the Carbon Clean 200 list of the world’s 200 biggest publicly listed companies.
The company’s early adoption of disclosing its impacts based on standards of the Global Reporting Initiative (GRI) provided the initial drive of becoming a carbon-neutral organization, said Dr. Stan Padojinog, president of the University of Asia and the Pacific (UA&P).
UA&P is the long-standing sustainability partner of EDC, and Padojinog is a member of the External Review Committee (ERC) tasked to evaluate the company’s sustainability report.
The ERC report determined the external and internal drivers for EDC’s carbon neutrality, which can also be useful in understanding how sustainability is evolving in the Philippine business scene. First is increasing demand from capital providers to account for the triple-bottom line performance of “profit, people, planet.”
“Many foreign investors have begun to demand accountability and transparency on the impacts of their fund beneficiaries not only on returns to their capital, but also on the environment and society,” wrote Padojinog in his individual review.
In addition to geothermal energy, EDC has also made investments in solar and wind.
Last but not least is the EDC management’s strong commitment to integrate sustainability principles in the heart of its operations and decision-making.
EDC Chairman and Chief Executive Federico Lopez announced an unequivocal directive to pursue alternative clean-energy sources and to refuse fossil fuels such as coal. Lopez is also the chairman of First Gen Corp.
“We are the only large energy company in the Philippines to declare unconditionally that we would not do coal-fired power,” Lopez said during the recent National Sustainability Summit for Millennials and Gen Zs. Natural gas is First Gen’s largest platform.
Coal, given its abundance in the world, is traditionally among the cheapest fuels for power generation. Lopez noted this has changed in the last year or two.
“We’ve always been staunch believers in a decarbonizing pathway, but I’ll be the first to admit we believe the world still had more time to get its act in order.
“However, that view changed immensely in November 2013, when our largest geothermal plant in Leyte was directly hit by one of the most powerful typhoons on record to ever hit the planet,” he said.
Headwinds
As an energy company in the Philippines, the Lopez group faces quite a number of challenges.
Lopez cited intense price competition and the short-term perspective of a government ambivalent about climate-change issues. Adding to these pressures is the fact that the majority of banks, local and foreign, continue to finance coal production and coal-fired power generation.
He said the recent coal tax was a step in the right direction, but will only amount to a measly one centavo to three centavos per kwh in tariffs to coal-fired power plants. Recent efforts of TRAIN 2 or the Trabaho Bill even threaten to remove fiscal incentives from RE, placing an inordinate tax burden that’s close to 10 times that imposed on coal-fired power.
“Coal-fired power plants, being the easiest to develop and its fuel supply the simplest to procure, every competitor and all the big Philippine conglomerates are seeking to build more coal-fired power plants in a blinding race to fatten their bottom lines,” Lopez said. “Sometimes it’s so easy to be disheartened by so much greenwashing, hypocrisy and lack of urgency around us.”
He thus urged his young audience to make their voices heard, vote as consumers, as potential employees and future employers.
“The one major reason I’m still optimistic about the future is that I see the youth, particularly Gen Z and the millennial generation, coming of age. In survey after survey done on your generation, it clearly stands out how a majority of you consider the environment and sustainability as among your top concerns, and rightly so.
“My generation and those before us have failed you. But I know many of you are keenly aware that actions taken or not taken today will create the world you and your children will have to live in.
“So, in a hopeful sense, your direct engagement in energy and sustainability issues is the only assurance we have that the country and the world does not blindly lock itself into the old paradigm that got us into this sorry state,” Lopez said. “We need to be off carbon in 30 years or less if we are to make it as a livable planet.”
Image credits: Nonie Reyes, Alysa Salen, EDC