Renewed high hopes for RE
The Philippines attracted thousands of megawatts of renewable energy projects shortly after the passage of the Renewable Energy Act of 2001 but the concerns have been raised on the future of RE without the new feed-in tariff rates.
Renewable energy currently accounts for 32.5 percent of the country’s installed capacity in 2016 amounting to 21,424 MW of which geothermal contributed 8.9 percent, hydro at 16.9 percent and biomass, wind and solar at 6.6 percent.
Energy Secretary Alfonso Cusi wants to increase the renewable energy capacity level to 15,000 megawatts by 2040 from around 5,000 MW in 2010.
“We are poised to increase our RE capacity from its 2010 level of 5,000 MW to 15,000 MW,” he said, adding that the DOE will promote technology innovation through research and development, demonstration and deployment.
Investments in new solar and wind projects, however, has slowed down recently due to the absence of clear government policies on the Renewable Portfolio Standards and the Green Energy Option in the absence of the feed-in tariff.
As a result, developers have raised questions on the way forward for RE development in the Philippines.
Danish wind turbine manufacturer Vestas said wind power development has come to a near halt in the Philippines due to the lack of an operational wind regulatory framework.
“Since the FiT2 (feed in tariff 2) came to an end, and until other policies come into effect, there is no operational wind regulatory framework. As a result, wind development has come to a near halt while conventional fossil fuel generation continues to grow significantly,” Clive Turton, Vestas Asia Pacific president said.
Vestas is servicing 183 megawatts of wind projects in the country, including the 150 MW Burgos wind power plant in Ilocos Norte, one of the largest wind energy project in South East Asia.
The feed-in tariff is a policy mechanism that promotes the rapid deployment of renewable energy by offering developers a guaranteed rate for the electricity they produce.
FITs have been the main drivers of renewable energy additional capacity in the Philippines to date. The FIT guaranteed a rate of P8.53 and P9.68 for every kWh produced by a qualified wind and solar project, respectively.
The FIT was later revised downwards for the second round to P7.40 per kWh for wind and P8.69 per kWh for solar to reflect technology improvements and cost reductions.
“A wind energy pipeline of several hundreds of megawatts stands to be unlocked with clear policy in place. Vestas is committed to help write the next chapter of wind energy deployment in The Philippines, and work with all government and private sector partners to that effect!” the Vestas official said.
Turton said the Philippines has some of the most abundant wind resources in Southeast Asia and a modern wind energy technology is able to generate more power, at a lower cost than ever before.
“With thermal power, and particularly coal projects moving forward while RE developments are at a near standstill, the country’s growing electricity needs will be fulfilled thanks to an increasing share of coal, at the expense of RE – at least in the near-term,” Vestas said.
“Indeed, wind and solar projects are virtually all halted. This is mainly due to the current RE policy vacuum, which follows the full allocation of the first two rounds of FiTs, and the freeze, of an expected third round of FiTs,” the company said.
Cusi has announced that he is not supportive of a third round of feed-in tariff for solar and wind projects as it will push up power rates.
The DOE has also not acted on the pleas of some solar developers who failed to get a feed-in tariff despite completing their solar projects in time for the March 15, 2016 government-imposed deadline.
These solar developers are now looking at shutting down their operations and some are selling out due to the very low rates at the Wholesale Electricity Spot Market, the country’s trading floor of electricity.
“With no other RE policy mechanism operationally in place, The Philippines is effectively putting to a halt an otherwise flourishing local industry,” Vestas said.
Vestas also expressed support to the renewable energy portfolio standards or RPS and any other policy tool, which aims to drive renewable energy development.
RPS is a policy instrument which aims to drive renewable energy development by mandating load-serving entities (such as distribution utilities), to procure a minimum percentage of electricity from renewable energy sources.
“However, RE Industry stakeholders express concern about the current RE policy gap (no new FIT, no defined new procurement mechanism, and RPS yet to be implemented), which is delaying new RE installations to the benefit of conventional fossil fuel generation – particularly coal,” Vestas said.
National Renewable Energy Board chairman Jay Layug said, however, expressed optimism and high hopes on renewable energy development in the country inspite of the ongoing challenges.
“By sheer geographic location, we Filipinos are all impelled by a shared desire to grow the country’s renewable energy sector. We do not have massive production and of conventional energy resources to fuel our economy. By default therefore and following all legislative mandate, we should continue to pursue the acceleration of renewable energy sources development in the Philippines,” Layug said.
“But we should think of RE not just as a means to increase our energy capacities. More importantly, we should think of RE to serve legitimate ends of development especially in our rural communities,” he said.
Layug said the National Renewable Energy Program as it stands represents the government’s unbending resolve to carve out a clear roadmap towards utilising emerging technologies in the renewable energy field.
“The NREP is our guidepost toward ensuring that while we strive to sustain industrial growth and create better lives for the Filipinos, we are likewise putting in place climate protection policies, securing energy supply for an endless time and sustaining economic development for decades to come. We all have to support renewable energy development and fulfil the spirit and intent of the RE law. In doing so, we also have to fulfil our obligation to provide renewable energy to our people in ways that would ensure fair and electricity pricing for all,” Layug said.
Senator Sherwin Gatchalian, however, urged the department to come out with a written policy on the feed-in tariff so as not to confuse investors.
“We really need to have a department order in writing for the industry,” Gatchalian said.