The Philippines needs to build about 18,000 megawatts of renewable energy capacity, or an average of 2,500 megawatts annually, to meet its target of 35 percent RE share in the power mix by 2030.
This is based on the internal computation of ACEN Corp., the power arm of the Ayala Group and one of the fastest-growing RE players in the country.
ACEN president and chief executive Eric Francia said the company based its computation on estimated 5-percent to 6-percent annual demand growth and higher utilization of solar and wind projects.
“We’re targeting 35-percent renewables share of output. We’re now at 22 percent. By our estimation, if we are to reach 35 percent by 2030, and 50 percent by 2040, on top of the 5 to 6 percent annual demand growth…our estimate is we would need to build around 18,000 MW or 18 GW of renewables between today and 2030,” Francia said.
ACEN is building 8,000 MW of RE capacity in the Philippines as part of its goal of reaching 20,000 MW in Southeast Asia by 2030. The company has about 4,400 MW of attributable capacity in the Philippines, Australia, Vietnam, Indonesia and India.
“The DOE thankfully is aligned with that and therefore bid out 11 gigawatts in the last GEAP [Green Energy Auction Program],” Francia said.
He said the results of the GEAP 2 provided a wake-up call to the industry where only about a third of the total capacity on offer was taken by investors.
“It was undersubscribed but to me, it’s really a wake-up call for the industry to step up to the plate and fill that gap. The good news is out of the 18 GW, around 5 GW has already been awarded through the first two rounds of the Green Energy Auction. So we only need to build 13 GW,” Francia said.
ACEN, like other RE developers, expects the next GEAP to include solar-storage hybrids, a technology that combines solar power and energy storage.
“Solar-storage hybrid should ideally be included in the next GEAP as this will help address grid constraints, as well as encourage distribution utilities to procure GEAP capacity because it enhances the reliability of GEAP as a source of supply,” Francia said.
Francia said building large-scale solar projects could be expensive at first because of the costs of infrastructure like roads and power lines.
“Large-scale solar is therefore more expensive in the short term but improves over time as it gets further scale. To reach our renewable energy goals, the country needs large scale projects, and the upfront costs need to be reflected in the tariff setting,” he said.
Francia said costs would also depend a lot on price of battery storage, which is still changing.
“At the end of the day, solar storage hybrid should be compared to the alternative which is gas. Solar storage, on the other hand, has mostly fixed cost and harnesses indigenous and clean energy. This ensures energy security and protects customers from price volatility,” he said.