Coal-fired power plants will become underutilized because of their “exorbitant costs,” as renewable energy becomes more competitive, a top executive said over the weekend.
First Gen Corp. chairman Federico Lopez said in a recent forum in Cebu City the Philippines should not build more coal plants because they “will be underutilized, whose exorbitant costs will be saddled on to captive utility consumers.”
He said renewable energy had become competitive and would change the energy landscape of the Philippines in the future.
“Economically priced renewable energy is here, will only get cheaper and in due time will permeate our lives whether we like it or not. There is no stopping that,” Lopez said.
“Price competition is intense and retail competition and open access is underway. Low price is still the main driver of electricity consumers. This has driven down profit margins of all power producers. But we’re driving down costs in our geothermal business, both the old fashioned way and through the use of new technology,” he said.
First Gen controls Energy Development Corp., the country’s biggest geothermal power firm. First Gen has a coal-free power generation portfolio.
“Our portfolio that blends flexible natural gas fired plants and geothermal [which is the only competitive 24/7 RE technology today] is a better combination for serving this type of demand called mid-merit. Having said that, in fact natural gas and geothermal, with just 1/3 and 1/10 the carbon emissions respectively of even the most advanced coal plants, are capable of beating the latter’s prices at baseload today,” he said.
He said there was also a need to change the ambivalence of the government about climate change issues.
“Despite our countrymen’s vulnerability to the effects of global warming, only token importance is given to such concerns in national public policy,” he said.
He lauded the government for passing the coal tax, saying it was a step in the right direction but would only amount to P0.01 to P0.03 per kilowatt-hour in tariffs to coal-fired power plants, significantly lower than other countries.
“In other countries like India, the coal tax is P0.06 per kWh, in South Korea it reaches P0.25 per kWh.
[With] coal-fired power plants, being the easiest to develop and its fuel supply the simplest to procure, every competitor and new entrant is seeking to build more coal-fired power plants in a vicious race to the bottom,” he said.
He said majority of banks continued to finance coal production and coal-fired power generation, noting that major banks financed the top 120 coal plant developers by more than $600 billion over the last four years.
“They’ve been slow to embrace COP 21 despite verbal pronouncements and still have quite a way to go,” Lopez said.
Lopez said despite the challenges, more companies were now conscious about greening their footprints and supply chains.
“This has a lot to do with the millennial consumer coming of age. In the Philippines, we’ve been seeing some electricity customers specifically coming to us because they want to green their supply chains with renewable power,” he said.
He said renewable energy technology was moving fast today thus ensuring its competitiveness.
“Solar, wind, and battery storage have experienced exponential cost reductions over the last few years….The last two years also saw a series of record low prices for PV Solar in high irradiation areas like Dubai, the Atacama desert in Chile, and Abu Dhabi. Solar PV solutions even coming in more aesthetic and friendly forms like Tesla’s solar roof tiles,” he said.