The recent geo-political issues in Indonesia and armed conflict in Iraq serve as a reminder that the Philippines – which imports 90 percent of its fuel requirements – is highly susceptible to fluctuating global prices and the looming threats to energy crisis.
To address the country’s energy issues, among the thrusts that the DOE is pushing for is formulating the right mix of renewable energy (RE) with traditional sources, such as coal and diesel. “At present, the Philippines is harnessing 30 percent of RE in our energy mix. If we keep it at that level, we will have a secure energy source, even if oil prices go up or if there is a shortage in supply in the international market,” DOE Secretary Carlos Jericho Petilla said.
“Because RE is indigenous which means it is locally available, we can depend on it for energy security even if there are political issues such as war in other countries,” Secretary Petilla added. This benefit alone, he said, should outweigh the cost implications associated with RE.
According to Secretary Petilla, detractors are quick to point out that the infrastructure needed to harness RE is expensive. “However, we must clarify that the equipment only entails one-time cost, not repeated costs. Also, private citizens can actually benefit more for own-use of RE such as solar, wind and biomass in self-generation of electricity for their own use,” he stressed.
“As a simple example, the cost of electricity from a coal plant can run up to P5.50 per kilowatt hour, plus P6.50 for distribution and transmission, which amounts to P12.00. If you install solar panels on your rooftop, you will only spend P9.00 per kilowatt hour for generation and no cost for distribution or transmission. This already saves you up to P3 per kilowatt hour,” Petilla said.
With the Philippine RE Act of 2008, net-metering was approved as the first non-fiscal incentive mechanism, taking effect in July 2013. Under the net-metering rules, qualified residential and commercial consumers are allowed to install an on-site RE facility – such as solar panels installed on roofs – not exceeding 100 kilowatts (kW) in capacity to generate electricity. Any electricity generated that is not consumed by the RE user will automatically be exported to the distribution utility’s (DU) system. The DU then gives a peso credit for the excess electricity received, equivalent to the DU’s blended generation cost, and deducts the credits earned to the customer’s electric bill. This translates to a lower monthly bill.
Secretary Petilla said in encouraging homeowners to use solar energy, DOE is also pushing for energy efficiency. “If they generate their own electricity, customers will now be more conscious and involved on managing their electricity consumption,” he said.
To promote the use of RE on a larger scale and to attract new investments for RE facilities, the government is banking on the feed-in-tariff (FIT) system, according to Secretary Petilla. FIT is a premium rate paid for electricity fed into the electricity grid from a designated renewable electricity generation source like solar energy system or wind power plant. Approved by the Energy Regulatory Commission in July 2012, the FIT rates in the Philippines is considered to be one of the lowest in the world. The impact of FIT to the electricity rate, estimated at 2 centavos per kWh, is marginal compared to the expected increase in the cost of traditional fossil fuels, like coal, in the coming years. This is the reason why DOE is pushing for the increase of the installation target for solar from 50 to 500 megawatts.
“The FIT is a testament that while RE seems to be more expensive than traditional energy sources, admittedly, it is needed because it is essential to the country’s energy security,” Secretary Petilla said. Because of this, the DOE seeks to out RE in place using FIT in its short-term vision to achieve grid parity. “In the long term, we hope to develop systems in order for RE to compete toe-to-toe with traditional energy resources and eventually lower the cost of electricity,” he said.
Despite ongoing issues, Secretary Petilla said RE is a must-have in the future of the Philippines’ energy mix. “In addition to contributing to our energy sources which ultimately translates to energy security, utilizing RE is needed for environmental reasons. Since it is clean energy, harnessing RE can cushion the effects of climate change,” he said.
DOE is working with other government agencies such as the Climate Change Commission (CCC) and organizations like Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to improve the perception on renewable energy and propel the shift towards a more sustainable energy supply in the Philippines.