Economy



By Claire-Ann Marie C. Feliciano, Senior Reporter


Government moves to fast-track renewable energy projects




Posted on September 17, 2014


THE ENERGY department is keen on fast-tracking the development of the renewable energy (RE) projects, with a number of service contracts already cancelled due to lack of progress.

“So far, we have already cancelled over 100 RE contracts because they are not moving forward,” Energy Secretary Carlos Jericho L. Petilla said during a budget hearing in Pasay City.

“Of the total, 67 contracts are already cancelled with finality but we also have those which are supposed to be cancelled but are still under appeal,” he added.

Mr. Petilla said this is part of the Energy department’s program to support the country’s RE sector.

“We have already cut the service contract processing to 45 days from two years to attract more developers to invest in RE,” he said.

“However, we are also very fast in canceling. Within six months, if the project proponent is not going to perform, we cancel the contract.”

Data from the department showed that since the enactment of the Renewable Energy Act of 2008, there are currently a total of 614 RE contracts with combined capacity of 12,040.28 megawatts (MW).

RIGHT MIX
Mr. Petilla said that among the thrusts of the department is to formulate the right mix of RE and traditional energy sources, such as coal and diesel.

“At present, the Philippines is harnessing 30% 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,” Mr. Petilla told reporters separately.

“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,” he added.

The official noted that benefits of RE projects are expected to outweigh the cost implications.

As part of the government’s efforts to use RE in a larger scale and attract new investments, it expects the effective implementation of the feed-in tariff (FIT) scheme.

Under the FIT, RE developers will dispatch the capacity of their projects to the grid at a premium rate for a period of 20 years.

The FIT rates -- approved in July 2012 -- provides the following rates for RE technologies: run-of-river hydro (P5.90 per kilowatt-hour), biomass (P6.63/kWh), wind (P8.53/kWh), solar (P9.68/kWh).

These were based on the installation targets -- which limit the capacity of projects for each RE technology -- that have been set by the Energy department.

The targets for RE technologies total some 750 megawatts (MW). Currently, run-of-river hydro and biomass projects are allocated at 250 MW each, wind power at 200 MW, and solar power at 50 MW.

This year, the department allowed the increase of solar to 500 MW.

Concerned stakeholders are also evaluating the possibility of hiking the allocation for wind projects to 500 MW.

EXPENSIVE BUT ESSENTIAL
“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,” Mr. Petilla said.

“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 added.

The Energy department is working with other government agencies such as the Climate Change Commission and organizations like Deutsche Gesellschaft für Internationale Zusammenarbeit to improve public and business perception on RE and promote the shift towards a more sustainable energy supply in the country.