Every summer, when the sun is beating down hard on the archipelago and dam water levels are low, a familiar visitor comes a-calling in the islands. Its name: Red Alert. It comes mostly in mid-afternoons and early evenings. Its message: be forearmed for a power outage is nigh. And when in some areas the warning blows real, economic activity slows down or stops altogether. With some untimely equipment failures, brownouts envelope more areas and a power crisis is declared, followed by the familiar howl and congressional hearings.
We know the terrain well. The Department of Energy will say it’s because our power reserves are too thin and power generation must be augmented, preferably with nuclear power. Correct, but no longer newsworthy. The question is why we have let it fester for so long. One reason is that on the whole we have sought relief only in bulking up our centralized generation system.
The centralized system requires large initial and continuing deployment of capital and good regulations to run properly. Capital and good regulations are very deficient in many jurisdictions, resulting in frail and high-cost power service. Frail power systems lead to poor economic performance and poverty. End-users are limited to consumption.
But 21st century technology has now managed to combine consumption and production of power among end-users at very competitive cost. In sun-drenched areas, the technical breakthroughs in solar photo-voltaic (PV) and battery storage are breaking the grip of the traditional problem of intermittence from clouds, rain, and night hours. Battery power storage is the missing key to unlocking the immense PV potential.
Grid-tying technology is one way out. Grid-tied PV systems use the existing power grid as storage — power produced with solar panels during daylight is exported to the grid when in excess of own consumption; power is imported from the grid when solar power is unavailable, at a price agreed upon with the local distribution utility. This now is a well-travelled territory with known technical and regulatory problems and solutions.
The problem for households is essentially capital constraint — the initial cost of a home PV system can be prohibitive for most households who face competing investment such as for a car. Easy bank financing for a car purchase exists although a solar PV installations is by far a better long-term investment than a car. Banks foot-drag because, unlike a car, solar PV installations are fixed in situ and cannot be readily repossessed and resold in a second-hand market.
Big companies or conglomerates are a different matter altogether. First, these are not capital-constrained; or they can readily secure bank financing if needed. Second, they have longer time horizons where solar PV installations are most advantageous. Third, most of these conglomerates already have hectares of idle rooftops in their possession currently earning nothing. If converted into extensive urban solar farms, these idle rooftops can become new revenue streams for these companies. Think about the Ayala Group, the SM Group, or the Gokongwei Group. They spend enormous amounts on purchased electricity and draw enormous amounts of power from the grid; thus, contributing to the frequent yellow alerts. Some of these companies (SM, for one) already own Retail Electricity Supplier (RES) subsidiaries and thus are accredited electricity suppliers, if only RCOA (Retail Competition and Open Access) is not stuck in regulatory mess. I dare say that if only 30% of the power needs of large public and private establishments with idle rooftops (factories, malls, school and government buildings, supermarkets, gas stations, etc.) are generated by rooftop solar installations, the Philippines can kiss power outages goodbye. And we won’t wait years to clear the jungle of right-of-way, environmental permits, and NIMBY issues.
When the grid is down, solar PV installations cannot supply power unless the system is equipped with battery storage capacity. So without battery storage, back-up generators still have to be run on “idling” mode or on rev-up, burning polluting fossil fuel. There are now grid-scale batteries that can deliver five to 100 megawatts of power for hours. These batteries can replace back-ups and peakers as well as feed power into, and stabilize, grid operation. Needless to add, off-grid systems become viable 24/7 only with batteries. The price of these grid-scale batteries is falling fast, what with technical advances, scale production, and competition.
An attractive feature of solar PV installations is that they are modular and scalable. The company can start with a small installation and scale up as the need arises. They more importantly economize on a scarce resource: regulatory quality. There is wisdom in the wit of savvy meat-eaters: “You don’t buy meat by the cow; buy meat by the kilo.”
Grid stabilization in our centralized power system depends upon pumped hydro and peaking plants which are switchable at an instant. In the Philippines, an additional stabilizer is the Interruptible Load Program (ILP) — large establishments stop drawing power from the grid and run their own back-up generators when surges of demand threaten to overwhelm the current capacity. These establishments are then reimbursed by the grid operator for the difference in cost. Grid-scale batteries spread among many establishments or owned and operated by specialized battery companies can replace peaking plants and back-up generators as ILP grid stabilizers.
On the battery front, kudos to Aboitiz Power for initiating a 48-megawatt battery storage plant at its Magat Hydroelectric Plant. AES in Masinloc is building a 10-megawatt battery storage instead of a peaking plant to help stabilize the grid. Kudos, likewise, to SMC for committing to build a portfolio of 16 battery storage plants around the country for a total of 520 megawatts. Fossil-powered peaker and back-up plants beware — economics is out to get you. On the rooftop solar farming front, kudos to Double Dragon Corp. for committing to equip its City Malls all over the country with solar PV-capacity and even to Celebrity Sports in QC for being now so equipped.
These companies are re-tooling to become the disruptors rather than the disrupted in the solar PV revolution! About time the environment committees of Congress consider a contingent tax on idle rooftops — you become exempt only when you generate at least 30% of your power needs. All government building plans should henceforth include solar PV facilities.
And, by the way, distributed and modular power greatly reduces our carbon footprint even as it raises our resilience to climate disasters. Bottom-line, resilience and Mother Earth meet in the rooftop solar PV!
Raul V. Fabella is a retired professor of the UP School of Economics and a member of the National Academy of Science and Technology. He now also holds an Honorary Professorship position at the Asian Institute of Management. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.