Enabling energy efficient systems in the Philippines

All eyes and ears were on President Rodrigo R. Duterte as he delivered his fourth State of the Nation Address (SONA) last Monday, July 22. The speech was noteworthy as it came halfway into his term.

While it was anticipated that the president would tackle illegal drugs, national security, and corruption, his comments regarding the utilization of energy sources, particularly in addressing “the need to ensure the sustainability and availability of resources and the development of alternative sources,” came as a welcome surprise. This policy direction shifts its gaze from our dependence on traditional energy sources and toward the development of renewable energy sources.

While this pronouncement garnered a positive response from energy industry players, particularly those in the renewable energy sector, consumers are still haunted by other things, such as the the ill-timed implementation of the TRAIN law coupled by spiking inflation rates in 2018.

The issue of power cuts across the economy. Increasing sources of energy and making power affordable and stable will result in lower prices of basic goods

STABLE STATUS QUO SO FAR
The Filipino consumer seems to be in a better position this year. Inflation in June slowed down to 2.7% year-on-year, the slowest rate of increase in prices of basic goods in 22 months. This is the lowest since the 2.6% rate in August 2017 and almost half the 5.2% posted a year ago in June 2018.

Furthermore, inflation this July is projected to ease to 2.3%, potentially lowering the prices of basic commodities. According to an economist, “domestic prices of basic goods and services are expected to have felt the benefits of a strong peso throughout the month, which made imported raw materials cheaper to buy.”

The reduction in the prices of electricity this month likewise lifted a burden on consumers as Meralco decreased its rates for a third consecutive month, attributable to lower charges of Independent Power Producers (IPPs) and stable charges of Power Supply Agreements (PSAs).

The price cut translates to a decrease in the July bill of about P21 for a typical residential customer using 200 kWh in a month. Households consuming 200 kWh, 300 kWh and 400 kWh, should see reductions of P32, P43, and P53, respectively.

PUSHING FOR PRONOUNCED POLICIES AND SMARTER SOLUTIONS
Despite being granted temporary relief, Filipino consumers cannot afford to be complacent as they continue to clamor and push for more pronounced policies and smarter solutions affecting their day to day lives, such as the cost and efficient delivery of electricity.

One way to have an efficient and environmentally friendly energy system is the establishment and operation of smart grids in the Philippines. This new technology controls various aspects of electricity delivery from source to end user, by way of smart meters and sensors which easily detect electrical faults and/or defects in the line, thereby preventing power outages and reducing energy losses.

More importantly, the smart grid gives the consumers more control over their electricity bills through the real-time monitoring and access of information, helping them in using electricity in an efficient way as they see fit.

In Southeast Asia, leading countries in smart grid technologies are Singapore and Malaysia. Following these regional innovators, the Philippines, together with Vietnam, and Indonesia, are taking steps in the right direction.

It is commendable that the Department of Energy recognizes the ultimate advantage of smart grids in the electricity network in terms of preventing power outages, increasing the level of competition, and empowering consumers. Fostering its smooth transition, however, requires prompt implementation in order to reach its maximum advantage and potential. Hence, the issuance of the Circular concerning the Smart Grid roadmap and policy framework, scheduled this third quarter, should be fast tracked.

As we embrace new technologies, we become drivers of innovation and development. The establishment of smart grid technology would not only meet the demands of the Filipino consumers today but over the longer term.

Hannah Viola is a Fellow at the Stratbase ADR Institute.