Energy Trilemma and high mandatory RE

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Bienvenido S. Oplas, Jr.-125

My Cup Of Liberty

MACROVECTOR-FREEPIK

As usual, there are many interesting stories weekly in the Philippines energy sector but these three recent reports in BusinessWorld are of particular importance.

1. “Renewable energy program targets 55.8% share of power mix by 2040” (Feb. 15).

2. “Senate asks DoE for details of clean energy plan” (Feb. 17).

3. “SMC units submit lowest bids for 1,800-MW Meralco supply deal” (Feb. 20).

Story No. 1 is the renewable energy (RE) lobby, especially solar and wind, aiming for a near-doubling of their capacity from 29% of total installed capacity (7,400 MW out of total 25,531 MW) in 2019. This means they want coal power to be further eased out and ultimately decimated.

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Note that in 2019, Philippines RE’s 29% of installed capacity produced only 13.5% of total electricity generation, 14.3 terawatt-hours (TWH) out of total 105.8 TWH. An energy weakling whose intermittency intends to produce more power instability if not blackouts for the consumers.

Story No. 2 is related to this. In particular, Senator Sherwin Gatchalian, Chairman of the Senate Committee on Energy, is pushing for a faster energy transition from stable, cheaper energy via coal power, to intermittent and expensive energy via wind-solar.

If we look at our richer neighbors in Asia, especially Singapore, Thailand, Malaysia, China, South Korea, Taiwan, and Japan, they are not as gung-ho as the Philippines in having more RE in their power grids. Their RE share to total electricity generation as of 2019 were only 2% to 12%. And it is precisely these low-RE economies (except Japan) that were growing very fast for the past three decades.

The Europeans, especially Spain, the UK, Germany, and Denmark whose RE share to total power generation is 28% to 77% in 2019, are the countries which are growing very slow and have among the most expensive electricity prices in the world (see Table 1).

Story No. 3 is about a successful competitive selection process (CSP) by Meralco where the two winning power plants (a gas plant and coal plant, both owned by San Miguel Corp.) would generate electricity at only P4.15/kwh and P4.26/kwh. This is less than half the feed-in tariff (FIT) or guaranteed price for 20 years of P11/kwh for solar and P10/kwh for wind.

A confused “pro-consumer” group, People for Power Coalition (P4P), wants to stop this cheap energy for Meralco customers and went to the Supreme Court and filed a TRO on the result of the 1,800 MW CSP. Maybe they want those three instant CSP losers — two solar firms and a newbie coal company from China with zero track record — to win and supply expensive electricity to the consumers? Lousy.

Related to these stories is the annual report, World Energy Trilemma Index by the World Energy Council (WEC), a UN-accredited global energy body. The index is composed of three factors:

Energy security: effective energy supply from domestic and external sources, reliability of infrastructure and ability of energy providers to meet current and future demand.

Energy equity: accessibility and affordability of energy supply across the population.

Environmental stability: achievement of energy efficiencies and development of energy supply from renewable and other low-carbon sources.

The Philippines ranked 76th out of 108 countries and jurisdictions covered in the 2020 report. WEC ranked us low on Energy Equity, #89, low affordability of energy, i.e., expensive energy (see Table 2).

There is an endless and strong lobby to ease out stable, reliable, and cheap energy from coal plants because it is a fossil fuel, and replace it with more RE, especially intermittent and expensive solar-wind, partnered with huge batteries and gas power which is also fossil fuel.

It seems that more RE + gas policy is mainly a gas lobby in disguise. The lobbyists know that people will object to a high 55% RE goal by 2040, meaning high power instability and unreliability, so they sneak in the gas component.

We need a market-based and consumers-focused energy balance. Balance of energy availability/stability, affordability, and sustainability. A high RE goal via government mandates and RPS will prove to be anti-consumers in the long-term.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers

minimalgovernment@gmail.com

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