More about wind-solar, more about inflation
Last Thursday, Aug. 28, I attended the Energy Smart Forum 2025 of the European Chamber of Commerce of the Philippines (ECCP) at the Dusit Hotel in Makati City. The event’s advocacy partners were six embassies, those of Austria, Denmark, Finland, Germany, Netherlands, and Norway.
One thing I noticed that was similar to the AmCham Energy Forum held on Aug. 14 and in many other industry and business fora, was the predominance of discussions on “energy transition” and “net zero,” although the ECCP forum was at a higher level than all other fora.
Today I take off from this column’s piece last week, “Energy transition leading to higher inflation and lower growth” (Aug. 26). I restate here the data, I used then — the (solar + wind)/total generation ratio in 2014 and 2024, and the inflation rate during the three years proximate to the two periods. Thus, the average inflation rate from 2013-2014, then 2023-2025.
The trend is even clearer. Countries that expanded their (S+W)/T ratio also experienced higher inflation over those periods — all of Europe except Russia (which has a negligible ratio of only 0.6%).
In contrast, Asian nations had low ratios of 0.4% (Indonesia) to 18% (China) and their inflation rates during those periods either flatlined or declined (except for Japan, Taiwan, Korea, the Philippines and Singapore). North and South America saw the same trend as the European nations (see Table 1).
So if we want more inflation and see more degrowth, we should invest in more wind and solar power. If we want price stability and industrialization, we should invest in more thermal and fossil fuel energy plus nuclear power.
Why do high (S+W)/T ratio countries experience rising inflation? Three immediate explanations come to mind.
One is that these two intermittent sources need backup power and ancillary services (AS) — batteries, storage like pumped hydro, and diesel power plants. These AS are not cheap, so the generation cost is high.
Two, the transmission cost is also high as these solar-wind farms are in far-away areas — solar farms in the mountains and offshore for wind where both construction costs and maintenance costs are rather prohibitive.
Third, their adverse impact on food production, forest, fishery protection and production. Solar and wind are very land intensive. While one can put up a 1,000-megawatt (MW) coal or gas plant on just 100 hectares or less, one will need at least 1,200 hectares to put up a 1,000-MW solar farm — and actual electricity production in the solar farm is small, is zero at night, and low in the day time when it is cloudy or raining.
More wind and solar power is not good for the Philippines and other developing countries. Our neighbors in Asia know this. They are not hoodwinked by the net-zero push and other impractical advocacy.
Yesterday I attended the Independent Electricity Market Operator of the Philippines (IEMOP) media briefing where I learned that the average prices for the August billing have increased by P0.60/kWh. This was because demand increased while supply decreased and so the reserves margin declined.
I checked the energy mix and compared it with recent months this year. The share of coal has been steadily declining in the last three months, not because there was more solar-wind power production, but because the liquefied natural gas (LNG) plants in Batangas went into full operation, plus the hydro power plants were busy kicking and producing power during the current rainy months (see Table 2).
We should do more renewables, yes, but only hydro and geothermal. Still, hydro is cyclical, with low output during the dry months of December to May, and geothermal plants have good output only near volcanoes.
We should expand our thermal power capacities — coal and gas, plus diesel as peaking plants, and add nuclear power. We should prioritize our country’s economic needs and push for industrialization.
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.
