ROOFTOP solar systems have the potential to lower electricity costs to P2.50 per kilowatt-hour (kWh) by displacing imported energy sources and bringing new investment of around P1.5 trillion by 2030, a research firm said.
Institute for Energy Economics and Financial Analytics (IEEFA) in a report on Monday said a “modernized” policy could drive the uptake of solar through programs that will ensure power supply at lower prices.
“The government is in a position to change the longstanding status quo, which disproportionately puts fuel-price and foreign-exchange risk on consumers, while utilities and power generators remain insulated from market changes,” said Sara Jane Ahmed, IEEFA energy finance analyst and author of the report.
“As a result, power suppliers have no incentive to transition away from coal and diesel or to hedge against price-change and currency risks,” she added.
The report, “Unlocking Rooftop Solar in the Philippines,” notes the country has one of the most expensive electricity rates in Southeast Asia, but it can start following global trends toward power sector modernization.
It said a modernized policy has been gaining momentum amid declining costs and technological advances in renewable energy, energy efficiency and distributed storage.
Ms. Ahmed said every kilowatt of installed rooftop solar means a reduction in the need for imported coal and diesel. The shift is estimated to save the Philippines up to $2.2 billion annually as well as $200 million per year in diesel subsidies.
The report said the Board of Investments had approved eight solar projects through Solar Philippines Commercial Rooftop Projects Inc. worth P85.96 billion, or $1.65 billion.
A conservative estimate of 8 gigawatts (GW) of solar installation by 2030 includes 35% of that coming from rooftop solar, translating into an investment value of $ 2.8 billion, it added. It said the billion-dollar market can easily grow with the right policies.
“These trends present an enormous opportunity to replace imported-coal and imported-diesel models with indigenous alternatives,” Ms. Ahmed said. “Solar, wind, run-of-river hydro, geothermal, biogas, and storage are competitive, viable domestic options that can be combined to create a cheaper, more diverse and secure energy system.”
The report cited as examples of renewable energy deflation the offer received by Manila Electric Co. (Meralco) in March of the country’s record lowest wind electricity generation bid on a new 150-megawatt (MW) wind turbine project in the Rizal province, for P3.50 per kilowatt-hour (kWh). It also pointed to an offer to Meralco for solar power at P2.99-per kWh for a 50-MW capacity plant.
These offers compare with coal-fired power generation at costs ranging from P3.8 to P5.5 per kWh. The true cost of imported diesel-fired power ranges from P15 to P28 per kWh.
The report said rooftop solar costs P2.50 per kWh, without financing expenses, to P5.3 per kWh, with financing expenses. Utility-scale solar power can cost as little as P2.99 per kWh, with wind power costing P3.5 per kWh, geothermal P3.5 to P4.5 per kWh, and run-of-river hydro P3 to 6.2 per kWh.
“Development of all of these more affordable options is still hampered by costly and unnecessary red tape. The Philippine government can help break this logjam by adopting policies that inject more diversity — and more energy security — into the electricity system while helping lower consumer costs by enabling the uptake of cheaper, cleaner options such as rooftop solar,” Ms. Ahmed said.
“More importantly, fossil fuel subsidies and electricity-sector losses are a growing drag on economic growth in the Philippines. Current plans for fossil fuel generation would instill a long-term dependence on fossil fuel imports, which would lead to more national debt, devaluation of the currency and an increase in inflation, all of which would destabilize the Philippine economy,” she added. — Victor V. Saulon