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Renewable energy in PH affordable in long term — study

Lean Santos

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A GIZ report says the Feed-in-Tariff (FIT) regime will only have a minimal impact on the electricity bill in the long term

RENEWABLE ENERGY. Focusing on renewable energy can address the Philippines' growing energy demand. Screenshot from GIZ's study

MANILA, Philippines – The benefits of renewable energy for power consumers in the Philippines will overtake its currently high cost, according to a study. 

In a report released by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH or the German Society for International Cooperation, renewable energy (RE), particularly in the Philippines, can help answer the country’s growing energy demand despite concerns about high cost and unreliability compared to coal and oil.

GIZ explained that once the current Feed-in-Tariff (FIT) regime, or the monetary incentive government gives to power producers involved in RE generation, becomes effective, the impact on household electricity bill becomes affordable.

“(RE) will add less than 2 centavos for the electricity bill. For a household with a monthly consumption of 300 kWh, this would result in additional monthly costs of P5.40,” the study showed.

Impact on society, environment

In a recent study by DOE, generation cost for coal amounted to about $60 per megawatt hour (MWh) compared to solar’s $160 MWh.

GIZ, however, pointed out that costs should not just be based on production and generation alone. It should also include a more “comprehensive cost-benefit analysis that includes social and environmental (costs)”.

With air pollution as the most pressing social and environmental effect of coal and oil power plant operations, carbon emissions from power generation in the Philippines produced around 81.15 million metric tons in 2011, the study showed.

According to the Philippine Environment Monitor, air pollution cost the Philippine economy around $1.5 billion and about $400 milion on pollution-related health expenses every year.

“(C)limate change fueled by coal-fired plants is already damaging the economy of the Philippines,” GIZ said in the study quoting global environmental group Greenpeace.

Declining costs

GIZ assured that the cost of producing power from RE sources is declining.  

“It is true that newly installed RE technologies are behind conventional fuels in terms of competitiveness considering their pure capital costs. However, global trends show an increasing RE market and prices going down due to learning curves and policy support,” GIZ said.

In 2012, almost 50% of all newly installed power capacity in the world were made up of RE worth $244 billion. Half of this figure were invested in developing or emerging economies.

RE technologies, according to the study, does not require fuel costs, compared to coal and oil plants which is dependent on fluctuating world prices for both commodoties. This makes RE competitive in the long-run.

“RE minimizes fossil fuel-driven price inflation, thus stabilizing the economy and protecting it from fluctuation,” the study said.

In terms of generation cost, wind and solar power are already competitive with coal and oil plants. In the GIZ study, a coal plant requires around $0.067/kWh compared to $0.07/kWh for solar.

“(As) the Philippines show tremendous process of constant economic growth… (it will be) accompanied by even faster growing energy demand, environmental degradation and energy scarcity.”

Share of RE in PH

In 2010, the country’s total electricity consumption reached 56.84 billion kilowatt hour (kWh) with around 59% of the power generated coming from coal and oil-based powerplants.

Share of renewable energy accounts for about 28% of total power generation, comprised mostly of geothermal and hydro power plants. Shares of wind, solar and biomass, according to the study, are “either underrrepresented or non-existing”.

According to GIZ, the only existing on-grid wind and solar capacities in the country are the 33 megawatt (MW) Bangui Bay Wind Power Project in Ilocos Norte and the 1 MW CEPALCO Solar Power Plant in Cagayan de Oro, respectively.

Despite efforts by the Department of Energy (DOE) in approving several wind power projects all over the country, the study stressed that the “relatively high share of RE in the electricity mix might decrease in the future (due to) committed and indicative coal power projects in Luzon, Visayas and Mindanao.”

The DOE expects around 300 MW power capacity from a total of 5 wind power projects in 2016 and a 1,400 MW installed capacity by 2020.

Coal power commitments by 2020, on the other hand, is expected to provide 5,000 MW of power in the country. –

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