WELCOME REPRIEVE. Over USD 257 Billion in new global RE investments were made in 2011. The long-awaited passage of the Philippine Renewable Energy Act’s FiT rates is a welcome reprieve for RE investors which can develop among other things – this small-scale hydroelectric power source. [WWF International]
Leading renewable energy advocate World Wide Fund for Nature (WWF-Philippines) has praised passage of the Renewable Energy Act’s Feed-in Tariff (FiT) scheme – a vital support mechanism to accelerate the development of our indigenous renewable energy resources.
Power harnessed from the sun, water, wind, geothermal and biomass sources today supply 16.7% of the world’s electricity needs. With over a third of its power sourced from coal plants however, the Philippine power mix – which was previously dominated by renewables – has gradually turned from green to black.
Fortunately, the country now has a chance to reverse this trend as one of the Philippines’ few competitive advantages is its vast renewable energy base.
“The Philippines is a fossil fuel-poor country,” explains WWF-Philippines Climate Change Programme Director Atty. Gia Ibay. “Investing in RE shields us from the volatility of the fossil fuel market while taking advantage of what we have been endowed with.”
WWF’s PowerSwitch study shows the country can further develop 1200 MW of geothermal, 2308 MW of sustainable hydro, 235 MW of biomass and 7404 MW of wind power capacities in the next 10 years, raising the share of indigenous renewables in our power mix to 50%.
The Energy Regulatory Commission (ERC)’s approved initial FiTs cover hydro (PhP 5.90/kWh), biomass (PhP 6.63/kWh), wind (PhP8.53/kWh) and solar (PhP 9.68/kWh). The FiT rate for Ocean Thermal Energy Conversion (OTEC) was deferred for further data gathering and study by the ERC. It should be noted that these rates are substantially lower than the FiT rates proposed by the National Renewable Energy Board (NREB).
The newly-passed FiT rates are meant to assure renewable energy developers of future cash flows as electricity end-users will be charged fixed amounts to cover the production of energy from renewable sources. The FiT will give renewable energy producers a fixed rate to ensure the economic viability of their RE projects.
It is through these FiT mechanisms that the volatility and risk of investments are lessened substantially, giving banks an assurance that anyone who seeks to loan money from them for a renewable energy project will eventually be able to pay them back, creating a level national playing field for renewable energy projects versus fossil fuel projects.
Various groups which have opposed this measure have argued that these FiT rates will increase the burden of electricity rates on consumers. The estimated increase due to FiT as a whole actually only amounts to five centavos per kilowatt hour (kWh), while electricity rates went up 69.04 centavos kWh in Luzon, 60.60 centavos per kWh in the Visayas, and 4.42 centavos per kWh in Mindanao just a few months ago – a vicious trend which is bound to get worse if fossil fuels such as coal succeed in dominating our power sector.
“Philippine electricity rates continue to increase almost on a quarterly basis – and at much larger amounts too – than the FiT. We need to ask ourselves what causes this. Is it because of renewable energy or is it because of an over-reliance on a fossil fuel based system? I think we all know the answer to that,” says WWF-International Asia Pacific Energy Policy Manager Rafael Senga.
It must also be noted that to meet future energy demands, the government has opted to rely on coal-fired power plants. Electricity from most renewable energy systems are predicted to achieve grid parity rates within 10 years, meaning they will attain the same rate and gradually become cheaper than electricity from coal energy. Coal-fired power plants have a minimum life time of 30 years which means that even if renewable energy becomes cheaper within 10 years, we will be locked-in to this imported, expensive and dirty energy source. The Philippines’ experience with previously more expensive geothermal energy – now cheaper than coal – is instructive.
“The FiT allows renewable energy projects to become cost competitive today, rather than tomorrow. This will allow us to invest in clean and cheap energy in the long run and prevent the Philippines from being locked-in for 20 extra years to dirty, expensive energy. This is why WWF-Philippines believes that the FiT is an investment, and not a subsidy as some have claimed,” added Ibay.
Concludes WWF-Philippines Chairman and former Philippine Energy Secretary Vince Pérez, “Three years and seven months after passing the RE Law, the passage of the FiT schemes couldn’t have come at a better time. Burdened with the highest electricity rates in Asia, Filipinos sorely need mechanisms to protect themselves from the volatility – ecologically and economically – of coal and oil-sourced power. In the end, this will provide us with cleaner and cheaper power.” [WWF]
Leading renewable energy advocate World Wide Fund for Nature (WWF-Philippines) has praised passage of the Renewable Energy Act’s Feed-in Tariff (FiT) scheme – a vital support mechanism to accelerate the development of our indigenous renewable energy resources.
Power harnessed from the sun, water, wind, geothermal and biomass sources today supply 16.7% of the world’s electricity needs. With over a third of its power sourced from coal plants however, the Philippine power mix – which was previously dominated by renewables – has gradually turned from green to black.
Fortunately, the country now has a chance to reverse this trend as one of the Philippines’ few competitive advantages is its vast renewable energy base.
“The Philippines is a fossil fuel-poor country,” explains WWF-Philippines Climate Change Programme Director Atty. Gia Ibay. “Investing in RE shields us from the volatility of the fossil fuel market while taking advantage of what we have been endowed with.”
WWF’s PowerSwitch study shows the country can further develop 1200 MW of geothermal, 2308 MW of sustainable hydro, 235 MW of biomass and 7404 MW of wind power capacities in the next 10 years, raising the share of indigenous renewables in our power mix to 50%.
The Energy Regulatory Commission (ERC)’s approved initial FiTs cover hydro (PhP 5.90/kWh), biomass (PhP 6.63/kWh), wind (PhP8.53/kWh) and solar (PhP 9.68/kWh). The FiT rate for Ocean Thermal Energy Conversion (OTEC) was deferred for further data gathering and study by the ERC. It should be noted that these rates are substantially lower than the FiT rates proposed by the National Renewable Energy Board (NREB).
The newly-passed FiT rates are meant to assure renewable energy developers of future cash flows as electricity end-users will be charged fixed amounts to cover the production of energy from renewable sources. The FiT will give renewable energy producers a fixed rate to ensure the economic viability of their RE projects.
It is through these FiT mechanisms that the volatility and risk of investments are lessened substantially, giving banks an assurance that anyone who seeks to loan money from them for a renewable energy project will eventually be able to pay them back, creating a level national playing field for renewable energy projects versus fossil fuel projects.
Various groups which have opposed this measure have argued that these FiT rates will increase the burden of electricity rates on consumers. The estimated increase due to FiT as a whole actually only amounts to five centavos per kilowatt hour (kWh), while electricity rates went up 69.04 centavos kWh in Luzon, 60.60 centavos per kWh in the Visayas, and 4.42 centavos per kWh in Mindanao just a few months ago – a vicious trend which is bound to get worse if fossil fuels such as coal succeed in dominating our power sector.
“Philippine electricity rates continue to increase almost on a quarterly basis – and at much larger amounts too – than the FiT. We need to ask ourselves what causes this. Is it because of renewable energy or is it because of an over-reliance on a fossil fuel based system? I think we all know the answer to that,” says WWF-International Asia Pacific Energy Policy Manager Rafael Senga.
It must also be noted that to meet future energy demands, the government has opted to rely on coal-fired power plants. Electricity from most renewable energy systems are predicted to achieve grid parity rates within 10 years, meaning they will attain the same rate and gradually become cheaper than electricity from coal energy. Coal-fired power plants have a minimum life time of 30 years which means that even if renewable energy becomes cheaper within 10 years, we will be locked-in to this imported, expensive and dirty energy source. The Philippines’ experience with previously more expensive geothermal energy – now cheaper than coal – is instructive.
“The FiT allows renewable energy projects to become cost competitive today, rather than tomorrow. This will allow us to invest in clean and cheap energy in the long run and prevent the Philippines from being locked-in for 20 extra years to dirty, expensive energy. This is why WWF-Philippines believes that the FiT is an investment, and not a subsidy as some have claimed,” added Ibay.
Concludes WWF-Philippines Chairman and former Philippine Energy Secretary Vince Pérez, “Three years and seven months after passing the RE Law, the passage of the FiT schemes couldn’t have come at a better time. Burdened with the highest electricity rates in Asia, Filipinos sorely need mechanisms to protect themselves from the volatility – ecologically and economically – of coal and oil-sourced power. In the end, this will provide us with cleaner and cheaper power.” [WWF]
