Re-Tooling the Philippine Renewable Energy Strategy and Rationalizing FIT Subsidies (Part 1)
David Celestra Tan, MSK
10 September 2018
Ten Years since the RE Law was passed we seem to have come to a strategy and policy crossroad. The achieved installation of 1,200mw had come at a heavy cost to consumers, mainly from solar, a sector that ironically is lobbying for more government FIT support. What have we learned so far and how do we retool towards a more sensible and affordable RE strategy?
The Philippines passed the Renewable Energy Law in December 2008 in response to the worldwide clamor to arrest global warming or climate change. Six RE technologies were identified for development with incentives plus feed-in-tariff subsidies. Solar, Wind, run of the river hydro, biomass, hybrid, and something called ocean thermal conversion. The DOE initially targeted an installation of 1,400mw and so far we are close to that at 1,206mw. There are 24 solar projects totaling 526.43mw. 7 wind projects totaling 426.90mw. 8 mini-hydro projects of 108mw and 18 biomass projects with 144mw.
According to the data of the Transco that administers the FIT program, Solar is receiving an average consumer subsidy of P4.0092 per kwh, Wind with P2.8592 per kwh, Biomass with p0.9592 per kwh and mini-hydro with 0.2292 per kwh. The total subsidy for 2018 is P26.15 Billion. To cover the feed-in-tariff subsidies for these projects you the electric consumers nationwide are being charged 0.2932 per kwh under the Universal Charge, a heavy burden on the already overcharged Filipino electric consumers.
Yet, many solar and wind proponents that already gobble up 80% of the FIT subsidies are clamoring for the continuation of FIT program. Many foreign companies, waving the flag of climate change and clean energy, are dangling Billions to invest in the Philippines, evidently expecting the juicy subsidies. With those kinds of returns, of course they will invest. These foreign entrepreneurs still consider the Philippines to be so starved for foreign investments that we will welcome them at any cost.
I think those days should be over and it appears the administration of DOE Secretary Alfonso Cusi knows it too. He has so far been steadfast in not continuing the FIT program. (God bless his heart!) In fact, the DOE still has a “no contact policy” while they are reviewing what to do about the RE program. Let’s hope not too long though.
So let us review the policy Issues. Should the Feed-In-Tariff program be continued? What are our real goals? Is Feed-in-Tariff subsidies synonymous to RE development and the pursuit of clean air? Should the Filipino electric consumers be made to pay? Can he afford it? Is it even fair?
Going Back to the Basics
The whole idea of RE (Renewable Energy) is clean power to arrest global warming or climate change, the main culprit of which is commonly considered to be the polluting coal. The Philippines given its small economy contributes only 1% of global warming. Yet we estimate that due to its longtime commitment to large hydro and geothermal power generation, we contributed probably 2.5% of global warming alleviation. And that was before we passed the Renewable Energy Law of December 2008.
The RE law of 2008
The Renewable Energy Law that was authored by Sen. Zubiri was a good law. It offered generous fiscal incentives to the identified technologies and mandated Feed-in-Tariff subsidies, patterned after Germany and Spain.(I Just don’t understand how ocean thermal became part of it). The problem is, in the implementation, it was forgotten that the main purpose of the law is clean energy and not renewable energy per se. Largely the work of the lobbyists. The Energy secretary at that time, apparently feeling that they had to implement the law, gave out “service contracts” for 400mw of RE projects with no evident regard for credentials criteria and no locational strategy. One well connected and fast moving guy got three of such contracts for solar and biomass projects in Negros, and those became part of the juiciest First Round of FIT. Sold the contracts to the big guys at unimaginable premiums. Lucky guy.
The RE industry, mainly solar and wind, wanted 3,000 mw of solar and waving the RE flag as if it is the main purpose of the law and must be implemented at all costs. (Would you believe that the Solar lobby originally wanted P19.30 per kwh FIT Rate which meant a subsidy of about P13.30 per kwh!)
We must share in the concern for global warming, no question. The RE law however must be implemented not only for the wording of the law but also its spirit and the ever present concern for public interest. So far it is costing the Filipino electric consumers P0.2932 per kwh to subsidize RE. And Transco is projecting more in the future.
Irony of Coal
The irony is while the government is making the Filipino consumers pay a hefty price to support clean energy, we are not doing anything to control the culprit which is coal. Fully 90% of Meralco’s new projects are coal and the country as a whole will be dependent 85% on coal by 2025. In the least, the government should have been resolute in making coal rates and contracting competitive and no games tolerated in the CSP (competitive selection process) program. Had they done so, the rates of Meralco’s new power supply contracts for new coal plants could be P0.40 to P0.60 per kwh cheaper, enough to make up for the 0.2932 per kwh FIT subsidies.
Consumers are getting shafted three ways. They are carrying the burden of the RE FIT subsidies, they are paying the sweetheart prices of the negotiate contracts between Meralco and its sister generator, and there would be no net improvement in the air that he will breathe because we kept building coal plants. Kawawanamantayo.
(to be continued)
MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com.ph
