Subsidies to off-grid power swell to P28 B

By Myrna M. Velasco – September 14, 2020, 5:00 AM
from Manila Bulletin

The subsidy being paid for by Filipino consumers in their power bills for the provision of electricity services in off-grid areas is projected swelling to P28.373 billion next year, roughly P15 billion higher compared to the P13.241 billion disbursed subsidy last year.

Given the escalating subsidies being injected into the Small Power Utilities Group (SPUG) areas that are under the supervision of the National Power Corporation (NPC), Congressman Carlos Isagani Zarate quizzed the Department of Energy (DOE) if it will call for the termination of such cost burden so electricity rates will go down.
But Energy Secretary Alfonso G. Cusi indicated it is not outright scrapping of the subsidy that they have been pushing for. Instead, the department and NPC are opting for the deployment of hybrid technologies in these off-grid areas (or areas that are physically impossible to connect to the main power grids) — given estimates that their resulting electricity tariff will be cheaper.

All Filipino consumers are paying for the subsidy in the off-grid or SPUG areas through the universal charge for missionary electrification (UCME), which is a separate line item in the electric bills being dispatched to them every month. That is equivalent to P0.1561 per kWh charge in the electric bills.

Annually, the UCME being collected from the consumers ranged from P13 billion to P16 billion; and these have been utilized to cover shortfall vis-a-vis the approved subsidized generation rates for the SPUG’s missionary areas.

The fund administrator or collecting agent of the UCME is state-run Power Sector Assets and Liabilities Management Corporation (PSALM); which in turn remits the subsidy to NPC. Last year, PSALM’s UCME collection reached P13.239 billion.

To take the edge off on consumers’ pockets for this subsidy, Cusi said the hybridization plan for the SPUG areas could potentially reduce power rates to P11 per kilowatt hour (kWh) compared to the current rate of P15 to P16 per kWh; and at times, it could also inflate to as high as P18 per kWh.

“The subsidy is currently high because we are using oil for power generation – and that is more expensive compared to other technologies. So what we want to do is to go hybrid through the deployment of solar or other RE (renewable energy) technologies,” the energy chief said.

Cusi emphasized “if we will install hybrid technologies, the power cost can go down to P11 per kWh, so even without a subsidy, the charges would still be lower.”

Hybrid technologies could be a combination of renewable energy resource like wind, solar or hydro coupled with diesel generation or even battery storage; and these are deemed ideal solution to the energy needs of off-grid domains.

The energy department has been showcasing Bohol and Mindoro among the pilot areas for SPUG hybrid deployments  – and consumers in these jurisdictions are looking at potential cost reduction up to the level of P9.00 per kWh.

With hybrid systems, Cusi noted “we can make power for these areas affordable and cleaner. Our goal is to eliminate the UCME in the bills and to intensify electrification in the SPUG areas.”

The department further pointed out these hybrid technology deployments will be tied eventually to the Renewable Portfolio Standards (RPS) that the department and the National Renewable Energy Board (NREB) have been fleshing out for off-grid sites.