RESEARCHERS at the Societe Generale SA, Bank of America Corp. and Goldman Sachs Group Inc. all see the US benchmark crude price hitting below $40 a barrel.
Oil prices have plummeted by more than half since hitting a high of $106 a barrel last June. But the fact that they are–for now–falling should not ruin the momentum the government has gained the past couple of years in pursuing renewable energy projects.
Indeed, if lower oil prices can spur economic growth, this should even lead to more developers of renewable energy projects–and the government must be ready to make the corresponding policy adjustments to accommodate them.
This the government can do by quickly awarding service contracts and incentives, particularly under the first-come-first-served approach in the feed-in tariff system to fully qualified developers and renewable energy projects, and also increasing FIT allocations when necessary.
The FIT is the government program where renewable energy companies are given incentives. Under the FIT system, renewable energy companies are entitled to the following rates: P9.68 per kwh for solar power, P8.53 per kwh for wind, and P5.90 per kwh for run-of-river hydroelectric power.
Last year saw the Department of Energy commissioning pioneering renewable energy projects like the 22 MW San Carlos solar power plant in Negros and three wind farms in Ilocos Norte, namely, the 33-MW Northwind project, the 81-MW Caparispisan project, and the 150-MW Burgos Wind Project of the Lopezes, the biggest wind farm in Southeast Asia in terms of scale and capacity.
The three wind farms are the so-called winners in the ‘first come, first served’ race by the DOE under the FIT system. The DOE has endorsed them to the ERC upon validation of their successful commissioning. They have also been declared ready for commercial operations.
All that is needed for them to avail of FIT incentives is the certificate of compliance from the ERC.
We do hope the ERC doesn’t dilly dally with its issuance of the COCs. Regulatory squabbling has delayed the implementation of the renewable energy law and the FIT system long enough. Remember this law was passed way back in 2008 and yet it is only in the last couple of years that big renewable projects have been given the government’s go-signal for development.
The DOE, the ERC and other regulatory bodies should also exercise a little creativity in adjusting preconceived installation targets, as this would not only accommodate more interested developers but also boost the country’s power supply, which is expected to experience shortages in the next couple of years.
For instance, the three wind farms have an aggregate capacity of 249.9 MW, which exceeds the wind installation target of 200 MW. But the DOE has rightly endorsed their full capacities to the ERC just the same, and the ERC should accommodate this since other renewable energy allocations are underutilized anyway.
The government should make renewable targets more realistic without raising overall costs to consumers. Renewable subsidies or incentives should be given to those already commercially viable projects. This would continue to bring down costs in the long run.
Wind, solar and other renewable energy projects can provide a competitive advantage over diesel, coal and natural gas because fossil-fuel prices, even if low at this moment, have proven to be quite volatile in the past, and will certainly be so again some time in the future. But wind, solar, water are readily available renewable energy sources in this country, and their costs will remain stable and under our control.
There is still a more significant reason though.
In a world of falling oil prices it is hard to see a sense of urgency for exploring more renewable energy projects. But we of all people should not forget why we need to focus on renewable energy as a long-term strategy to supply power to our country.
Ondoy, Pepeng, Yolanda, Pablo. These are just some of the deadliest tropical storms that hit the Philippines in the last few years, causing thousands of deaths and billions in damage.
We have seen how vulnerable the Philippines is to extreme weather events caused by climate change. In fact, our country tops the list of nations most in danger of facing more frequent and more intense storms as climate change worsens.
Renewable energy can significantly slow climate change and save many millions of lives.
Oil may be abundant and cheap—again for now—but this can only lead to more greenhouse gas emissions and it is countries like the Philippines who would have to cope with the resulting negative climate change impact.