Renewables can help lower power costs

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The Philippines ranks among the countries with the most expensive electricity rates in Asia—and with the fast depletion of fossil fuel—the vicious trend of spiraling energy cost is deemed to continue.

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On the opposite side of the fence, technological advances and the explosive growth of its usage in other countries have resulted in plummeting costs of renewable energy, shattering long-held assumptions that it is expensive. Renewable energy resources include geothermal, solar, wind, ocean, hydro and biomass power.

“There is a general misconception that renewable energy is costly, but in fact, it could reduce electricity rates,” said lawyer Pedro Maniego, chairman of the National Renewable Energy Board.

“Nowadays, renewable energy prices have become competitive with coal, if not lower. What’s more, harnessing power from renewable energy will actually translate to savings for the government and consumers, amounting to billions of pesos over the medium to long term,” he said.

According to Maniego, the price of solar energy, which was very expensive several years ago, has dropped to P7 a kilowatt-hour (kWh). The initial Feed-in Tariff (FIT) for wind energy is fixed at P8.53 a kWh for 20 years, while geothermal generation from current sources comes at around P4 a kWh. FITs for biomass is at P6.63 and hydropower at P5.90, which are at par with, if not lower than coal, which stands at P5 to P7 per kWh.

Maniego also stressed that FITs for renewable energy are fixed, as opposed to fossil-fired power sources, which are allowed to automatically adjust their rates following the pass-through costing in their energy supply agreements. With the exception of biomass power, renewable energy sources do not incur any fuel costs after installation.

“Upon reaching grid parity wherein renewable generation cost is equal or lower than the average grid cost, perhaps in the sixth or seventh year of implementation, the Feed-in Tariff mechanism will actually generate savings, which could be passed along to consumers through lower retail electricity bills,” he added.

FIT is a premium rate paid for electricity fed into the electricity grid from eligible renewable electricity generation sources like solar power plants or wind farms.

“The FIT rates in the Philippines—issued by the Energy Regulatory Commission in July 2012—are, in fact, among the lowest in the world,” Maniego said.

“The impact of FIT, estimated at 2 centavos a kWh, is marginal compared to the expected increase in the cost of traditional fossil fuels, like coal, in the coming years,” he added.

For the Philippines, distributed generation utilizing renewable energy supply, rather than centralized generation from big power plants, should be considered.

Maniego cited the recent aftermath of Super Typhoon Yolanda, which cut the power supply in affected areas like Tacloban. Because solar power can be deployed very quickly, it can be harnessed in the area to provide emergency power to critical installations like hospitals, evacuation centers and government facilities.

“This also speaks of a seemingly forgotten fact about renewable energy—that it is abundant and practically unlimited,” he said.

Despite ongoing issues, Maniego remains positive on the renewable energy’s future in the Philippines.

“Once we realize the true value of renewable energy, we can pick up where we left off, being the pioneer and leader in this field, not only in Asia but in the world,” he said.

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