August 20, 2018 | 9:04 pm
ROOFTOP solar systems have the
potential to lower electricity costs to P2.50 per kilowatt-hour (kWh) by
displacing imported energy sources and bringing new investment of around P1.5
trillion by 2030, a research firm said.
Institute for Energy Economics and
Financial Analytics (IEEFA) in a report on Monday said a “modernized” policy
could drive the uptake of solar through programs that will ensure power supply
at lower prices.
“The government is in a position to
change the longstanding status quo, which disproportionately puts fuel-price
and foreign-exchange risk on consumers, while utilities and power generators
remain insulated from market changes,” said Sara Jane Ahmed, IEEFA energy
finance analyst and author of the report.
“As a result, power suppliers have
no incentive to transition away from coal and diesel or to hedge against
price-change and currency risks,” she added.
The report, “Unlocking Rooftop Solar
in the Philippines,” notes the country has one of the most expensive
electricity rates in Southeast Asia, but it can start following global trends
toward power sector modernization.
It said a modernized policy has been
gaining momentum amid declining costs and technological advances in renewable
energy, energy efficiency and distributed storage.
Ms. Ahmed said every kilowatt of
installed rooftop solar means a reduction in the need for imported coal and
diesel. The shift is estimated to save the Philippines up to $2.2 billion
annually as well as $200 million per year in diesel subsidies.
The report said the Board of
Investments had approved eight solar projects through Solar Philippines
Commercial Rooftop Projects Inc. worth P85.96 billion, or $1.65 billion.
A conservative estimate of 8
gigawatts (GW) of solar installation by 2030 includes 35% of that coming from
rooftop solar, translating into an investment value of $ 2.8 billion, it added.
It said the billion-dollar market can easily grow with the right policies.
“These trends present an enormous
opportunity to replace imported-coal and imported-diesel models with indigenous
alternatives,” Ms. Ahmed said. “Solar, wind, run-of-river hydro, geothermal,
biogas, and storage are competitive, viable domestic options that can be
combined to create a cheaper, more diverse and secure energy system.”
The report cited as examples of
renewable energy deflation the offer received by Manila Electric Co. (Meralco)
in March of the country’s record lowest wind electricity generation bid on a
new 150-megawatt (MW) wind turbine project in the Rizal province, for P3.50 per
kilowatt-hour (kWh). It also pointed to an offer to Meralco for solar power at
P2.99-per kWh for a 50-MW capacity plant.
These offers compare with coal-fired
power generation at costs ranging from P3.8 to P5.5 per kWh. The true cost of
imported diesel-fired power ranges from P15 to P28 per kWh.
The report said rooftop solar costs
P2.50 per kWh, without financing expenses, to P5.3 per kWh, with financing
expenses. Utility-scale solar power can cost as little as P2.99 per kWh, with
wind power costing P3.5 per kWh, geothermal P3.5 to P4.5 per kWh, and
run-of-river hydro P3 to 6.2 per kWh.
“Development of all of these more
affordable options is still hampered by costly and unnecessary red tape. The
Philippine government can help break this logjam by adopting policies that
inject more diversity — and more energy security — into the electricity system
while helping lower consumer costs by enabling the uptake of cheaper, cleaner
options such as rooftop solar,” Ms. Ahmed said.
“More importantly, fossil fuel
subsidies and electricity-sector losses are a growing drag on economic growth
in the Philippines. Current plans for fossil fuel generation would instill a
long-term dependence on fossil fuel imports, which would lead to more national
debt, devaluation of the currency and an increase in inflation, all of which
would destabilize the Philippine economy,” she added. — Victor V. Saulon
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