Burgos wind farm: Spotlighting hidden costs, corporate values in energy projects

by Myrna Velasco March 28, 2016

http://www.mb.com.ph/burgos-wind-farm-spotlighting-hidden-costs-corporate-values-in-energy-projects/

 “If you don’t like the road you’re walking on, start paving a new one,” an American celebrity once said.

Wittingly, this epigram is also applicable to how some players in the energy sector have been changing tacks in project developments. There is currently a sore point dividing the ‘green advocates’ versus the ones perceived leaning more on ‘environment-offending technologies’ – yet as it is, it remains difficult trailblazing an investment pathway anchored primarily on technologies of less carbon intensity.

In an energy world where coal remains ‘king,’ the Lopez group – via its growing renewable energy and gas portfolios – is considered the only conglomerate trailing the ‘generally clean investment track’ – at least for now.  Could that be a precursor of things to come? Maybe – or maybe not!

A tourist-enthralling view of the 150-MW Burgos wind farm of the Energy Development Corporation – set against the backdrop of Northern Luzon’s sunset.

First Gen chairman Federico R. Lopez confessed that it was a tough decision path for them, but they still preferred to be in it for Mother Earth’s sake and the welfare of the next generation.

“It’s not easy. Even investors are saying that you are missing out on growth opportunities from investing in more coal plants…why don’t you bid for other government coal plants? You’ll get those kinds of comments,” Mr. Lopez noted.

He further admitted “it can feel difficult at times because we are torn with our shareholders, but there’s also something within our group that basically tells us: it’s in the values that we are on the right track, and we just need to hang on.”

The Lopez firm’s top executive added though that until now, they are still “looking for ways to live and carry out those values and the things that we do.”

The conglomerate’s diversified power generation capacities comprise of: gas-fired power plants which are also on expansion now; and renewable energy assets of geothermal plants, hydro, wind and solar – all labeled in the ‘clean tech genre’ and under corporate vehicles First Gen Corporation or Energy Development Corporation and their business operating units.

Burgos wind: a splendor reaching out to the sky

Recent addition to their portfolio is the 150-megawatt Burgos wind farm in Ilocos Norte – touted to be the biggest in Southeast Asia of such kind of investment in that technology type. Following the resolution of ‘transmission congestion problem’ that hobbled its initial operations, the wind plant now feeds optimized volume of its generated capacity to Luzon grid.

Yet beyond the electricity the wind plant generates, there are more value-added opportunities the facility provides not just to its owners and lenders – but to the general public in particular; and the world in general.

Eco-tourism is one sphere that wind plants have been emerging ‘superstars’; and the bigger scale noble cause is their contribution to alleviating global warming and health risks to humankind.

On the tourism front, Burgos wind’s parent firm First Philippine Holdings (FPH) is kick-starting its ‘Good Tours’ initiative, a series of guided tours for select groups at its power plant facilities. It is the company’s way of showcasing to the public that their power plant sites “are models for sustainability and home to globally important wildlife specifies.” FPH added that in their project sites, “visitors can hike mountains, cycle along the pathways, or paddle around the country’s largest water reservoir.”

The pilot activity they had on this was a tour for the energy journalists at their Burgos wind farm’s site – wherein tourists would often appraise as not just a “majestic showcase of 150 megawatts of clean energy” but a “splendid display of exceptional convergence of technological invention and nature.” The facility straddles around 700 hectares of rolling hills with 50 class-1 wind turbines that rise 120 meters into the sky.

Aside from its wind farm, FPH and its subsidiaries are also opening their other plant sites to visitors – including their gas-fired facilities in Batangas; as well as their geothermal and hydro plants across various sites in the country.

It was further explained that its ‘Good Tours’ drive is part of the bigger “Powered by Good” campaign of the Lopez group – which is essentially anchored on “building awareness and creating appreciation for businesses that build the nation,” such as renewable energy developments, industrial parks, mixed-use ventures and energy services.

Energy cost’s externalities: keeping it fake?

The Philippines, for years, has been teetering on power supply crisis. Investors reckoned that the most practicable and cost-competitive solution to that dilemma would be capacity additions from coal technologies – because the system is desperately in need of baseload capacity which emerging technologies, like RE, would not be able to provide.

Up to a certain extent, it seems acceptable – but making it like an interminable investment trend would be abysmal – frankly! The question nagging government then is: when will it pull the plug so coal investments could be re-balanced with corresponding amount of cleaner energy alternatives to be integrated also into the power system? The answer still is: deafening indecision.

What policymakers are being reminded of, however is that: the act of an individual country when it comes to these installations will not come without its more colossal impact to the world – the inconspicuous cost externalities would be on health issues; and global warming that are triggers of death-dealing disasters.

Richard Tantoco, EDC president and chief operating officer said, “the energy sector is undeniably a significant contributor to climate change,” thus, he calls out on government, investors and consumers to “all act collectively, decisively and quickly to switch to low carbon options.”

He asserted “notwithstanding the seeming lull offered by cheaper electricity prices, countries that have depended on coal plants as their main source of electricity have learned that such reliance can ultimately be very costly.”

The Lopez firm executive added “we have golden opportunity to learn from the mistakes of other countries whose over-reliance on coal is now costing them trillions of dollars in externalities. I certainly hope that we do not have to learn those lessons from the mistakes that we will knowingly commit moving forward because to do so would make our future generations suffer the consequences of going the ‘fake cheap’ route.”

Tantoco demonstrated in particular that “on an ex-plant basis, coal may readily appear to be the cheaper option – especially with the recent crash in global coal prices – but what other countries may have saved in electricity prices by taking the fast and cheaper route is quickly being eroded by the mounting social and environmental costs that they did not foresee or simply chose to ignore.”

He stressed “the truth is: coal has costly externalities, way beyond the ex-plant price, and these have not been priced-in to the illusory ‘least cost’ equation.”

In fact, during the climate diplomacy negotiations of the 21st Conference of the Parties (COP21) in Paris last December, this is one point of discussion that resounded with a thud: that calculations of cost impacts of coal plants must be done three fold: costs on their carbon emissions; and to also factor in costs to the environment and the other on human health.

The EDC executive expounded “it does not matter how much or how little carbon we emit today as a country relative to others –what should really matter is that the whole world recognizes that the Philippines will always be one of the hardest hit by the adverse impact of climate change year after year.”

And for a country with limited resources like ours, Tantoco emphasized “our capacity to respond to emergencies, disasters and calamities has proven to be clearly inadequate.”

He thus highlighted that “we cannot continue to live with this fact unaffected, and we have to make other choices and set policies sooner than later to stop this self-inflicted harm on both national and global scale.”

Indeed, for the Lopez group – whether or not they can really pave that new path for cleaner energy to thrive in the Philippine electricity market, it remains to be seen. What is certain though is: after solving the immediate supply crisis that the power industry is enmeshed in, ‘conscience’ must really strike upon investors so they will eventually ‘clean their acts’. Just an important thing to ponder on: if super typhoon Yolanda wasn’t enough wake-up call to the Filipinos, I don’t know what else we’re still waiting for to suffer from?