August 12, 2018 | 8:51 pm By Bienvenido S. Oplas, Jr.
This title is rooted
from three recent reports in BusinessWorld:
1. DoE gives up chair
of PHL Electricity Market (Aug. 1),
2. PHL to become
ASEAN’s most coal-dependent economy by 2030 — ADB (Aug. 4), and
3. Renewables firms
hoping to unify lobbying efforts (Aug. 7).
Report #1 is the
realization of a provision in Electric Power Industry Reform Act (EPIRA) law of
2001 that an independent market operator (IMO) be created to operate the
Wholesale Electricity Spot Market (WESM), which was created in June 2006. For
more than a decade, the Philippine Electricity Market Corporation (PEMC) as
market operator was a DoE-chaired and controlled body and hence, was not an
independent entity.
I attended the PEMC
Chairmanship Turnover Ceremony last July 31 at the PEMC office in Ortigas.
DoE Secretary Cusi has
officially turned over PEMC Board Chairmanship to Mr. Jose Aboboto, one of the
private industry players in WESM. Atty. Oscar Ala remains as PEMC president.
The IMO technical and
secretariat function will be done by the Independent Electricity Market
Operator of the Philippines (IEMOP) headed by its first President, Atty. Francis
Saturnino “Nino” Juan. In the ASEAN, only the Philippines and Singapore have an
electricity market between power producers and distributors/suppliers.
Report #2 may send
alarm bells to the climate alarmism and anti-coal movement as if Philippine
coal consumption is already substantial and may yet increase. Our coal use in
2017 of 13 million tons oil equivalent (mtoe) was only 1/9 of Japan, 1/7 of
South Korea, 1/4 of Indonesia’s 57 mtoe, 1/2 of Vietnam’s 28 mtoe.
In addition, our total
primary energy supply (TPES, sum of domestic production plus imports minus
exports) is also very small at only 0.52 tons of oil equivalent (toe) per
capita in 2016, or only 1/10 of South Korea and 1/9 of Singapore.
Our average electricity
consumption is also very small, only 744 kWh per capita in 2015, or only 1/14
of South Korea and 1/12 of Singapore.
One can conclude that
among the big reasons why South Korea, Japan, Singapore, Hong Kong, others are
developed is because they have huge energy and electricity consumption. Energy
precedes development that is why it is foolish to over-regulate and over-tax
power generation, transmission, distribution and pricing. When power supply is
huge relative to demand, there is no other way for the price to go but down,
resulting in cheaper electricity for consumers.
Singapore has very low
coal consumption because it is largely using natural gas, about 98% of its
total power generation. New Zealand is more dependent on hydro and other
renewables like biomass, geothermal.
Report #3 is about the
fear of renewable energy (RE) developers especially wind-solar that the DoE
will insist on a competitive selection process (CSP) instead of a “Swiss
challenge” for distribution utilities and electric cooperatives in getting
their power supply contract. Related to this is the fear of the RE lobby that
their tax perks like exemption from VAT, income tax holidays, etc. will be
removed under TRAIN 2 bill now in Congress.
A good compromise
between expensive, unstable electricity by the RE lobby vs cheaper, stable
electricity by the consumers, is to have a uniform feed in tariff (FIT) for all
variable REs — wind, solar, biomass and run-of-river hydro — to the lowest FIT
level of P5+/kWh. Solar-wind currently get P9+ to P10+/kwh of FIT or guaranteed
high price for 20 years.
Solar-wind developers
and campaigners keep repeating the mantra of “wind-solar technology are
improving very fast, their prices are declining very fast.” If so, their high
FIT should be adjusted downwards because high FIT automatically negates that
mantra.
If the EPIRA was
implemented without distortions like RE law of 2008, we should have cheaper and
more reliable electricity market in the country by now. Which reiterates the
fact that more competition, not state favoritism, is more conducive to the
economy.
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