PHL counting on renewables as energy crisis looms
By Sheldeen Joy Talavera, Reporter
WITH the sole indigenous natural gas source responsible for 20% of Luzon’s power needs expected to run dry, the looming energy crisis is sending the Philippines on a mad scramble to adopt renewable energy before the lights start going out.
The Philippines continues to be dependent on coal for baseload power, even after banning new coal-fired power plants. Coal accounted for over 60% of the power generation mix last year, and could continue to make up a significant share with many recently built coal-fired power plants up and running.
Despite the continued reliance on coal-fired power, the government has set ambitious goals to increase the share of renewable energy in the power generation mix. Renewable energy includes wind, solar, biomass, geothermal, ocean energy, and hydropower, which comes from naturally replenishing resources.
“While this highlights that the Philippines is still heavily reliant on fossil-based commodities, we are also seeing the significant potential for the expansion of renewable energy projects in the country,” Angelo Kairos T. Dela Cruz, executive director of think tank Institute for Climate and Sustainable Cities, said in an e-mail.
Mr. Dela Cruz said the Philippines is moving towards “a more sustainable and resilient energy landscape” under the Clean Energy Scenario (CES) of the Philippine Energy Plan 2020-2040, developed by the Department of Energy (DoE).
Renewable energy currently holds a 22% share of the power generation mix. The CES targets are a 35% share by 2030 and 50% by 2040.
Judging by policy and regulatory improvements, the Philippines has taken great strides in pushing for more new renewable energy capacity, according to Jose M. Layug, Jr., president of the Developers of Renewable Energy for Advancement, Inc.
“The Philippines has leapfrogged its neighbors in ensuring transition to cleaner forms of energy,” Mr. Layug said via Viber.
The DoE has been promoting renewable energy adoption via the Green Energy Auction (GEA) Program, Green Energy Option Program, net metering, and renewable energy portfolio standards.
“These initiatives aim to incentivize investment in renewable energy projects and create an enabling environment for their development,” Mr. Dela Cruz said.
The Energy department is targeting two rounds of the GEA this year, featuring various renewable energy technologies, particularly projects involving integrated renewable energy and energy storage systems.
To date, it has awarded 5.4 gigawatts of new renewable energy capacity via the auction program.
For 2024, the DoE expects more than 4,000 megawatts of renewable and conventional power projects to come online, thereby bolstering the power supply.
Analysts said that there is still a need to consider the limitations of variable forms of renewable energy to ensure stable and reliable electricity.
Mr. Layug said the push towards the renewable energy targets should be “calibrated yet aggressive.”
“While we install more renewable energy plants, the DoE is fully aware of the need for baseload power and ancillary services to address intermittence. We will move forward with (sustainability) and resilience, taking into account the consumer interest,” he said.
The Philippines’ grid planning has traditionally been focused on centralized baseload power plants, “which typically run on fossil fuels,” Mr. Dela Cruz said.
“This approach makes it challenging to integrate variable renewable energy sources like solar and wind into the grid effectively, as instead of baseload facilities, which are inflexible, what we need to complement variable renewable energy is flexible generation,” he added.
Eric T. Francia, president and chief executive officer of ACEN Corp., said that there is a need to recognize the limitations of the system given the intermittency of variable forms of renewable energy.
“The good news is that battery storage costs are improving. I hope to see supportive policies to accelerate the scaling up of energy storage, thereby unlocking the full potential of renewables,” Mr. Francia said via Viber.
ACEN, the energy arm of the Ayala group, currently controls about 4.8 gigawatts of attributable capacity in operation and under construction, as well as signed agreements and successful competitive tenders amounting to over one gigawatt.
The company said it has effectively exceeded its original goal of five gigawatts of renewables by 2025.
BUILDING THE RENEWABLE ENERGY PORTFOLIO
With the Philippines highly vulnerable to climate change, some companies have integrated renewable energy into their portfolios to reduce emissions of greenhouse gasses and other pollutants.
Renewable energy accounted for most of the committed projects in the pipeline for the year, dominated by solar energy with capacity of 1,720.27 megawatts as of the end of May.
SP New Energy Corp. (SPNEC) is building the P200-billion Terra Solar project which could become one of the world’s largest solar farms.
The solar project in Nueva Ecija and Bulacan consists of a 3,500-megawatt solar power plant and a 4,000-megawatt-hour energy storage system. It is expected to generate more than five billion kilowatt-hours of electricity yearly.
“This will be one of the largest solar projects not just in Asia, but in the world,” SPNEC Chairman Manuel V. Pangilinan has said. “It’s a big project. It has attracted a lot of interest from foreign investors because it’s big. It’s transformative for the Philippines.”
Antonio Miguel B. Alcantara, chief executive officer of Alsons Power Group, said accelerating the shift toward sustainable energy is essential.
“This shift will require building new power plants, improving our electrical grids, and establishing reliable interconnections between islands to facilitate the integration of renewable energy sources and improve overall energy access,” Mr. Alcantara said via Viber.
Alsons Power, the power arm of the Alcantara group, is set to commence with commercial operations of its P5.5-billion hydropower project in Sarangani province in September — its first renewable energy project.
It has a pipeline of nine hydropower projects which the company aims to complete over the next five years.
Currently, Alsons has three diesel power plants and a thermal plant with a combined capacity of 468 megawatts.
“Along with the development, implementation, and operation of our power projects comes our drive to integrate ourselves into our host communities. We do this through our community relations programs that focus on the environment, education, and community development,” Mr. Alcantara said.
Under the Energy Regulation No. 1-94, host communities are ensured to get a reasonable share of the profit from power plants operating in their areas.
ACCESS TO FINANCING
Renewables still face challenges due to limited access to financing and permitting issues that could hinder the industry’s expansion.
“The limited access to financing slows down the development and expansion of renewable energy initiatives due to inability to secure adequate funds,” the DoE said.
Mr. Dela Cruz said that while renewable energy plants require substantial upfront investment, obtaining loans and financing can be challenging, particularly for small industry players.
“Limited access to affordable capital and uncertainty surrounding financial returns can deter potential investors from actively participating in renewable energy,” he said.
The Philippines will need up to P31 trillion to hit its energy targets by 2040, according to the DoE.
Aside from financing, the DoE said obtaining permits remains “complex,” which it is trying to address through the Energy Virtual One-Stop Shop (EVOSS).
“While we have made progress in ease of doing business with EVOSS, there is still room for improving processes and reducing permits needed to build power plants. We need to have vibrant and mutually cooperative government collaboration: national and local,” Mr. Layug said.
Despite the challenges, the Energy department said it is still on track on achieving its renewable energy goal, committing to expand the portfolio.
“We are actively developing waste-to-energy resources, expanding rooftop solar installations, and exploring the potential of ocean and tidal energy, ensuring a diverse and resilient energy mix for the future,” the agency said.
“These efforts underscore our dedication to achieving national renewable energy targets, reducing carbon emissions, and securing a sustainable energy future for all,” it added.