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Renewable energy in the Philippines

The newly opened wind farms in the Ilocos Norte province are among the fast growing renewable energy (RE) projects in the Philippines, a country that is largely dependent on imported oil and whose main sources of power are coal-fired power plants.

BURGOS, Ilocos Norte – Standing on an overlooking hilltop here in Burgos, Ilocos Norte, one can hear the northern wind blowing its loudest as it powers 50 wind turbines scattered all over a 600-hectare land that was once filled with snakes.

Welcome to the Burgos Wind Farm, a 150-megawatt new power plant that commenced operations in November last year and which is touted as one of the biggest wind farms in Southeast Asia.

It is owned and operated by Energy Development Corp. (EDC), a geothermal company led by the Lopez Group, a prominent Filipino family engaged in various businesses.

“This project underlines EDC’s strategy to be the country’s leading diversified renewable power company,” said EDC president Richard Tantoco, announcing the project.

The company said the project would not only provide 370 gigawatt-hours of electricity, which would power approximately two million households but could also displace an estimated 200,000 tons of carbon emissions annually.

Indeed, the air is crisp and fresh and there is no dark smoke or soot emitted anywhere in the wind farm. The difference is stark and telling, as say, if one would stand in the middle of a coal-fired power plant.

The people of Ilocos Norte could not be more proud.

“We are now the renewable energy capital of the Philippines, actually, not only in the Philippines but in Southeast Asia,” Ilocos Norte Governor Aimee Marcos told reporters in a recent briefing here.

Marcos welcomed the development of the Burgos Wind Farm in the province, saying that there is no substitute for clean energy.

The Burgos Wind Farm is not the only wind project in the province. Another wind farm is the Bangui Wind Farm, located in Bangui, another municipality in this province and constructed ahead of the Burgos Wind Farm.

Northwind Power Development Corp., a company controlled by Ayala Corp., a Filipino-owned conglomerate, operates this 33-MW wind farm in the province.

This project uses 20 wind turbines arranged on a single row and stretched along a nine-kilometer shoreline.

According to Northwind, this project is estimated to offset 57,000 tons of carbon emissions.

The wind farms in the province are just among the fast growing renewable energy (RE) projects in the Philippines, a country that is largely dependent on imported oil and whose main sources of power are coal-fired power plants.

RE in the Philippines

Indeed, over the last four years, the renewable energy sector in the Philippines has recorded tremendous growth and the excitement in the air is almost tangible.

More and more companies are eyeing the renewable energy sector and the Philippines is on the radar screen of foreign investors as well that are keen on investing in RE.

The policies of the administration of President Aquino are also contributing to the growth and development of RE.

One such policy, for instance, is the so-called feed-in-tariff (FIT) scheme given by the government, which is a set of incentives to lure investors into the RE sector.

And signs of boom are evident not just in the windy provinces of the North and the Visayas but also in rooftops of buildings and malls across different cities and municipalities that are being powered by solar energy.

Indeed, a policy change introduced by Energy Secretary Carlos Jericho Petilla encouraged renewable energy companies to push through with their investments.

He said that when he came to office in 2012, there were the so- called flippers or those companies that did not seem seriously interested in developing renewable energies but use the sites only for speculation.

“At the beginning of his term, there were around 200 service contracts pending. As it turned out, these service contracts were not only pending because of the long and complicated permitting process but also because a considerable amount of applicants already sold their sites. Therefore, he decided on the one hand to streamline the permitting process in order to favor the serious players, and on the other hand to make sure that flippers are abandoned. His administration simplified the permitting process for RE plants and streamlined the requirements of the financial and technical assessments,” according to a December 2014 report prepared by GIZ, an international organization operated by the German government, on the success of RE in the Philippines.

Thus, he introduced the first-come, first served rule for FIT.

In a separate interview, Petilla said this rule for FIT was meant to weed out the non-serious developers or the flippers.

This approach proved to be efficient and successful, the Energy chief said.

Wind, Solar, Biogas

For instance, the Burgos Wind Power Project was built in a span of just six months.

Similarly, the San Carlos Energy Inc. (SaCaSol) successfully connected the first 22 MW of its solar plant in Negros in the southern Philippines in May last year and another 30 MW are under construction.

According to the company, the SaCaSol plant is expected to provide approximately 31,610,473 kilowatt-hour (kWh) of electricity annually to the Visayas Grid, which is currently suffering from brownouts and low voltage problems.

Petilla said this regulation created confidence on the Philippine government as a reliable partner supporting serious RE developers.

In 2014, the government had started to reap the fruits of its labor.

SaCaSol was inaugurated in May and at the end of last year, the installed capacity of net metering solar PV rooftops was around 450 kWh, with total potential of 1 MW in solar rooftops estimated to be in the pipeline.

SaCaSol chairman Jose Maria Zabaleta, in a December 2014 symposium celebrating the success of RE in the Philippines, shared the success story of the SaCaSol project.

Zabaleta, originally a sugar farmer, said it was in 2012 when he talked about his plans to build a solar plant with the credit agency Thomas Lloyd, which in turn agreed to provide funding for the project.

He said that aside from providing clean energy, the construction of the solar plant also provide employment to the community.

The project employed 2,500 people and the unemployment rate went down close to zero percent.

Furthermore, since there is now stable power, a Japanese company has set up shop in the province and is now employing 1000 people.
SaCaSol is set to double its capacity and is exploring new areas, Zabaleta said.

Tetchi Capellan, president of the Philippine Solar Power Alliance (PSPA) said the development of the solar industry in the Philippines started in 2011, when a group of private sector representatives organized a business trip to Germany to learn how to develop a solar power market.

In 2012, the Asian Development Bank built a 520 kW solar system on their roof, marking the first break through in solar development in the country.

To support development of RE, solar developers pushed for the net metering rules as a support mechanism for solar rooftops.

The net metering system is provided under the Renewable Energy Law of 2008. It allows electricity end-users who are updated in the payment of their electricity bills to their distribution utility to engage in distribution generation

The Energy Regulatory Commission (ERC), the power regulator, passed the implementing rules in June 2013.

Solar rooftops

Since then, the solar rooftop market has developed tremendously. While at the beginning of 2014, a capacity of only 200 kW were under the net metering scheme, this number increased already to almost 1 MW by the end of 2014.

Some of these solar rooftop installations and projects are the 22 MW SaCaSol project, the first solar farm in the Philippines and a solar panel rooftop in one of the branches of the SM Mall, the largest mall chain in the Philippines.

Launched in November last year by local firm Solar Philippines, the project involves 5,760 solar panels and 60 inverters installed over the mall’s parking building, covering 12,000 square meters.

The 1.5 MW plant will be able to augment the mall’s power requirements, or the equivalent of 2,000 Filipino homes. It is expected to operate for over 25 years and offset an estimated 40,000 tons of CO2, according to Solar Philippines.

Capellan said there are more solar rooftops and projects that would likely materialize this year, for both commercial and public buildings.

Solar Philippines, for instance, inaugurated on March 5 another solar rooftop project, this time at Robinson’s Place Palawan, another giant mall chain in the country.

Approximately 20 percent of the mall’s electricity consumption will be covered by the solar panels 1,100 tons of carbon emissions per year, the company said.

And it’s not only solar that has potential for growth in the country.

According to the Energy department, the Philippines has a total biomass potential of 4400 MW that remains to be fully tapped.

So far, the current installed biogas capacity in the country is only 11 MW and another 50 MW in the pipeline.

Indeed, Ditmar Gorges, chief executive officer of biogas company EnTech said the biogas industry is still starting to develop the market in the Philippines.

He said that biogas plants not only utilize industrial waste but also creates farm jobs.

Running a 1 MW plant employs around 120 farmworkers, Gorges said.
He said crucial to the establishment of a Philippine biomass market is capacity building and raising awareness for potential biomass investors.

Filipino-owned Cleangreen Energy Corporation (CEC) is another example of a company that is tapping the potential of biogas in the country.

The company is building a 12 MW biomass power plant in Bataan, a province in the north, to commence operations in 2017.

Indeed, wind, solar, biogas have huge potential in the Philippines. Hydropower and geothermal sources, meanwhile, already exist and have been providing power to the grid.

Generation Mix

According to the Department of Energy (DOE), as of 2011, the Philippines’ installed power capacity is divided as follows: coal has a 30 percent share, followed by natural gas at 18 percent percent and then oil-based plants at 19 percent. The share of renewable energy, meanwhile, is as follows: 11 percent for geothermal, 22 percent for hydro, and 0 percent for wind, solar and biomass. This was in 2011. Total installed capacity is 16,162 MW.

While there is no updated figure on this yet, the 2015 registered capacity at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, may provide an indicator on how much capacity of renewable energy has increased.

The registered capacity at the WESM for 2015 is as follows” coal is at 36.55 percent, natural gas at 17.58 percent, oil-based at 15.50 percent, geothermal at 11.17 percent, hydro at 15.36 percent, wind at 2.44 percent, biomass at 0.87 percent, solar at 0.33 percent and small hydro at 0.19 percent.

Moving forward, energy players expressed optimism that the RE industry in the Philippines will continue to grow.

Ernesto Pantangco, chairman of the National Renewable Energy Board (NREB), a multi-sectoral body under the Department of Energy that aims to promote the RE sector, is very optimistic that the investments in RE will increase.

He said that NREB is working on an information campaign in order to make more companies aware of the feed-in tariff incentive.

Solutions to Power Crisis

Pantangco, who is also senior vice president of EDC, the owner of the Burgos Wind Farm, also believes that RE can be part of the solution to the looming energy crisis in the Philippines.

Solar power is definitely a part of the solution because solar PV plants produce just at the right time energy to provide peak power, he said.

He also said that even though wind power has its off-season during summer time, it would still produce around 20 percent output contributing to the power reserves.

Another official of the group that owns the wind farm agreed.
“Anytime the wind is blowing, (the wind farm) will generate up to 150 MW,” said Aloysius Santos, vice president of First Gen., the power generation company of the Lopez Group, said in a recent briefing with reporters.

He said even during the summer, there is a potential for the wind farm to generate 150 MW of power because there would still be windy days.

A power supply shortage is looming this summer for the Luzon grid, one of three grids in the country. The two other grids are the Visayas and Mindanao grids.

The supply shortage is at least 700 MW due to higher demand and insufficient supply because of the one-month maintenance shutdown of the Malampaya Deep Water Gas-to-Power Project in offshore Palawan.

The Malampaya facility, which supplies 40 percent of Luzon grid’s requirements, is scheduled for a maintenance shutdown from March 15 to April 15.

Indeed, there are many advantages of RE aside from augmenting supply this summer.

And the Philippines, blessed with manifold renewable energy sources, can do well to maximize these resources.

According to GIZ, increasing fuel prices, high energy import dependence, ever increasing carbon emissions and unconsidered external costs of fossil fuels make renewable energies the superior alternative.

It said that electricity generation from renewable energy makes the country less dependent on energy imports.

“In 2013, indigenous energy sources saved the country energy imports in the amount of $2.7 billion. 56.75 percent of the Philippines energy demand is already covered by indigenous energy sources. Yet, the energy demand is expected to rise annually by four percent. Renewable energy sources, such as solar and wind, are free of charge and can help to cover the additional demand keeping the Philippine import,” GIZ said in a report on RE.

RE can also cushion the economy from volatile prices of fossil fuels.

“The prices for fossil fuels like natural gas and steam coal are very volatile. This makes it difficult to predict the future costs for electricity generated from fossil fuels. Most renewable energies have no fuel costs that makes it easier to predict their costs,” GIZ said.

More importantly, it said that the use of renewable energies would significantly reduce the country’s greenhouse gas emissions.

“The replacement of 1 kWh coal generated electricity by 1 kWh RE generated electricity saves around 960gCO2,” it said.

Energy Revolution: Going Green

Environmental group Greenpeace also said that the Philippines could embrace an energy revolution and totally abandon coal.

“The Philippines can embrace an energy revolution, turn its back on coal, seize the moment and lead the way for renewables in Southeast Asia, capitalizing on its success in geothermal and in solar panel production,” Greenpeace said.

Furthermore, Greenpeace said that renewables ensure the country’s security of supply, help cope with rising demand and provide decarbonized energy.

“We all need electricity. It is vital. It powers our lives, runs our hospitals and schools – we need to for every aspect of our lives. But we need to be clean and sustainable. Embracing the energy revolution and harnessing renewables doesn’t mean bankruptcy and sacrifice. The facts show that it can bring us wealth, cost savings and employment,” the group said, adding that thousands of jobs can be created by the industry.

Moving Forward

For his part, Department of Energy director of Renewable Energy Management Bureau Mario Marasigan said in an interview that the goal is to increase the share of RE continuously.

“Our aim is to triple the capacity of RE by 2030. RE is clean so we need that,” Marasigan said.

The department he said, has the thrust to ensure energy security and at the same time, “climate proof” the future.

At the same time, he said the government needs the help of everyone in promoting RE because it cannot do it alone.

Going green and utilizing RE sources, indeed, will surely go a long way for the future of the Philippines as well as the health of its people and the environment.

About Iris Gonzales

Iris Gonzales is a Manila-based writer. She covers the economy for The Philippine Star and blogs about human rights and development issues for the London-based New Internationalist.