‘Cheap versus expensive technology’ stirs debate on RE as alternative

MANILA, Philippines — The dilemma of renewable energy (RE) is how it can get out of the cradle and leaps into the playground when it comes to cost-competitiveness; and for that, the solution being propounded by the Foundation for Economic Freedom (FEF) would be to start with cheaper technologies in the installation targets.

With the “cheap versus expensive RE” debate being stirred up, the FEF opined that it will make a lot of sense integrating into the energy mix the cheaper ones first; and wait for the “technology maturity” of the others, primarily solar, so cost impact would eventually be eased for the Filipino consumers.

It has been the P9-billion annual subsidy computation of economist and former finance official Romeo Bernardo that is being fiercely contested by the RE developers who are latching on to higher price tags to justify investment returns. The others opined though that some cheaper RE technologies, such as hydro and biomass, could easily attain price parity with other technologies that the grid has traditionally been relying on for power supply.

“Cheaper first is the only sensible approach. The time frame for the expensive technologies need not be defined now, let us wait until they are mature and not ridiculously priced like over 300 percent of avoided cost of solar, then signing it up over a 20-year period as is being recommended by NREB (National Renewable Energy Board),” the FEF averred.

The economists’ group then set out a challenge for policymakers to “let the public decide what it can afford. It certainly cannot be the estimated P7 to P9 billion per year ‘subsidy’ over a contract period of 20 years, which is definitely unaffordable given the already high cost of power.”

Solar technology with a proposed feed-in-tariff (FIT) of P17.95 per kilowatt-hour (kWh) is viewed to be “too steep a price” for the Filipino consumers to bear. Ocean technology is also pricey with P17.65 per kWh FIT, but near-term installations are not really expected so it is not much of a worry for the regulators.

After an amount (deemed affordable to the public) been determined by Congress or through the public hearings of the Energy Regulatory Commission, the FEF further proposed that “we should auction off that amount starting from the lowest cost technology first like run-of-the-river, until the amount of the subsidy is used up.”

The group enthused that “the high degression rate (though not high enough) for solar is an acknowledgement by the renewable energy developers that the prices are expected to come down. So why not wait?”

Given that the initial price setting is applicable within the next three years, the FEF recommended that a review process must be undertaken at the lapse of that timeframe.

“So basically, if we are overly cautions we may end up with less renewable energy in the first 3 years, and make the necessary adjustments. If we err on the side of paying too much, we lock in the mistake for 20 years,” the group stressed.

It reminded policymakers and regulators then that “we already have more RE capacity installed as a percentage of total installed capacity than in the US and most countries in Europe, so we can afford to wait for some technologies to come down in price.” -MYRNA M. VELASCO, Manila Bulletin