Green energy okay, but not at this cost

We all want renewable energy, of course. With supply infinite and non-pollutive, it is the smart alternative to dwindling dirty sources like diesel and coal. But should we go into solar and wind if it would swell our electricity bills? Certainly not. More so, if that extra cost amounts to P8 billion a year, for 18 years, or a total of P144 billion.

The P8 billion yearly is what the government wants consumers to subsidize for R&D of solar-wind technologies. The National Renewable Energy Board is petitioning the Energy Regulatory Commission to insert it in electricity bills, as suggested in a new law. If the ERC consents, consumers will fork up an additional 12 centavos per kilowatt-hour of electricity. Philippine electricity notoriously is the costliest in Asia, a dampener to investments and dread of households.

The government would grant P17 per kilowatt-hour for solar R&D, and P10 for wind, for close to two decades. This will multiply electricity production costs six times. Romeo Bernardo, former undersecretary of finance asks if it’s still affordable. Conventional sources cost only P5 a kilowatt-hour to produce, on average.

The Foundation for Economic Freedom is sounding the alarm against the rent-seeking subsidy. The money will go to “rich solar and wind producers, at the expense of Philippine industry and the Filipino consumer,” the FEF says. The organization of economists posits that, if the Philippines must subsidize renewable R&D at all, it should be for biomass and run-of-the-rive hydro. These types would benefit rural areas more. By contrast, solar and wind are unsteady and unreliable because dependent on weather, according to FEF president Calixto Chikiamco.

The government views the subsidy as the Philippine contribution to reducing carbon emissions. But the FEF counters that the country’s emissions are less than one percent of the world’s, while 30 percent of its power already derive from renewable geothermal. So much for the rent seekers’ green cover.

The STAR columnist and FEF member Boo Chanco questioned recently the subsidy’s 18-year duration. Quoting a solar industry exec’s report to stockholders, he said their output would match grid parity in three to five years. So why lock consumers into a two-decade payout, instead of waiting only awhile for solar and wind to catch up.

Abroad solar and wind subsidies are also under fire. Boo cited market trader Jim Chanos’s debunking of the energy’s vaunted cost-efficiency. In a presentation entitled “Does Wind + Solar = Hot Air?” Chanos pointed up overblown figures, including supposed jobs generation. –Jarius Bondoc (The Philippine Star)