SPECIAL REPORT: What is the true cost of electricity?

Published by rudy Date posted on July 17, 2014

(First of three parts)

The cost of electricity in the Philippines is measured in many ways.

For the consumers, the cost is measured in pesos per kilowatt-hours that appear in the monthly bills.

There have been record high increases following petitions before the Supreme Court and due to clearing prices set at the country’s trading floor for electricity, the Wholesale, Electricity Spot Market or WESM.

Experts believe, however, that the true cost of electricity could be higher because not many people take into account the impact of coal, which is the main source of power in the Philippines.

To illustrate, in 2013, coal-fired power plants accounted for 5,568 megawatts in installed capacity, whereas oil-based power plants come in a far second with an installed capacity of 3,353 MW.


Natural gas power plants, meanwhile, have a total installed capacity of 2,862 MW, while geothermal account for 1,868 MW of installed capacity.

The Philippines currently has 14 coal-fired power plants.

The renewable energy sources, meanwhile, account for 3,521 MW for the hydropower plants; 33 MW for the wind; 119 MW for biomass and one MW for solar.

The data is based on a report from the Department of Energy as of March 2014.

While coal plant owners insist that the use of coal is much cleaner than before, Climate Change commissioner Naderev Saño, as well as environmental groups like Greenpeace, say that there is no such thing as “clean coal.”

“Coal will always be dirty because even with technology to control air pollution, the process still produces coal ash, which when disposed improperly can contaminate the environment with heavy metals,” Saño told The STAR.

He also explained that the water used for scrubbing smoke stacks or in the ash ponds have to be disposed and pose a dangerous risk to human health.

“When viewed from a value chain perspective, coal has to be extracted from coal mines, usually through open pit mining that leaves irreversible damage and creates black wastelands. As such, there can be relatively “cleaner” coal technologies but it can never be truly ‘clean,’ Saño said.

As such Saño said, coal burning for power generation remains the main reason for heat-trapping gases that cause anthropogenic climate change.

Saño recognized that there have been gains in reducing the pollution coming from coal plants, but noted that these are still not enough.

“As a technology, there have been gains in reducing the pollution coming from coal plants but the band-aid measures at the end of the pipe have very prohibitive costs and only in countries with strict air quality regulations would the pollution control investments make business sense,” he said.

Because coal is a cheaper option compared to other forms of fuel, many opt to rely on this fuel.

“Unfortunately, these environmental and public health concerns are externalities and are not considered in the economic equation. For many developing economies like the Philippines, the true cost of coal is not internalized and so coal apparently seems the cheapest option. Because of the political economy surrounding fuel and energy, and the urgency of providing energy when it is needed and where it is needed, the balancing act between short-term cost-efficiency and long-term sustainability becomes a challenging task,” Saño said.

The non-government Greenpeace, as expected, maintained that there’s no such thing as clean coal.

“They always claim that there is clean coal. The truth is there is no such thing as clean coal. The technology that is used is more advanced in order to lessen the emissions, but in truth there are still emissions. The emissions may be lower, but that doesn’t mean the emissions are gone. There are other factors too such as coal ash. The process might be cleaner, but it doesn’t mean you can actually claim it’s clean coal. It’s a misnomer,” said Greenpeace climate change campaigner Reuben Muni.

Muni believes the solution is for government to promote renewable energy (RE), which authorities say are dependent on the specific energy source such as sun and water.

“That’s another myth on RE. A lot of the myths being peddled by the coal industry are just myths. One of the common misconceptions is that there is only one source but if you talk about power generation by RE you can talk about the energy mix. For example, you can have both solar and wind in one place. In some places, that’s possible. It’s also possible to have solar and hydro in one place.

What is lacking is information, which is why some communities think it’s impossible,” he said.

“What the government should do is to push for the development of RE,” he added.

The Department of Energy (DOE), however, is doing exactly that. It provides incentives to RE proponents under the so-called feed-in-tariff (FIT) system.

The FIT regime is a form of incentive for renewable energy players.

Feed-in tariffs offer cost-based compensation to renewable energy players among other perks.

The FIT rate approved by the Energy Regulatory Commission (ERC), the power regulator are as follows: P9.68 per kilowatt-hour for solar; P8.53 per kWh for wind, P6.63 per kWh for biomass and P5.90 per kWh for hydropower projects

Aside from providing incentives to RE proponents, Greenpeace’s Muni said the government should also stop approving coal contracts.

“Definitely, the government should stop approving coal fired power plants. It’s also possible to revoke permits issued for new power plants. They can do more than that especially in terms of information. There is a lot of misinformation. They should also have a one-stop shop for RE applications to speed up the process,” Muni said.

I think that the government should really prioritize RE especially development of RE facilities not just large scale but community based RE facilities. It’s the more suitable model. –Iris C. Gonzales (The Philippine Star)

(Tomorrow: How unhealthy is coal?)

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