Renewables still risky and costly, but way to go

By Rey Gamboa (The Philippine Star), March 8, 2016

Even with the recent ups and downs in crude oil prices, the fact remains the average levels today continue to be depressed if compared to the $100 per barrel pricing that fueled the world economy for more than a decade.

Hovering now at below $30, crude prices have dismayed US-based shale oil extractors as their profitability levels have shrunk far lower than they could have imagined, and even threatening their ability to survive in the near future.

With Saudi Arabia and most other oil-producing countries allied with the OPEC not throttling their production, the world is awash with crude stocks stored in every conceivable storage tank. It does not help the Chinese economy, the second biggest in the world, is slowing down, and therefore demanding less fuel to fire up its manufacturing facilities.

Business case

The upside to all of this, at least in the Philippines for the moment, is the continued push towards developing more renewable energy sources, notably with solar, wind, and to a certain extent, bio-energy. Even the seemingly forgotten bio-diesel fuel is getting a second look.

In this current oil-glut era, even if only temporarily, the development of alternative non-fossil fuel resources continues to be seen as viable, largely because of the government’s incentive program set in place before crude oil started its downward pricing cycle.

This, and recent technological advances in renewable energy systems have helped in bringing the cost of sun or wind to produce electricity to respectable levels where financial sustainability is possible with the help of some ingenious financial packages.

The business case may be far from ideal, but from a protracted perspective that is influenced heavily by the immutable logic that energy sources like oil, coal and gas are finite and will eventually run out, plus the anxiety the world is imperiled by “dirty” fuels, renewables are being given a fighting chance.

Like mushrooms

The most successful renewable energy source in the Philippines in terms of growth in recent years, it seems, would be wind. Sprouting like mushrooms in the northern tip of Luzon, wind farms are far from being novelty backgrounds for selfies.

In Ilocos Norte, the big wind farms in Bangui, Burgos and Caparispisan combined already make it one of the biggest in Southeast Asia, and provide clean and sustainable energy to energize the homes of millions of Filipino families.

In recent months, wind farms in other parts of the country have been breaking ground and taking advantage of the generous monsoon winds the Philippines experiences for most times of the year.

Based on a wind energy resource atlas developed and regularly updated for the Philippines and available essentially for free to any interested in investing in wind energy in the country, the goal is to install up to 2,400 megawatts of energy from wind by 2030.

Just recently operational is the Pililla wind farm in Rizal. Two more sites, in Oriental Mindoro and Laguna, are being eyed pending the resolution of grid connectivity concerns. More recently, the southern shorelines of Mindanao had been mentioned as wind energy-rich.

Deadline beaters

Just when solar seemed to be going nowhere in the country, the government introduced a more aggressive come-on for investors in 2012 under a feed-in tariff (FIT) scheme. With the deadline this March 15, locally approved solar project ventures are working hard to be able to beat the buzzer for FIT incentives.

So far, the total contribution from solar to the national grid will be about 200 MW from all the new projects, but this is way short of the 500 MW target set by the Department of Energy for this year under the renewable energy development plan approved in 2008.

There is clamor to extend by another year or so the deadline for FIT inclusion, especially since a number of solar projects clearly will not be able to operate within the next few days.

The development of solar energy continues to be challenged by the cost of technology and the inadequate solar maps for the country. FIT helps to a certain extent, but unless major reforms are seen in the sector, it would be difficult to aim for over 1,000 MW of installed capacity within the decade.

Under-tapped

Least understood and appreciated – and to a large extent undermined – is the contribution of bioenergy to the national grid. Residues from sugar, rice and coconut could comprise as much as 150 MW of energy, but is simply ignored and wasted.

Bioenergy represents a viable fuel source for commercial purposes as well as cooking use for households in the city and rural communities. Lately, sugar-based ethanol and coconut oil have been subjected to new scientific studies, all with the hope of popularizing them as motor fuels.

While there are criticisms hurled against converting sugar and plant-based oils because they compete with humans’ food consumption patterns, new studies are being conducted to isolate the two processes to enable each to co-exist without undue harm inflicted on each other.

Additional cost for environmental reforms

For both the country’s wind and solar energy development programs, success could not have been possible if not for the role of international agencies and global funding organizations that firmly believe in a future where renewable energy plays a major party.

And despite the controversies that earlier clouded FIT incentives, hard-core economists are giving space for environment activism to be heard, even if it may come as an additional cost, albeit minute, on the pockets of electricity consumers.

Perhaps this reflects the urgency of reforming our old wasteful and harmful ways during the industrial age to save the world from the perils of global warming. Call it a payment for sins of the past, something that has become more expensive given the extent of damage that needs to be repaired.