No more ‘business as usual’ for electricity in the Philippines

By Eddie O’ Connor,, BusinessWorld, Apr 30, 2018

AS the economy in the Philippines continues to grow, energy demand races ahead. Recent analysis by the Asia Development Bank and the International Renewable Energy Agency (IRENA) suggests that energy consumption will grow by 40% by 2025, with an 85% increase in energy demand for electricity.

The question for the Philippines is how to deliver these very large amounts of new electricity without exposing the country to increased energy insecurity and environmental pollution. On a “business as usual” track, where coal remains the dominant fuel in the country’s electricity mix, the Philippines will become a net importer of energy over the coming decade. At the same time, the impacts of pollution, driven by this fossil fuel use, continue to grow. External costs, including health care, will rise inexorably, amounting to some $225 billion across the ASEAN region by 2025.

Thankfully, the Philippines has an alternative pathway which will enable it to meet its growing energy demand while increasing energy security and reducing the costs of, and exposure to, pollution. This pathway also sees a reduction in the cost of energy, as coal and gas are replaced by less expensive alternatives, which can also be brought onto the grid faster and deliver electricity with reliability and in meaningful amounts.

Renewable energy is already cheaper than new coal fired generation and it is quicker to install. In markets around the world, new solar and new wind energy is beating coal in auctions for new capacity.

As the costs of these technologies continue to fall, the cost of coal remains stubbornly high, even without factoring in the price of pollution and security of supply.

Both wind and solar power plants can be built in a year to eighteen months, irrespective of the size of the unit. This is in contrast to building a new coal fired power station, which can take the better part of five years.

In short, coal is neither a quick nor cheap solution to the Philippines’ ongoing demand for energy. The country has plentiful supplies of renewable energy and God doesn’t charge for sunlight or wind.

The energy industry is a major employer, and renewable energy is expected to deliver very significant numbers of new jobs over the next decade. IRENA estimates that the region could sustain a 9.5% employment growth rate in renewable energy. Many of these jobs will come in the design and manufacturing of renewable energy components, as well as in the development, construction, and operation of the plant.

If the Philippines sets out an ambitious medium-term strategy for wind and solar energy, it will like Morocco, South Africa, and Brazil attract the design, manufacturing, and servicing operations to support these growing industries. Wind turbine towers and blades, along with power electronics and operations monitoring work could all be attracted to the Philippines if it set its target to become the regional hub for Southeast Asia, as well as servicing its own demand.

The Philippines has built a global position in the business services and outsourcing sectors in a comparatively short space of time.

By investing in renewable energy, the country also has the opportunity to do the same again by developing the energy systems of the future, which will use smart technology to run the power plant, grids, and transport needs of tomorrow.

While this prize awaits the Philippines, it is clear that the alternative — coal — will not deliver such economic opportunities. The components and the fuel for any new coal fired power stations will come from overseas, bringing energy insecurity and exposure to price volatility along with pollution and greenhouse gases. Coal will not deliver an energy system of the future for the Philippines, just business as usual.

The Philippines has set out its ambitions in its 2030 National Road map.

But, a road map can only describe a destination.

If the country is to truly steal a march on its competitors and unleash the nation’s renewable energy potential, it needs to significantly increase the amount of renewable energy capacity to be procured by local utilities under the new Portfolio Standard. If this doesn’t happen, and we take an incremental approach, then the country will continue to be exposed to fossil fuel price risk, the growing costs of environmental pollution and the prospect of its neighbors grabbing the clean energy investment and jobs that would otherwise come here.

This is a moment for action; business as usual, or a new pathway to growth and economic development powered by our own resources. It’s not a difficult choice to make.