Call for price-based competition in Philippines solar market

Call for price-based competition in Philippines solar market

Solar PV has a strong role to play in the Philippines where energy demand
continues to grow and the power mix remains expensive. While significant
utility-scale solar deployments peaked ahead of a deadline to qualify for
the Feed-in-Tariff in March this year, a new subsidy quota is on the
horizon. PV Tech caught up with Pete Maniego, chairman of the National
Renewable Energy Board, to gather his insights on solar subsidies and how PV
can compete with fossil fuels in the Southeast Asian country.

You were quoted recently as saying the government needs to level the playing
field for renewables. What solutions would you propose?

I was advocating for a price-based competitive selection process instead of
the current cost-based rate fixing. Fossil-fuel fired power plants have the
pass-through cost advantage over renewable energy sources. The returns of
fossil power plants are guaranteed over the term of the power purchase
agreement (PPA). On the other hand, the rates of renewable energy plants are
fixed during the Feed-in-Tariff (FiT) period, except for Forex and inflation
adjustments.

What do you think should be done to enable smaller companies to compete in
the market?

The 'First to Operate', 'First to FiT' policy of the Department of Energy
should be changed. The policy unduly favours big companies with deep pockets
and access to financing, whereas small companies find it difficult to secure
funding due to the uncertainty of finishing the race on time or within the
installation caps.

Companies like Google, IKEA and Facebook are becoming more involved in
renewables - with either on-site or with off-site PPAs. What's your view on
large energy users in the Philippines working in a similar way, and how do
you think government should reduce the risk for them?

The retail competition and open access policies (RCOA) are mandated under
the Electric Power Industry Reform Act, and immediate implementation is
being pushed by the Energy Regulatory Commission. Under the RCOA,
contestable customers can enter into agreements with retail electricity
suppliers other than the distribution utility serving their area.
Contestable customers are those with 750kW requirement per month. The
threshold will be reduced by 250kW per year until all consumers will be
contestable customers. Incentives can also be given to companies for
installing solar and other RE power systems that will reduce their peak and
energy demand.

Obviously, the Philippines is importing a lot of fuel currently, how would
an increase in prices change power prices and how then would they compare
with renewables?

The coal-fired power plants have a new lease on life due to the current
regime of low fuel prices. Despite the prevailing low fossil fuel prices,
solar and wind developers were able to offer lower prices than coal in
Chile, the Middle East and the United States. In the Philippines, the
Manila Electric Company (Meralco) was able to close PPAs with solar power
companies at Php 5.39/kWh (US$0.112), which is competitive with coal.

The Philippines has abundant renewable resources: what mix do you think
would work the best?

For the next five years, the Philippines should aim for a 30% share in the
power mix based on consumption i.e. GWh, not installation capacity in MW.
By 2030, the renewable energy share in the power mix should be 50%. Over the
long term, the aspirational target should be 100% renewable energy supply
for the country.

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Ref:
http://www.pv-tech.org/interviews/pv-talk-call-for-price-based-competition-i
n-philippines-solar-market

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com