Philippines: The real score

Philippines: The real score

The issue of whether or not to promote renewable energy in this country has
always been a touchy one.

To accelerate the development of emerging renewable energy resources,
Republic Act 9513 or the Renewable Energy Act of 2008 provided for a feed-in
tariff (FIT) system for electricity produced from wind, solar, ocean,
run-of-river hydropower, and biomass to serve as an incentive to producers.

Unfortunately, these incentives given to producers of renewable energy come
in the form of a fixed tariff given to producers and these FIT payments are
recovered from end-consumers via the FIT charge that appears in our
electricity bills.

The incentives are granted on a first-come-first served basis. Among the
incentives enjoyed are priority dispatch in the Wholesale Electricity Spot
Market (WESM) and a fixed rate of P8.69 per kwh.

Once the installation target is met, no new FITs will be given for that
period. Plants outside the FIT scheme have to sell their output at market
prices.

During the first contracting round of FIT, the DOE increased the
installation target allocation of solar energy from 50 megawatts in 2013 to
108 MW in 2014 in recognition of the investments and contribution of solar
companies in the energy mix.

For the second contracting round whose deadline ended in March 15, 2016, the
quota for FIT eligibility for the solar power sector is 400 megawatts.

The way the FIT system works, these power plants have to build first before
they can apply for incentives. And so ever since the FIT system was
implemented, about 798.2 MW of solar capacity was built, of which 100 MW
were given incentives under the first round. With 400 MW eligible under the
second round, this left around 298 MW "stranded" and without incentives.

What the solar industry wants is for the entire 798.2 MW of installed solar
capacity to be entitled to FIT, which includes the 250 MW excess capacity.

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But Energy Secretary Alfonso Cusi does not agree with this idea of making
the consumers pay to promote renewable energy sources.

Just like President Duterte who believes that developing countries like the
Philippines cannot afford these higher priced energy sources, Cusi said that
it is unfair that electricity consumers should be subsidizing the cost of
producing renewable energy through the FIT scheme.

When asked whether there will be another FIT round or whether the government
would consider the solar industry's proposal to include the excess solar
capacity in the second or third round since it would be unfair for the
private sector that spent so much to build these plants Cusi answered in
the negative, since this would mean additional expenses on the part of the
public.

Cusi said he would rather that non-governmental organizations or even public
agencies that are pushing for renewable energy production to slowdown
climate change give grants to producers of these energy sources.

And so those who are hoping that the Duterte government will support a
change in the energy mix in favor of renewable energy sources should give up
hoping.

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But then, there are those who believe that some producers of renewable
energy and their supporters are resorting to dirty tricks to destroy the
image of our traditional energy sources in order to promote their own.

Just recently, there were news report about supposedly ailing residents
living near a 150-megawatt coal-fired power plant operating inside the
Petron Bataan Refinery in Limay, Bataan allegedly suffering from health
problems as a result of coal fly ash or ash particles that float in the air
or that might have made its way to a waterway.

A number of illegal settlers near the refinery have said that they suffered
from skin rashes as a result of the coal ash from the power plant.

As a result, the Environment Management Board reportedly issued a notice of
violation while the Department of Environment and Natural Resources (DENR),
headed by Gina Lopez, threatened the company with a cease-and-desist order.

But it seems that Lopez, who is against coal-fired power plants and the
mining industry, has been informed.

San Miguel Corp. (SMC) president Ramon Ang has been quoted in one newspaper
as saying that no less than the DENR has certified that the ash was inert or
benign.

Despite this, Ang said it has been recommended that Petron construct a
retaining wall to ensure that the ash in the Petro Limay terminal area does
not reach the Alangan River. He added that as a preventive measure, they
have put up earthen dikes even as they are planning to construct a permanent
retaining wall to make the community feel safe.

Ang, who celebrated his birthday yesterday, has been personally assuring
Limay residents and the public that there is no coal spill, because no coal
is being used in the facility (it is currently being test-run using diesel
fuel but it won't be fully operational until next year); that the residue
found in the homes of illegal settlers along the perimeter walls are a
combination of regular dust and limestone powder, a byproduct of oil
refining certified by the DENR as non-toxic; that the limestone powder is
stored in a specifically-constructed ash pond with dikes, far away from the
river said to be affected by the ash; that the powder is there because the
local government, for some reason, would not issue a permit to Petron to
transport it to its cement manufacturing facility where it will be used as
raw material; and that the power is not "dumped" but is instead sold at $100
per ton to a sister company that uses it to process cement.

SMC's top executive has also emphasized the fact that local health officials
have already said that the supposed skin rashes informal settlers have
complained about are actually scabies brought about by contact with infected
animals.

Ang has also briefed Lopez on the matter, and after hearing the facts, she
immediately issued a permit for Petron to transfer the limestone ash to its
proper storage facility and decided not to issue a CDO.

Petron is not a bad neighbor as some would like the public to believe. It
has been one of Bataan's biggest source of employment, livelihood, and
scholarships. The company also recently opened a new, fully-equipped and
staffed hospital that provides free medical care to Bataan residents.

And as publicly listed corporations and among the country's respected
companies, Petron and parent San Miguel would not be that irresponsible to
not pay attention to a matter as important as taking care of its neighbors.

As for Secretary Lopez, she should be very careful about her future
pronouncements in connection with producers of traditional energy sources
lest she be suspected of trying to promote her family's renewable energy
business.

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Link to Original Article:
http://www.philstar.com/business/2017/01/15/1662677/real-score

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com