Philippines: Too much democracy for renewables

Philippines: Too much democracy for renewables

Let's just, for the sake of example, say that it takes 3,000 signatures to
start generating electricity from a renewable energy resource; the sun, the
wind, a river. Not only are such a large number of signatures needed but
also there are rounds of bidding to go through, as well as regulatory
examination, which itself involves further awareness-making activities of
the public at large. That the approval process necessitated is for renewable
energy -which carries considerably less risk for the consumer than say coal
or oil, which are hostage to volatile international markets-it may be
thought it would be easier. It's not; the approval process for a renewable
energy project is considerably more torturous than for a conventional fossil
fuel fired project.

If the Philippines wants to utilise more renewable energy, and there are
lots of sources available, the process that investors are subjected to has
to be made easier and less open to mischievous abuse than the rigorous
procedures which govern its development currently allow, or even facilitate.
Commercial scale renewable energy projects invariably require investment to
the tune of billions rather than millions of pesos, but their size in the
range of 5-20MW, cannot command the sort of political support that a fossil
plant of, say, 6 or 800MW can attract. Renewable energy investors and
developers can so easily become hostage to unethical business practices
purely by virtue of the extensive permitting requirements set by the
regulations.

If I were inclined to invest in and develop off-grid power generation, then
the fuel of choice would be oil. I could buy and install second-hand diesel
generating sets for about P20,000,000 a MW and be up and operating in six to
nine months knowing that I would not be exposed to the risk of rising fuel
prices, which would be covered by the Universal Charge Missionary
Electrification Fund, a.k.a all the electricity consumers in the
Philippines. I would need some land but not much, and, of course, I would
need an ECC. The technology is well understood by electricity
cooperatives-it is the accepted norm-the cooperatives don't take the fuel
cost risk.

If, however, I were to invest in and develop, say, run of river hydropower,
then I'd be looking at an investment of P200,000,000 a MW without any chance
of a subsidy from the Universal Charge Missionary Electrification Fund and a
predevelopment period of five to six years before I could start commercial
operation. During those five to six years, I would need a service contract
from the Department of Energy, for which I would need to bid. I would need
to obtain water rights, a process which could itself take three years. I
would need to convince the buyer of the power to be produced that it would
be compatible with his distribution system and be sold at a tariff that
would reduce overall the cost of power to the cooperatives consumers. I'd
need quite a lot of land, about 70-100 hectares, wherein I may need to cut
down some trees and build quite long roads and I'd need lots of LGU and DENR
approvals and rights.

So which of the two options would a businesslike investor choose? Oh, and
just to complete the comparison if I happened to be a foreign investor, I
could own 100 percent of the fossil fuel generating business, but only 40
percent of the renewable option.

Anybody whose interest was in making money would choose the fossil fuel
option. But despite all this, there are people who do opt for renewable
development, but nothing like the numbers that the Philippines could
actually fully benefit from. Perhaps, they have a social conscience, perhaps
they just like renewables or see it as the most viable source for future
power needs, or often I think they start the process before full realization
of the challenges, which actually increase as time goes on. Whatever their
reasoning for opting for renewables, their activities need support from the
bureaucratic and political system. Their working lives need to be made
easier than for fossil fuel development, not compounded with additional
difficulties. Even more so, they should not be encouraged because of the
difficulties [not to mention the 3,000 or so signatures which may be
needed]to embark on yet more politicking of the energy sector, for this is
just a route to the ruination of further renewables development and the
further deterioration of the Philippine business environment turning the
overegged democratic requirements into nothing but a farce.

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Link to Original Article:
http://www.manilatimes.net/too-much-democracy-for-renewables/305040/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com