Filipinos choosing the green energy option

Filipinos choosing the green energy option

THE ASEAN (Association of Southeast Asian Nations) is facing a new forefront
and it's the transition of energy dependence from fossil fuel generated
electricity to sustainable and renewably generated electricity. The ASEAN
has an aim of increasing renewable energy share in primary energy supply to
at least 23% by 2025. The recently adopted Sustainable Development Goals
(SDGs) has given more weight to ASEAN's aim with SDG 7 for clean and
affordable energy.

The Philippines is already at the forefront of the ASEAN region with 26% of
its energy mix coming from renewable sources while the remaining 74% comes
from a mix of coal, oil, natural gas, and other fossil fuels.

In 2015, the Department of Energy (DoE) took on a daunting task to at least
raise the power generation mix of renewables to 30% by 2025. However, there
shouldn't be any solace even with the current developments as the country's
energy sector has maintained a heavy reliance on fossil fuels despite its
connections to health and environment issues. Besides its effects on climate
change and global warming, a Greenpeace study has cited that there have been
960 coal generated deaths every year with a potential of raising that number
to 2,410 if the new power plants are to be developed.

Several policies have already been introduced and implemented to hasten the
movement towards renewable energy while at the same time assist consumers
and producers in tackling the high costs of electricity despite the
increasing demand.

In 2008, the Renewable Energy Law was enacted by Congress in a bid to spur
the development of renewable energy in the country. It had in its armory
several incentive mechanisms that could provide financial feasibility for
private sectors to invest in the development of renewables in the current
energy mix. The most widely known mechanisms are the Feed-in-Tariff (FiT) --
a premium rate paid for the generation of a particular type of electricity
to encourage developers to invest in renewable energy -- and the FiT
Allowance -- a mechanism used to further support renewable energy investment
by uniformly charging consumers by kWh -- however, these mechanisms have
been blamed to increase electricity prices as they are an additional
component in the electricity bill.

Despite its good intention to increase renewable energy investment, equally
charging consumers a particular FiT Allowance and putting a premium on
renewable energy financially burdens all consumers regardless of their
willingness to pay for renewable energy development. This current system of
pricing electricity tariffs can be changed by utilizing a different
mechanism found in the Renewable Energy Law -- the Green Energy Option. The
Department of Energy defines this mechanism as a way of giving consumers the
opportunity to determine where their electricity is sourced regardless if
it's purely solar, wind, geothermal, hydro, etc. But to ensure the use of
this mechanism, there must be an existing demand from consumers to source
their electricity from renewables and to utilize this mechanism.

To find out, in 2016, I conducted a study titled Choosing the Green Energy
Option: A Willingness to Pay Study of Metro Manila Residents for Renewable
Energy, which has also been recently presented in the WAVES National
Conference in National Capital Accounting under Theme 2: Economic Valuation
Studies for Natural Capital Accounting hosted by the National Economic
Development Authority and World Bank last March 30-31, 2017.

The study used the contingent valuation method to determine if residential
consumers were willing to pay for renewable energy and to estimate their
respective willingness to pay. The study's main query asked consumers
located in Quezon City, Parañaque City, and Manila if they would be willing
to participate a program where they would pay a premium of 30% of the
electricity they use comes from Solar Energy. Afterwards, a dichotomous
choice analysis yielded that Metro Manila residents were willing to pay P268
to P435 ($5.37 to $8.31) on top of their current electricity bill. This is
approximately 0.97% to 1% of their monthly household income. It shows that
Filipinos find a substantial value in utilizing solar energy instead of
sustaining their current dependency on coal and fossil fuels. The demand for
solar energy exists; however due to its minimal contribution in power
generation mix, there is a failure in taking full advantage of this demand.
Thus, the recommendation from this study is to make the Green Energy Option
a functional mechanism for residential consumers and give them the
opportunity to choose where the electricity they use in their homes comes
from. The current reliance on the FiTs and FiT-Allowances reveals an
equalized approach towards renewable energy and despite its noble goal to
increase renewable investment it also results in high prices in electricity
tariffs for all.

The Green Energy Option offers an alternative wherein we move from equally
pricing all consumers (save for those with lifeline rates) to equitably
charging consumers based on their willingness to pay for renewable energy.
The move towards a greener and environmentally sustainable energy sector
doesn't have to be a costly burden to all consumers when we have the option
to make it an equitable one.

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Link to Original Article:
http://www.bworldonline.com/content.php?section=Opinion&title=filipinos-choo
sing-the-green-energy-option&id=143469

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com