Philippines: Solar, wind challenge coal as more affordable energy source

Philippines: Solar, wind challenge coal as more affordable energy source

WITH much enthusiasm, climate and environmental advocates see the
ratification of the Paris Agreement by the Philippine Senate both as a
challenge and opportunity to shift from dirty fossil fuel to clean renewable
energy (RE).

Although ambitious, reducing the country's greenhouse- gas emission by 70
percent between 2020 and 2030 will be a tough nut to crack, as it struggles
to sustain growth currently pegged at 6.8 percent last year.

This goal is yet clearly a "conditional" commitment largely dependent on
the support the Philippines will get from the international community.

Last year the Climate Change Commission (CCC) said RE presents the biggest
opportunity for local investment as the country plans to veer away from
coal.

An environmental advocate, Environment Secretary Regina Paz L. Lopez vowed
to expedite the granting of environmental compliance certificates (ECCs) for
RE projects while thoroughly reviewing ECCs for potentially destructive and
environmentally unsound development projects-particularly mining and coal.


Among the renewables, climate and environmental advocates are betting on
solar and wind over coal in competing for huge investments pouring the power
sector's way.

Citing the "Boom and Bust 2017-Tracking the Global Coal Plant Pipeline"
report, Greenpeace Philippines Climate and Energy Campaigner Reuben Muni
said it is just a matter of time when investment starts shifting to the more
economically viable clean, RE options, dropping coal in the process.

Muni said ditching coal will eventually reverse the trend in favor of solar,
wind or other RE sources.

Laying blame

WHILE admittedly one of the cheapest and reliable source of energy today,
coal is being blamed by climate and environmental advocates for causing not
only air, soil and water pollution that undermines human health and
environment but for being the biggest contributor to global GHG emissions
that trigger climate-change disasters.

The Philippines is not oblivious to climate change-triggered disasters. In
2013 the strongest typhoon ever to make landfall in history devastated
Central Philippines, leaving a trail of death and destruction.
Climate-change effects, such as longer wet season and longer dry seasons,
also cause enormous damage to food production areas that undermine the
country's food-production capacity, including fisheries.

While the Philippines is not one of the so-called big polluters, climate and
environmental advocates said the Philippines should step back and cease from
following the development track of developed countries only to make the
turn-around later on.

Instead, they said the Philippines can take a more sustainable development
path by shifting from its use of dirty coal to more environment-friendly
sources of energy, such as solar, wind, geothermal, possibly, ocean current,
biomass or biogas-without compromising the integrity of its already fragile
environment.

Huge investment

INVESTMENT in coal in the Philippines, as well as other energy sources, can
only be estimated based on power-generating capacity power plants.

For coal investment, the rough estimate can be based on those being
constructed and those that are already existing, according to Muni. The
country's current installed power-generation capacity is 18,765 megawatts
(MW). With a 45-percent share, coal investment in the Philippines is pegged
at $8.54 billion.

This is a conservative estimate, as the Department of Energy figure
accounts only for the power-generating capacity that goes to the main power
grid.

"A lot of these things are on a specific timeline," Muni said. "One MW of
coal is equivalent to $1 million three years ago. But today, this may no
longer be true."

He explained the equivalent figure could even be higher because coal's
volatility causes price to go up.

Market forces

MUNI said coal is like other goods that are subject to market forces at
work-economic, politics-like oil and gas, coal price also change.

"In the past, during the [Fidel V.] Ramos and Cory [Aquino] administration,
our power was based on three big sources-hydro, geothermal and oil diesel,"
he said. In 2015 around 45 percent of the country's energy supply comes
from coal, 23 percent of the country's energy supply comes from natural gas,
13 percent from geothermal, 11 percent from hydro and 7 percent from coal.

At some point, oil became the biggest source of energy in the mid-1990s
because of the Persian Gulf War and Middle East Crisis-when price of oil was
very volatile.

"During the last year of the Cory administration and the start of the Ramos
administration, we only have the Calaca power plant-the first- ever coal
plant in the Philippines," Muni explained. "Then came Pagbilao, Masinloc and
Sual. The entry of coal as a power source started to boom."

At that time, coal was the cheapest and most accessible source of energy,
with the Philippines having the Semirara coal mine, and neighboring
countries, such as Indonesia, China and Australia, possibly supplying the
Philippines with adequate coal.

Coal dependence

THE Philippines is currently heavily dependent on coal.

According to the DOE, coal has the highest contribution to the country's
current power-generation mix pegged at 44.5 percent as of 2015.

The local demand for coal is not limited to power generation.

In 2015 the cement industry utilized 15.22 percent of the country's coal
supply while 5 percent went to other industries, such as alcohol, sinter,
rubber boots, paper and chemical manufacturing, fertilizer production and
smelting processes, according to the DOE.

This factor makes coal as having the biggest share in terms of investment in
the country's
energy sector.

Industries, Muni said, are into coal use for economic reasons, which means
the country's dependence on coal could be worse. The DOE, he said, only
counts those that feed the power grid.

Even oil companies, such as the Petron Oil Refinery in Limay, Bataan, he
said has a coal plant with 140-MW capacity.

While it powers its oil-refinery facility, Petron is also providing the
power grid with the excess power it produces from its own coal-fired power
plant, he said.

Coal rise

THE country' dependence on coal became more pronounced in the last 15 years.
According to the DOE, since 2002, from a historical yearly average of 1.5
million metric ton (MMT), local coal production grew tremendously.

Muni said the country started to shift from oil-then the dominant source of
energy-to coal during the Cory and Ramos administration. The shift, he
said, was because of economic reasons.

"During the Persian Gulf war, oil became very volatile," he explained. "With
the Philippines having its own coal resources, investment in power shifted
to coal."

But the Philippines, he said, only has low-grade coal, which means it has to
import coal. Around 70 percent of the country's coal requirement are
imported. Of that, around 90 percent comes from Indonesia, with the
remaining 10 percent coming from Australia and China, making Philippines
heavily dependent on Indonesia's coal industry.

In the last 13 years, local production of coal grew almost four folds, with
production peaking up to 8.17 MMT in 2015, according to the DOE.

Muni said it was during this period that the country saw more coal-fired
power-plant projects being approved and constructed to meet the increasing
demand for energy.

The shift to coal as a source of energy was attributed to the highly
volatile price of oil in the world market and the failure of the DOE to
promote RE sources to investors in the power sector.

At that time, Muni admits that RE is not yet economically feasible and the
technology not so much available in the Philippines.

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Link to Original Article:
http://www.businessmirror.com.ph/power-struggle-solar-wind-challenge-coal-as
-more-affordable-energy-source/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com