ILOILO CITY, Philippines—Panay Island will host the country's first commercial production of energy coming from rice stalks, husks and other agricultural wastes to boost the use of renewable sources of energy and address looming power supply shortage of Western Visayas.

The independent power producer Asea One Power Corp. (AOPC) announced on Wednesday it would invest in a P3-billion project to put up power plants on Panay and Guimaras producing a total of 25 megawatts by converting wastes to energy.

AOPC president and chief executive officer Paul Rodriguez said they were aiming to start commercial production by January 2011 from the seven plants in the provinces of Iloilo, Capiz, Antique, Aklan and Guimaras.

"Our vision is for a clean and green Panay and Guimaras Island within the framework of the region's available indigenous resources of biomass feed stocks," Rodriguez said in a speech during the signing of the power supply agreement between the AOPC and the electric cooperatives in Panay and Guimaras.

He made the announcement days after President Gloria Macapagal-Arroyo signed the Renewable Energy Act, which was expected to boost the development of renewable sources of energy and minimize the use of fossil fuels. Fossil fuels have been blamed for the increased emissions of carbon dioxide and other toxic chemicals.

Rodriguez said their plants, designed to have individual capacities ranging from 2.5 to 5 megawatts, would provide additional base load supply to the Panay-Guimaras Power Supply Consortium.

The consortium includes the Iloilo Electric Cooperative (Ileco) I, Ileco II, Ileco III, Capiz Electric Cooperative (Capelco), Aklan Electric Cooperative (Akelco), Antique Electric Cooperative (Anteco) and Guimaras Electric Cooperative (Guimelco).

The plants will produce energy from rice stalks, rice husks and wood chips such as sibucao and madre de cacao (Gliricidia), bagasse from muscovado and coconut husks.

Although there were plants producing power from agricultural wastes, these were not for commercial use, Rodriguez said.

The plants will be constructed on an "embedded or distributed system," which means they will be built close to and integrated with sub-stations of electric cooperatives, doing away with the interconnection to transmission lines of the National Transmission Corp. (Transco).

Rodriguez said this would mean a lower electric rate by P1.51 per kilowatthour because of the removal of transmission or wheeling charges.

Among the areas being eyed for the plants are the towns of Pavia, Pototan and Sara in Iloilo and the capital town of Jordan in Guimaras.

The plants are expected to consume an estimated 48,000 to 50,000 metric tons of rice husks alone each year.

These will be sourced all over Panay Island, one of the country's biggest palay producers.

"We intend to use local resources. There is more than enough," said Rodriguez in an interview.

Aside from producing cheaper power, the plants are expected to help provide additional income to rice farmers who can sell their rice stalks, and millers who can sell rice husks. Muscovado millers will also benefit by selling their bagasse.

The AOPC intends to purchase the rice husks at P500 per ton. Rodriguez said the construction of the plants would be completed 18 months after it starts upon the approval by the Energy Regulatory Commission.

He said the project would be their contribution in slowing global warming and climate change while ensuring the power needs of the region.