Green groups urge gov’t to push long-delayed policy on renewable energy

Environmental groups are urging the government to make up its mind on the long-delayed feed-in-tariff (FIT) policy, claiming it would be the key to attracting more investments in renewable energy development that would lead to cheaper power rates in the long run.

The feed-in-tariff scheme has been on the drawing board for three years. Under the proposed scheme, companies that invest in developing renewable energy sources are guaranteed returns on their investment through long-term contracts and price certainty in the form of a fixed cost rate (the FIT) to be levied on electricity consumers.

Under the scheme, distribution utilities would be required to buy electricity generated from renewable energy sources at prices that are determined as a percentage of the prevailing retail price of electricity. The government would set a fixed rate that consumers would pay for the power generated by renewable energy generators over a set period.

“Talks about the FIT have been dragging on for a year. There is no new renewable energy project that is being implemented,” said JP Agcaoili, a campaigner for Greenpeace.

Locked in with coal

“While the discussions on [FIT] drag on, the coal [plants] proposals are coming in and are approved. While the rest of the world is moving to renewable energy, we are locked in with coal,” Agcaoili said.

“What’s stalling them?” asked Eric Alvia, director of the Center for the Advancement and Utilization of Sustainable Energy, referring to the Energy Regulatory Commission, the power regulatory body.

A FIT system for electricity produced from renewable energy sources is mandated in the Renewable Energy Act of 2008. The ERC, in consultation with the National Renewable Energy Board, was supposed to formulate and promulgate the rules for a FIT system in 2009.

The proposed feed-in-tariff rates are P7 per kilowatt hour (kWh) for biomass, P17.65 per kWh for ocean technology, P17.95 per kWh for solar power, P6.15 per kWh for run-of-river hydropower and P10.37 per kWh for wind power. The rates are estimated to add roughly P0.12 per kWh to consumers’ electricity bills.

Lower rates

Alvia believes an FIT policy regime would attract renewable energy investors to the Philippines, and thereby boost the country’s supply of “green” power and reduce the demand for coal and fossil-based fuels.

It would also lure businessmen into rehabilitating aging geothermal and hydro-power plants in Mindanao, which is currently experiencing rotating power outages.

He claimed an FIT regime would have the same effect as the laws that liberalized the airline and telecommunications industries.

“The prices for the fares and the rates went down, the penetration rates for cell phones went up, the demand for landlines went down,” he said.

“I’m sure if they do that, people will have an incentive to shift their energy needs from coal,” Alvia added.

The Department of Energy has already approved a 760-megawatt (MW) installation target for renewable energy projects under the FIT scheme. It is composed of 250 MW each for hydroelectricity and biomass, 200 MW for wind power, 50 MW for solar energy and 10 MW for ocean technology.

Cheaper in the long run

But Greenpeace, which sits on the National Regulatory Energy Board, complains that the installation target set by the government is too low, well below what renewable energy investors would be interested in developing.

There has been a lot of opposition to the FIT scheme as it would substantially add to the cost of power in the country, which already has one of the highest electricity rates in the world.

According to the green energy advocates, renewable energy would be expensive in the first few years as the technologies are relatively new compared to coal-fired plants.

However, the clean technologies would be cheaper in the long run because it has a minimal impact on the environment and is not dependent on the movement of fossil fuels in the world market, they said.

The price of coal and fossils fuel will always increase, and the latest price hike announced by Meralco reflected that, Alvia said.

Abundance of green energy

According to the environmental groups, there is an abundance of green energy sources in the Philippines. They said the country can harness energy from the sun, the wind and the tides and from geothermal and biomass sources to meet the power demands of its growing population.

The Philippines also has vast tracts of agricultural land as well as sunny and windswept coasts for power where renewable energy installations can be built, they said. In its energy roadmap, Greenpeace said Mindanao, whose power at present comes mainly from geothermal and hydropower plants, has great potential to harness wind energy.

According to the Department of Energy, about 35 percent of the country’s energy comes from renewable sources.

Greenpeace said the Philippines can increase its renewable energy capacity to 50 percent by 2020.

First posted 12:31 am | Saturday, March 31st, 2012