PHL renewable energy efforts still face huge hurdles –analyst

Despite opportunities in renewable energy (RE) in the Philippines, foreign industry experts posed several challenges to the development of the sector —particularly in framework development and foreign investment limits— that need to be addressed.

 

"There are a lot of potentials in the renewable energy in the Philippines. Technology solutions, which are becoming cheaper, are available and there is high demand for reliable power supply by population," Paul Bertheau of Berlin-based Reiner Lemoine Institute said in a briefing held in Quezon City.

 

Mario Marasigan, Director of the Renewable Energy Management Bureau (REMB), said the Philippines has an installed capacity of 5,000 megawatts (MW) of RE, which contributed 40 percent to total generation. These installed RE capacities are mostly from geothermal and hydro power plants scattered all over the country.

 

Bertheau noted that those in off-grid areas are in much need of RE power plants —e.g.,  wind and solar power— as most of them rely heavily on diesel-run plants, which have high power generation costs due to the high costs of diesel fuel and of fuel distribution.

 

“Off-grid areas have an estimated 350 MW installed diesel power capacity. [There is] high potential for hybrid power systems due to excellent solar resources and large number of islands relying on diesel-based power generation,” he said.

 

"Now a standardized regulatory framework for the broader implementation of renewable energies is necessary. These policies have to be clear. Hopefully, there will be this framework in place," he added.

 

However, the Philippine government is still working on regulatory rules on RE mechanisms. Marasigan said the ERC is still finalizing rules for Renewable Portfolio Standard (RPS) and net metering. "We cannot call on that...but [hopefully] they can finish that by end 2013," he said.

 

In 2012, the Energy Regulatory Commission (ERC) approved feed-in tariff rates. But other regulatory policies are still in the works, particularly those concerning the collection and administration of these fees. The ERC said it is necessary to have all the components of the RE mechanism in place to fully implement the Renewable Energy Law in 2008 or Republic Act 9513.

 

Another challenge is the limitation of foreign ownership rules, as foreign investments is only to 40 percent. Gunther Matschuck, president of German-Philippine Chamber of Commerce and Industry, pointed out the limitation is a concern for foreign investors to have a hold on their investment.

 

"We very much regret, especially in wind and solar, that we are restricted. If they (foreign investors) cannot have control, it’s going to be difficult," Matschuck said.

 

In the 1987 Constitution, foreign equity ownership in land utilities and telecommunications among others is limited at 40 percent.

 

But Marasigan said the limit on foreign ownership is a constitutional provision and will require amendment in the Constitution.

 

"The 60-40 limitation is not a simple rule, its a constitutional provision. If we want to change that, we have to amend the constitution. And that will take long," he said. — TJD, GMA News