Philippines can save up to P13.5B annually from shift to renewable energy —study

The shift from diesel to renewable energy to power small island and isolated power grids can save the Philippines up to P13.5 billion annually and electric cooperatives up to P1.7 billion over the next decade, a report from the Institute for Energy Economics and Financial Analysis (IEEFA) found.

In an emailed statement, the IEEFA said a study found that the savings could be realized should the government-owned and controlled National Power Corp. (NPC) Small Power Utilities Group (SPUG) shift to renewable energy from what is currently dominated by diesel power.

This comes as the IEEFA estimates that electric cooperatives have been hit with at least P3.16 billion in infrastructure damages over the last six months due to climate-fueled disasters, and noted that there is zero likelihood that they will be able to cover the damages as working capital funds pegged at P10.1 million.

"Department of Finance Secretary Carlos Dominguez, as the chair-designate of the Climate Change Commission, and ex-officio chairman of the National Power Corporation (NPC), can help the Small Power Utilities Group (SPUG) realize the country’s vision to provide not only clean but also reliable, secure, and affordable power for residents of small island grids," said IEEFA energy finance analyst Sara Jane Ahmed, the author of the report.

As a government-owned and -controlled corporation (GOCC), the NPC is mandated to undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal, and other sources.

Through the SPUG, the NPC is also responsible for providing power generation and associated power delivery systems in areas that are not connected to the main grids.

Ahmed noted that diesel-fired power units cost more than new high-performance renewable units, and that solar PV plus lithium-ion batteries can now reliably deliver power at a significant discount to the price-performance potential of the current diesel-power.

"With less transport costs due to importing diesel, electric cooperatives could see savings from a shift to decentralized, modular renewables ranging between PHP 1.38 billion (USD 66 million) and PHP 1.7 billion (USD 82 million) over the next decade," Ahmed said.

"Renewable energy is now up to 60% cheaper than diesel-fired power but the isolated and island grids are dominated by diesel power. This is unsustainable from a financial viability and energy security standpoint," she added.

The IEFFA also noted that the NPC's growth does not need to rest on diesel generation, as its study shows that renewables can effectively supply off-grid markets.

With this, IEFFA outlined several recommendations to deliver energy access, reliability, resilience, and affordability in small island and isolated power grids:

• Halt new diesel power investments immediately and accelerate hybridization
• Redirect UCME subsidies to enable long-term savings and efficient investment in renewable energy and storage, rather than locking in long-term liabilities through diesel-generated power
• Results-based financing of UCME subsidies to realize both savings and delivery
• Training by the Technical Education and Skills Development Authority (TESDA)
• Consider a sustainable insurance facility for electric cooperatives affected by climate-fueled disasters for improved access to liquidity for timely
• Support from multilateral development banks to accelerate NPC-SPUG’s modernization
• Carbon pricing economic benefit for electric cooperatives as a financing tool that can generate at least USD 393.6 million over the next decade

Locally, lawmakers are calling to maximize the potential of renewable energy sources in the country and step up the energy transition, amid the coronavirus disease 2019 (COVID-19) pandemic.

According to market research provider S&P Global, major oil companies are diversifying into renewable and low carbon energy in response to the growing concerns over climate change, and the International Energy Agency (IEA) forecasts the world’s total renewable-based power capacity to increase by 50% between 2019 and 2024.—LDF, GMA News