Germany Energiewende’s €520 Billion Cost By 2025

Now clearer pictures of the cost of Germany’s energy transition to the renewables are coming up, the huge financial burden to energy consumers because of heavy government interventions and cronyism — subsidies to renewables, taxation and over-bureaucratism of coal, gas and nuke.  See these reports last week.

English translation from the original German news report:

German Energiewende To Cost €520 Billion By 2025, New Study Initiative 

Neue Soziale Marktwirtschaft, 10 October 2016

The total cost of Germany’s green energy transition (Energiewende) amounts to over €520 billion euros by 2025 in the electricity sector alone. This is the result of a report commissioned by the Düsseldorf Institute for Competition Economics (DICE) on behalf of the Initiative New Social Market Economy (INSM)….

By far the biggest cost driver with a total of €408 billion is the levy to finance renewable energy (EEG levy). The expansion of electricity and distribution networks totals €55.3 billion. The study is the first full-cost estimate which takes all the costs of the energy transition in the electricity sector into account. In addition to the direct costs of subsidising renewable energy, indirect expenditures such as the cost for the expansion of transmission and distribution networks were included in the calculations, as well as offshore liability expenses and network, capacity and replacement costs.

At the end of 2015, 150 billion euros had already been spent on the Energiewende, not including the cost for network expansion. The bulk of the costs (25.000 euros for a family of four) will have to be paid in coming years.” — Translation by The Global Warming Policy Foundation, UK

And aside from expensive, unstable electricity from renewables like wind and solar, they devour the natural beauty of the countryside. Many German environmentalists are now turning 180 deg, from support to attack.


More news reports:

Vahrenholt writes that already today Germany has the second highest electricity price (after Denmark) in Europe and that the so-called renewable energy feed-in tariff will rise from 6.35 €ct/kwh today “to an astounding 7.3 €ct/kwh in 2017“. Germany’s green energy feed-in act generates an additional cost to consumers of some 25 billion euros annually, paid by citizens via their power bill. This represents “a social transfer from bottom to top of immense dimensions“.…/power-expert-says-germany…/

“often wind parks are approved by politician’s who have a direct interest and business dealings in them, meaning the industry is rampant crony capitalism – the very kind that Germans are typically famous for opposing. For example Rannungen mayor Fridolin Zehner had a wind turbine built where none is supposed to be built – on his own land – thus allowing the honorable mayor to cash in on lucrative leasing fees – to the tune of 10,000 euros annually.”…/germans-media-sobers-up-to…/


“The Institute for Competition Economics at the University of Dusseldorf has calculated the total cost of Germany’s Green Energy Transition. The result: By 2025, an estimated €520 billion euros will be spent. A family of four will pay more than 25,000 euros for the Energiewende.

Seldom was a German environment minister more ridiculed and mocked than Peter Altmaier (CDU): Three years ago, the current Chancellery Minister warned that the cost of the Energiewende could, if nothing were done, “cost the country around one trillion euros by the 2030.”

Major magazines and weekly newspapers from Wirtschaftswoche to Die Zeit immediately snapped that the environment minister must have got it wrong. “Don’t scare the living daylights out of people with horror figures,” Baden-Württemberg’s Prime Minister and Green Party star Winfried Kretschmann demanded.…/

Economic and energy policies of the Duterte administration

* This is my article in BusinessWorld last October 07, 2016.


The new administration of President Rodrigo Duterte will turn 100 days old this week. The basis for its assessment is still sketchy and raw, so one way to further assess it later is to see some baseline figures when it assumed office.

Stratbase-Albert del Rosario Institute (ADRi) conducted a forum last Sept. 28 on “Raising the Next Tiger: The New Administration’s Economic Priorities” at The Tower Club in Makati. The main speakers were Mr. Aekapol Chongvilaivan, Country Economist, Philippines Country Office, Asian Development Bank (ADB); Department of Budget and Management (DBM) Secretary Ben Diokno; and Bangko Sentral ng Pilipinas (BSP) Deputy Governor for Monetary Stability Sector, Diwa Guinigundo.

The various reactors and discussants included Mr. George Barcelon, president of the Philippine Chamber of Commerce and Industry (PCCI); Mr. Calixto Chikiamco, president of the Foundation for Economic Freedom (FEF); Ambassador Donald Dee, president of the Employers Confederation of the Philippines (ECOP); and Mr. George Chua, president of the Financial Executives of the Philippines (FINEX).

These four reactors particularly mentioned the high prices and limited capacity of the Philippine’s energy sector. They pointed out that this factor, among others, reduces the country’s competitiveness compared to our ASEAN neighbors. Mr. Chikiamco and Mr. Chua in particular mentioned the problem of pushing more renewables wind and solar into the national grid as contributing to rising electricity prices and even affecting the grid stability.

Below are some numbers presented during the forum. I added the data on electricity generation (in terawatt hours) to further contextualize the points made by the four mentioned discussants (see Table 1).


Sec. Diokno did not give comparative data for some ASEAN countries, only the Philippines’ fiscal data. He only emphasized the bigger focus of Duterte administration to expand and improve the country’s infrastructure to address the Philippines’ low rank in global competitiveness surveys.

Public spending by the national government for infrastructure are as follows: P165B in 2010, P175B in 2011, P216B in 2012, P307B in 2013, P346B in 2014, P576B in 2015, P756B in 2016, and P861B proposed in 2017. These numbers indicate a sustained increase in infrastructure spending from 2015 until next year.

So as baseline data: First, the Philippine economy has been growing rather fast until 2015 and the challenge is how to sustain this expansion. Second, overall global competitiveness is good enough but ranking in infrastructure quality is low. And third, growth of our power generation remained low, only 46% after one decade. In contrast, Indonesia’s power capacity has expanded nearly twice after a decade while Vietnam’s has expanded more than three times.

The big challenge therefore is to allocate more public resources for infrastructure development.

To get the additional funds, the new government will have to discontinue — or at least significantly cut the budgets — of some programs and projects that have questionable impact on poverty alleviation. These funds should then be reallocated to help bankroll more infrastructure projects.

Second, attract more private players and investors in coal and natural gas power generation, in road tollways, in seaports and airports, in rail-based urban transportation. This process is non-burdensome to taxpayers because these public goods are funded via user-pay principle.

For instance, only those who regularly use NLEx and SLEx pay for the capital expenditure and maintenance of those roads, not taxpayers who live far away who hardly ever use these roads.

It is also good that the President has explicitly declared that we cannot turn our back in using cheaper and stable energy from fossil fuels like coal and natural because of our fast rising energy demand that require 24/7 power. It is not possible to sustain fast growth without cheaper and stable electricity supply. Energy precedes economic development, it is not vice versa.

In the presentation by Mr. Guinigundo, he showed important reform measures from 1993 to 2016. I will show here some, especially those referring to enhancing more economic competition, liberalization and deregulation (see Table 2).


If we remove the uncertainties of murders and disrespect for due process related to the ongoing “war on drugs,” the Duterte administration is starting on good and relatively stable macroeconomic platform. It just needs to sustain the momentum while hastening development and expansion of public infrastructure, especially in roads and energy.

AEMO on the S. Australia blackout last Sept. 28

More on the huge, state-wide blackout for many hours in S. Australia last September 28. There was a storm, strong winds with gust at 100-120 kph, so the wind farms should produce more power, right? Wrong. Wind power suddenly went AWOL. Huge supply deficiency, plus some transmission towers were knocked down. And there was massive power blackouts.


The wind farms shut down their turbines and locked the blades from spinning as there is danger that the blades might go out of control, the turbine can overheat/burn?

sa-blackoutSA energy mix is 48% from wind, 34% energy import from Victoria, and 18% from thermal/gas power. Data from the AEMO Report, PRELIMINARYREPORT – BLACK SYSTEM EVENT IN SOUTH AUSTRALIA ON 28 SEPTEMBER 2016.

From The Advertiser, 4 October 2016:

Australian Energy Market Operator Orders 10 SA Wind Farms To Limit Generation After Statewide Electricity Blackout

Paul Starick

TEN South Australian wind farms have been ordered to limit generation in the wake of the disastrous statewide power blackout because the national electricity market operator has declared they have not performed properly.

The state’s biggest wind farm, at Snowtown, is among those which the Australian Energy Market Operator has targeted in its “management and analysis” of last Wednesday’s unprecedented power outage as it gradually restores the power network….

And from The Australian, October 05, 2016:

Green Disaster: South Australian Blackout Due To Loss Of Wind Power

Graham Lloyd

A dramatic, sudden loss of wind power generation was the root cause of South Australia’s state wide blackout last week…

en2My Australian engineer friend, Bernd Felsche, commented last October 06,

The AEMO preliminary report released yesterday does not state specifically if any wind generators locked; only that the power generated declined over a short period.

The “wind farm” operators ought to be able to tell if their turbines locked up. But they’ve said nothing … in a week.

As you note; wind power will drop to zero when the turbines lock up; something of which the State government and energy operators must have been aware; but totally unprepared in any event; transmission line failure to the wind generators OR the generators themselves.

South Australia’s government hasn’t yet announced a Royal Commission into the grid infrastructure (failure). They must do so IMNSHO because the grid structures failed catastrophically at wind speeds well below what they are supposed to survive. Such failures are indicative of a failure of competence or corruption.

From September 28 to October 4, the wind farm operators were silent? wow. Silence is admission that they indeed locked up their blades. I think they were designed for winds of 100 kph max, so when the winds reached 90+ kph, they locked up their blades, zero output.

The irony of wind power — when there is a storm with strong winds, instead of wind turbines producing more electricity, they instead produce zero. The huge blackout in S. Australia occurred even before some transmission towers were knocked down. Wind power simply went AWOL.

From ABC, South Australian blackout: When the lights go out, it’s a sign the electricity grid isn’t working well, October 06, 2016:

“Wind presents two engineering problems when it is hooked up to a grid that was designed before it was viable.

First, it is intermittent so all of it has to be backed up by baseload power for those days when the wind does not blow.

Second, for an electricity network to function, demand and supply have to be kept near the perfect harmony of 50 cycles (50 hertz) every second of every day. If the frequency gets out of tune it trips the shutdown switch.

This electrical harmony is called synchronous supply, and thermal power is very good at delivering it. Wind power is asynchronous as its frequency fluctuates with the breeze, so it has to be stabilised by the give and take of other sources of demand and supply.”

The endless reminder: Governments should step back from energy rationing and cronyism, telling picking winners and losers, mandating which energy sources should continue and expand and which ones should be curtailed, if not discontinued and killed.

Eliminate red tape in the energy sector

* This is my article in BusinessWorld last September 15, 2016.


Which is more realistic and beneficial for consumers in reducing energy prices: removing the VAT (value-added tax) on electricity or removing the red tape and bureaucracy that stall construction of new power plants which will increase competition among players?

This is the question that Dr. Ramon Clarete, faculty member, former Dean of the UP School of Economics (UPSE) and Fellow of the Energy Policy Development Program (EPDP), tried to answer during the EPDP lecture last week at UPSE.

Dr. Clarete made various simulations and his econometric analysis showed the following:

If VAT is removed, tax collection (2009 to 2021) goes down by 3.4% of total or P212B or P16.3B/year.

If VAT is retained but red tape is eliminated, tax revenues increase by P21.9B or P1.7B/year.

If red tape and VAT are out, the economy loses revenues P197.7B or P15.2B/year.

Conclusion: Better eliminate red tape and unnecessary bureaucracies involved in issuing energy permits than abolish VAT on electricity. And electricity consumers will be better off with lower prices.

The paper is still undergoing further revisions. Once finalized, EPDP will publish it on its Web site.

I support the recommendation for two reasons.

One, for the rule of law to be more effective and respectable, a tax or subsidy should apply to all sectors, no exemption. Thus, it is wrong to impose VAT on food, clothing, and medicine purchases but not on electricity and other goods and services.


Second, government has been expanding all these years such that its seeming purpose has been to further entrench and expand itself, endlessly. So instead of two or three agencies giving business permits, there are now 15 to 30 agencies involved; and instead of just one or two permits and signatures per agency, there are now three or more permits per agency.

How bad is the situation in the Philippines’ energy sector? Here is one such study covering the hydro power sector.

Under the Duterte administration, there are now moves by the Departments of Energy and Finance and other agencies to reduce the 160 or so government permits which take energy companies five years to comply with. Hopefully this can be reduced to at most 50 permits and require at most two years to comply with.

The problem with government is that for every regulation that it can shrink or abolish, it also creates two or more new regulations.

In the energy sector, there is a new DENR order that new coal power plants being proposed will also require getting the approval of the Climate Change Commission (CCC).

This doesn’t bode well because for the CCC, coal power is tantamount to an evil-demon resource that should be controlled and disallowed whenever possible, and only new renewables like wind and solar should be allowed with various subsidies and price guarantee for two decades.

This thinking is highly faulty and anomalous because coal power remains among the cheapest and most reliable energy sources worldwide. Blackouts and darkness have many social and economic costs to the people. There are more robberies, rape, murders and other crimes, more road accidents if streets are dark at night.

See the comparative levelized cost of electricity (LCOE) per energy resource in the US based on a recent study by the Institute for Energy Research (IER) last July. They used the US government’s Energy Information Administration (EIA) assumption for 2020 capacity factor to derive the numbers.


So the cost per kWh of coal and natural gas — two important fossil fuel sources — is only about 1/3 the cost of wind and solar. Plus the fact that coal and gas are reliable, available 24/7 except under maintenance shutdown, and dispatchable upon demand changes (increase or decrease).

The lobbying of certain sectors to discontinue the use of coal power in the Philippines before the end of their economic lives, and that any new energy demand should be supplied only by the intermittent sources, is unwise and dangerous.

The Philippines used 82.6 terawatt hours or 82.6 billion kilowatt hours of electricity in 2015.

If all of this were generated from solar PV power plants and if the cost is the same as the US where solar price is 10 cents or P4.70 (at P47/$) per kWh more expensive than coal, then Philippine-based consumers should have paid P388B (= 82.6B kWh x P4.70/kWh extra cost) in extra cost or more expensive electricity in 2015.

If divided among the 101 million Filipinos that year, this means that each Filipino, newly-born babies and oldies alike, would have paid an additional P3,843 per head, on top of what they paid in electricity consumption in 2015.

Expensive electricity is simply wrong. Intermittent, weather-dependent and unreliable electricity supply makes it doubly wrong. Government should step back from more bureaucracies, more regulations of new power capacity additions. And more importantly, government should step back from favoritism and cronyism of expensive, unreliable renewables like wind and solar.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, a Fellow of SEANET and Stratbase-ADRi.

S. Australia’s blackout last September 28

A few months ago, the Australian Energy Market Operator (AEMO) warned of blackouts by around 2020 in S. Australia because of its rising dependence on wind power. Well, it already happened. Widespread and prolonged “Earth Hour” in S. Australia last September 28, 2016.


An Australian engineer friend, Bernd Felsche, made this comment when I posted this issue in my fb wall last October 2:

“Note that the renewables crony capitalists and their sheep will argue that the failure wasn’t due to wind power which is only true in the context of the failures; the collapse of power transmission lines due to wind.

However, an electrical power grid is usually able to “recover” within minutes to deliver whatever available power to priority consumers. And there was the potential of significant capacity via the Heywood connector to coal-powered generation in Victoria. However; that connector “tripped” due to the surge in demand that it “saw”.

Wind power failed to provide to the grid because there was insufficient rotating inertia for them to synchronise. Reports indicate that the gas-fired power station at Pelican Point was started from cold to provide that inertia; which would account for the hours of delay before some power was restored. Wind power could not be utilised until it could synchronise to the frequency and phase of a much larger generator.

It seems that the entire South Australian electricity supply grid has been mismanaged for decades.

The transmission towers that collapsed apparently did so in winds that they should have withstood. Nearby wind turbines did not even shut down due to excessive winds (sustained above 90 km/h), so wind speeds could at first glance not have exceeded the design wind speeds for the towers. Let’s hope that the evidence isn’t destroyed before there’s an official inquiry.

Adding to that, it is well known that wind power requires a minimum of 90% of spinning reserve. That reserve was substantially provided by the interconnectors to Victoria. The loss of the Heywood connector might have been averted by faster circuit protection to shed non-essential loads in the Adelaide area.

The transmission map (see…/solutions/network-map/ ) indicates that there are 4 lesser (132/66 kV) power transmission lines parallel to the main 275kV one in the Blyth/Melrose region where most, if not all of the tower collapses were reported. While those resources present some potential for re-routing power, it quickly gets complicated and expensive. That Northern transmission line exists originally to connect to the now demolished (in the week prior to the blackout) coal-fired power stations at the Northern end of the Gulf.

South Australia’s power generating capacity is not reliable, lacking sufficient spinning reserve to fill the loss of capacity in wind power generation. The grid is neither robust nor resilient.

No lessons have been learnt from the experience in Germany where the mixing of unreliable, unpredictable power generation with conventional power generation on the grid makes the reliable generating capacity unstable.

South Australia has experienced what it’s like to power a State on virtue signals alone.”


From some news reports:

“So we end up not achieving our emissions targets or, if we do, we do it at even higher costs than is necessary and in the meantime there could even be a risk of blackouts,” report author Tony Wood said.

In the spotlight is a single winter’s night in South Australia, when the wholesale price leapt from a year-long average of $60 a megawatt hour to $9,000 MWh.

The causes are complex, but the Grattan Institute followed a trail that began with the Renewable Energy Target (RET), which mandated 23.5 per cent of electricity be drawn from renewables by 2020.” – Sept. 25, 2016…/sa’s-power-price-spike…/7875970

“Loss of available power from transmissions lines feeding the region from other states coupled with South Australia’s ill-considered climate change energy policy of forced shutdown of the states operating coal plants to promote heavy use of renewable energy created this latest power debacle.

Last July the state barely averted energy black outs when reduced outside electrical energy supplies forced huge and costly purchases of needed power to restore electrical system reliability.”…/entire-state-of-south…/

From the Grattan report, 40 pages long:

“3.4 Wind and solar PV can affect system security

The increased penetration of renewables does not just have potential implications for the NEM in terms of price signals for new investment. It can also have consequences for the security and stability of the electricity system.

The frequency at which the electricity system operates needs to stay balanced. Balance is easier to do with fossil fuel and hydro power stations than with generation such as wind and solar PV. This is because wind and solar do not operate at the same frequency as the electricity system. Wind turbines, for example, generally rotate according to the speed of the wind, rather than the frequency of the system. On this basis, wind and solar are described as providing asynchronous generation.”…/09/877-Keeping-the-lights-on.pdf

Governments should stop politicizing and intervening too much on energy policies.

Climate change, the UN and ‘Clexit’

* This is my article in BusinessWorld last September 08, 2016


Last weekend, UN Secretary General Ban Ki-Moon declared during the G20 summit in China that “climate change scepticism is over.” This statement is wrong on two counts.

First, the term climate change (CC) skepticism or “CC denial” is wrong because skeptics recognize climate change, having happened in the past and currently taking place in the present. However, skeptics only believe that climate change is natural and cyclical, or it is “nature-made” and not man-made. Thus, the appropriate term should be “anthropogenic/man-made skepticism” and not “CC skepticism.”

Second, the debate is not over and was never settled.

If the debate is “over,” then how come that the UN (UNEP, WMO, IPCC, FCCC, etc.) could not answer (a) how much of current CC was man-made and nature-made? Is it 100-0, or 90-10, or 75-25, or 51-49? And (b) what was it like before this “man-made” CC, less flood, no flood, or more flood? Less storms, no storm, or more storms?

A Web site ( used Greenland surface temperature as proxy for global temperature, and galactic cosmic rays’ (GCRs) volume.

GCRs are charged particles from exploding stars that wander through the universe including our solar system. They help in the formation of cloud cover in our planet, so that more GCRs mean more clouds. The presence of GCRs in the Earth’s atmosphere is regulated by the sun. Active sun through more total solar irradiance (TSI) means less GCRs that can enter the solar system and hence, less cloud, contributing to global warming. A weaker sun means more GCRs and hence, more clouds, contributing to global cooling.

Temperature changes in Greenland are measured in temperature anomaly (or deviation from the average temperature) while changes in GCRs are measured in carbon -14 anomaly (or deviation from the average volume of carbon -14). The author has shown there is correlation between GCRs count and Greenland temperature cycle of warming-cooling.

This correlation between GCRs and global temperature has been studied and shown by a known Danish physicist Henrik Svensmark many years ago, and followed up by hundreds of other papers by other physicists and geologists worldwide.

Recently, a group of scientists from the National Space Institute at the Technical University of Denmark (DTU Space) and the Racah Institute of Physics at the Hebrew University of Jerusalem has shown the link between large solar eruptions (or their absence) to changes in Earth’s cloud cover based on over 25 years of satellite observations. They wrote,

“Earth is under constant bombardment by particles from space called galactic cosmic rays. Violent eruptions at the sun’s surface can blow these cosmic rays away from Earth for about a week. Our study has shown that when the cosmic rays are reduced in this way there is a corresponding reduction in Earth’s cloud cover. Since clouds are an important factor in controlling the temperature on Earth our results may have implications for climate change,“explains lead author on the study Jacob Svensmark of DTU. (Source: WUWT, “Svensmark publishes: Solar activity has a direct impact on Earth’s cloud cover,” Aug. 25.)

These and other scientific studies show that all the huge annual climate meetings of the UN and national governments for many years are based on questionable if not wrong hypothesis and assumption that natural factors like the Sun, GCRs, clouds, water vapor, are not the main drivers of planet Earth’s climate, that it is only human emission of carbon dioxide (CO2) that drives the “unprecedented, unequivocal” global warming. Therefore, their solution that more UN and governments’ interventions, taxation, and regulations will “fight man-made” warming and CC is wrong.

And that is how various global associations and alliances of independent-minded scientists and NGOs were formed. The most recent of which is “Clexit,”

Inspired by “Brexit” or Britain’s exit from the huge EU bureaucracy, “Clexit” or Climate Exit from UN FCCC, the climate alarmism and energy cronyism was formed last August.

Here is part of the summary statement made by Viv Forbes, Founding Secretary of “Clexit”:

“For developing countries, the Paris Treaty would deny them the benefits of reliable low-cost hydrocarbon energy, compelling them to rely on biomass heating and costly weather-dependent and unreliable power supplies, thus prolonging and increasing their dependency on international handouts. They will soon resent being told to remain forever in an energy-deprived wind/solar/wood/bicycle economy.

“Perhaps the most insidious feature of the UN climate plan is the “Green Climate Fund.” Under this scheme, selected nations (“The rich”) are marked to pour billions of dollars into a green slush fund. The funds will then be used to bribe other countries (“developing and emerging nations”) into adopting silly green energy policies.

“Carbon dioxide does not control the climate. It is an essential plant food and more carbon dioxide will produce more plant growth and a greener globe.”

“Clexit” now comprises 158 members from 23 counties. The “Clexit” Committee is headed by Dr. Václav Klaus, an econometrician and former prime minister and president of the Czech Republic, as Hon. Patron. “Clexit” President is Christopher Monckton from UK, an expert reviewer for the IPCC’s Fifth Assessment Report on CC and author of numerous peer-reviewed papers on climate sensitivity and mitigation.

The few but deep members of “Clexit” include the following:

  • Official IPCC reviewers but dissented from the final public IPCC reports prepared by political appointees.
  • Meteorologists, climatologists, physicists, radiation experts, climate modelers, and long-range forecasters who show that the assumptions and forecasts of the greenhouse-driven computer models are faulty.
  • Organic chemists, biologists, physicians, naturalists, graziers, foresters and farmers who know that extra carbon dioxide in the atmosphere is beneficial for Earth’s biosphere.
  • Sea level history and measurement experts who can prove that there is nothing unusual or alarming about current fluctuations in sea levels.
  • Geologists and geographers who have studied eons of climate history via ice cores, stratigraphy, paleontology, deep-sea drilling, historical records, glaciers, ice sheets and landscapes and can show that CC is normal and today’s climate is not extreme or unusual.
  • Astrophysicists, geologists, and researchers who have studied the cycles of ice ages and the climate effects of the Milankovitch cycles in Earth’s orbit — obliquity, eccentricity and precession, and say that the 1,000 year climate averages are trending towards the next glacial epoch of the Pleistocene Ice Age.
  • Medical researchers who point to evidence that exposure to cold are up to 20 times more lethal than exposure to heat.
  • Power engineers and logistics experts who say that wind and solar power cannot run modern industrial societies, modern transport, or big cities except by installing massive overcapacity and gigantic transmission webs at exorbitant costs. 100% wind/solar is a recipe for blackouts and starvation.
  • Politicians, businessmen, columnists, lawyers, army officers, and bloggers who see that this political agenda will destroy the freedoms we cherish.

The formation of “Clexit” was not prompted or supported by any industry, corporation, group or lobby nor have they had any say in the association’s statements or conclusions.

The “anthropogenic CC” camp is driven by a desire for more, bigger UN, and governments. They desire more government regulations, taxation or subsidy of energy, transportation, manufacturing, down to micro household lifestyle.

A “Clexit” is a way to regain scientific objectivity, economic rationality, and protect individual and enterprise freedom from ever-expanding UN and governments, local and national.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, a SEANET Fellow and “Clexit” temporary regional director for Southeast Asia.

No FIT for geothermal and other renewables, please

* This is my article in BusinessWorld last September 01, 2016


Expensive electricity via government price guarantee for 20 years is wrong. Business is about risks and returns, capitalism is about corporate expansion and bankruptcy, so there is no such thing as guaranteed price nor assured profit for many years in a competitive economy. Only politics and cronyism will try to negate the nature of competition and business reward and punishment.

Last Aug. 17, 2016, it was reported here in BusinessWorld that Geothermal technologies sought to be included in FiT program.

“The National Geothermal Association of the Philippines (NGAP) is asking the government to include emerging geothermal technologies in the feed-in-tariff (FiT) program to address the cost and risks encountered by developers,” the report said.

This is wrong. Other renewables should also not aspire for FiT system. Granting FiT for intermittent renewables like wind and solar for 20 years was already wrong because it exposed consumers to high and rising electricity prices and the grid to volatile power fluctuations within minutes, among others.

The association was correct in calling that “On the policy front, NGAP calls for expedited regulatory action and permit approvals, as well as assurance of peace and order in some of the more remote prospects.”

Let there be less government interventions and bureaucracies for businesses.

Another reason why granting FiT to geothermal and other renewables is wrong is because energy technologies keep improving and hence, their costs keep falling. So why give an assured, guaranteed high price for technologies that evolve towards falling price through time?

The numbers below on levelized cost of electricity (LCoE) will support the above statement. LCoE is not a perfect measurement of the overall cost per technology but it is a good dimension of the overall competitiveness of different power generation technologies.

Some definitions here.

  1. Dispatchable energy sources are those that can easily adjust to consumer demand. Non-dispatchable technologies are those that are generally dependent on the weather.
  1. Capacity factor means the ratio of actual electricity output over rated or installed capacity.
  1. CC means combined cycle for natural gas plants.
  1. CCS means carbon capture and storage, it is made mandatory by the US government for all new coal plants and it pushes the capex to high levels, making coal power in the US more costly (see table).


So in the US, the no. 1 geothermal electricity producer in the planet, the LCoE of geothermal is falling fast, the lowest among all energy sources at only $42.3/MWh by 2022. The Philippines is no. 2 geothermal producer in the planet, next only to the US. Technologies also follow the law of diffusion of molecules, making expensive technologies become cheaper through time.

On another note, I wrote in my column last Aug. 17, 2016, Brownouts, coal power and the electricity market, “can we expect PEMC to be more independent, more candid, in assessing the harm, actual and potential, of more REs in WESM and grid stability?… no. The DoE cannot contradict itself and say that REs are necessary and that REs are dangerous to the customers’ pockets and the stability of the national grid.”

The Philippine Electricity Market Corporation (PEMC) through Atty. Phillip C. Adviento replied last Aug. 23, 2016. They said that PEMC “acts only as the Market Operator responsible for the governance and operations of the WESM. The function of maintaining the security, reliability and integrity of the power grid is lodged with the System Operator. Against this context, it is grossly inaccurate to claim that PEMC is expected to study the impact of influx of RE resources in the grid.”

Good point, I recognize that strict distinction between a market operator (of WESM) and system operator (of the national grid). Still, PEMC has the data, it generates that data, of the intermittency per hour and even per minute, of the overall low capacity factor, of the renewables that enter the WESM.

PEMC added that it is “not a government-controlled corporation.”

However, it IS a private but government-controlled corporation. The Governance Commission for GOCCs (GCG) itself said this at the Senate Committee hearing last Jan. 26, 2016, then chaired by former Senator Serge Osmeña III.

Since the DoE Secretary sits as ex officio Chairman of the PEMC Board, the Secretary determines who among the private players can sit and cannot sit on the board, the Secretary has included government-owned energy corporations on the board even if they have minimal or zero contribution to electricity supply at WESM (NPC and PSALM), also TransCo. That makes PEMC a government-controlled corporation.

Government needs to step back from its intervention in the sector. It should reduce the number of permits that firms need to secure so that they can put up new power plants quickly. The government should also cut or abolish the system of guaranteed price for decades for favored renewables, reduce the taxes and fees imposed on energy companies, and the electricity costs paid by the customers.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET and Stratbase-ADRi.