Rising feed in tariff (FIT) due to more wind-solar power

* This is my article in BusinessWorld last January 24, 2017.

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Cheaper electricity and stable energy supply are among the important components to have fast and sustainable economic growth.

On Jan. 17, the Philippine Electricity Market Corp. (PEMC) sent a press release saying that “effective settlement spot prices (ESSPs) in the wholesale electricity spot market (WESM) plunged to P2.28/kWH for the December 2016 billing period which is the lowest since January 2011. ESSPs refer to the average prices paid by wholesale customers for energy purchased from the spot market.” That is good news as various players using fossil fuel sources like coal, natural gas, and oil, are fiercely competing with each other in generating electricity. WESM was created by EPIRA of 2001.

On the same day, the Department of Energy (DoE) posted a “Request for comments on the draft Department Circular entitled ‘Declaring the launch of WESM in Mindanao’ (on Jan. 26, 2016) and providing for transition arrangements.” Another good news because finally, there will be a formal spot market for power producers and electric cooperatives that will guide a competitive and deregulated market, benefitting the consumers.

Last Dec. 23, 2016, the Energy Regulatory Commission (ERC) posted a request for public comments until Dec. 30 regarding the petition of three wind developers — Trans-Asia Renewable Energy Corporation (TAREC), Alternergy Wind One Corporation (AWOC), and Petrowind Energy, Inc. (PWEI) — that their feed in tariff (FiT) or guaranteed price for 20 years of P7.40/kWh be raised to P7.93/kWh, citing various cost escalations. That was bad news because expensive electricity is never a virtue. I sent a letter to ERC Commissioner Salazar arguing that they say No to the petition.

And last Dec. 6, 2016, the ERC published in a newspaper a National Transmission Corp. (TransCo) petition asking for a FiT allowance (FiT-All) of 22.91 centavos/kWh starting January 2017. That’s also bad news because FiT payments by consumers keep rising fast. From an introductory price of only 4 centavos/kWh in 2015, became 12.40 centavos/kWh in 2016, and almost 23 centavos/kWh this year.

Now two factors will raise the FiT-All for 2017 beyond 23 centavos. (1) ERC will not be able to act on this by January or not even February 2017, that means there will be price underrecoveries that must be added to the original requested price. And (2) with low WESM prices the past few months — P3.19/kWh last September, P2.91/kWh last October, P2.54/kWh last November (data from Meralco), and the P2.28/kWh ESSP last December — this means that FiT-All will go up. This allowance is the difference between FiT rates (highest prices are solar of P10+/kWh this year due to price escalation, followed by wind, then biomass, cheapest is run of river hydro) and average WESM prices. Or FiT-ALL = FiT rates — WESM prices

Expensive electricity is the hallmark of renewable energy favoritism anywhere in the world.

Understand that in my previous columns, it was shown that the main beneficiaries of expensive electricity from renewables in the Philippines are not ordinary firms but huge companies: the Lopez group (EDC Burgos wind) and Ayala group (Northern Luzon UPC Caparispisan wind, and Northwind Bangui) who got P8.53/kWh FiT and combined revenues of about P4.3 billion in 2015 alone.

Let us check Germany’s renewables output. The chart below is for the last three months, Oct. 23, 2016 to Jan. 22, 2017.

Last Jan. 8, its total electricity consumption was 57.4 GW and here are the renewables output that day: solar 0.23 GW, onshore wind 1.53 GW, and offshore wind 0.39, or a total output of only 2.15 GW from these three renewables (see chart).

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A total of only 2.1 GW was generated by solar-wind sources or only 3.7% of 57.4 GW power demand. If Germany relied solely on wind-solar, that would have meant massive, large-scale, and catastrophic blackouts. Germany of course was saved by the power plants that it wants to banish someday — fossil fuel sources like coal and natural gas plus nuke power, within Germany and from energy imports from its European neighbors — and which it kept running. So we did not hear or read such massive blackouts in Europe’s biggest economy.

Aside from expensive direct cost of wind and solar in Germany due to FiT, there is additional indirect cost of higher transmission cost. From a news report, “The Energiewende is running up against its limits” last Oct. 21, 2016 (http://energypost.eu/energiewende-running-limits/)

“German transmission system operator Tennet recently announced an 80% increase in its transmission fees because of the high construction costs of new power lines to accommodate renewable energy. A study of the Düsseldorf Institute for Competition Economics found that by 2025 costs of the Energiewende could exceed €25,000 for an average four-person household.”

The Joint Congressional Power Commission should consider introducing a law in the future that will abolish the RE Act of 2008 (RA 9513). Penalizing the energy consumers to further enrich the favored and crony firms in renewable energy is wrong.

Letter to ERC re petition by 3 wind firms for higher FIT

This is my letter to the ERC last month.
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To: re-twg@erc.gov.ph, twg-re@erc.gov.ph

28 December 2016

Hon. Jose Vicente B. Salazar
Chairman
Energy Regulatory Commission
Pasig City

Dear  Chairman Salazar,

In relation to the ERC  invitation for public comments until December 30, 2016 of the petitions by Trans-Asia Renewable Energy Corporation (TAREC), Alternergy Wind One Corporation (AWOC), and Petrowind Energy, Inc. (PWEI) that their FIT rate be raised from P7.40/kWh to P7.93/kWh, may I send the following comments.

Please say NO to their petition. Here are the reasons why.

  1. Expensive electricity is never a virtue. Many of the things we do and use now require electricity and therefore, cheap and stable electricity supply should be the aim of energy producers and generating companies.
  1. Cost and price dynamics – rising or falling, higher or lower than what was assumed and projected – are part of capitalism and entrepreneurship. This includes the realization by the petitioners that their actual EPC cost, switchyards and transformers, transmission interconnection cost, O&M and other related expenses are much larger than what was assumed by the ERC in its earlier ruling.
  1. There is indeed a big difference between the P8.53/kWh received by EDC Burgos (Lopez group),  Northern Luzon UPC Caparispisan (Ayala group) and Northwind Power Bangui (partly Ayala), and the P7.40/kWh received by the petitioners. Then let it be known by the electricity consumers that among the reasons why Philippine electricity prices remain high, why FIT-All keeps rising from 4 centavos/kWh in 2015 to 12.40 in 2016 and up to 23 or even 25 centavos/kWh in 2017, are due to these wind farms  that get high guaranteed and escalating price for 18 more years.
  1. When public backlash against more expensive electricity from wind (and solar) will rise proportionate to the rise in FIT-All in the coming years, the three petitioners will somehow be relegated in the background as public attention will be focused on the Ayala and Lopez expensive wind farms, and the big solar farms with higher FIT rates.

The environmental costs of thousands of trees murdered on the ridges and mountain tops of Nabas, Aklan and Pililia, Rizal as PWEI and AWOC constructed wide roads, flattened ridges and built those huge wind towers in the mountains are actually not included in the supposed “environmental benefits” of those wind power plants.

Capitalism and entrepreneurship is about risks and returns, expansion, break even or bankruptcy. Nothing is guaranteed except constant competition and innovation, to cut costs and produce more per unit of input. Thus, the FIT system of guaranteed price for 20 years is abdication of the spirit of capitalism and entrepreneurship, while embracing statism and forever intervention by the state in pricing and output allocation and rationing.

Ultimately, the RE Act of 2008 contradicts the spirit of EPIRA of 2001 and hence, the former should later be significantly amended if not abolished. EPIRA moved things towards competitive, cheaper electricity prices and stable power supply while the RE Act moves towards the opposite, for more expensive electricity and unstable, intermittent and brownouts-friendly power supply.

I hope you will consider the above points.

Thank you very much.

Sincerely yours,

Bienvenido S. Oplas, Jr.
President, Minimal Government Thinkers
Fellow, SEANET and Stratbase-ADRi
Columnist, BusinessWorld
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Meanwhile, look at these news reports and press releases by their respective companies. Phinma says it is earning good money in TAREC.

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AWOC is expanding. From the current 54 MW will add 72 MW. Also in its website, it posted,
“On October 23, 2009, Alternergy has been awarded with six exclusive Wind Energy Service Contracts by the Department of Energy based on its financial and technical capabilities. One of which is the “Pililla, Rizal” Wind Energy Service Contract which covers an area of 4,515 hectares. The Project is estimated to generate approximately 40 MW capacity.”

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Meanwhile, look at the site of PWEI’s Nabas wind farm in Aklan overlooking Boracay island. Mountain ridges were flattened and all trees and other vegetation there were removed.

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Europe’s rising electricity prices as more wind and solar are added into the grid

More wind and solar plants, more expensive electricity. This is shown in Europe (this graph), shown in the PH. Feed in tariff (FIT) rates will rise from 4 centavos/kWh in 2015, 12.40 centavos in 2016, to 23-25 centavos/kWh this year.

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Source: http://euanmearns.com/green-mythology-and-the-high-price-of-european-electricity/

Another data from Euan Mearns. Left chart is for industrial customers, right chart for household/residential customers.

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Source: http://euanmearns.com/energy-prices-in-europe/

A friend commented that “We should treat the subsidies as state support to explore alternative energy sources.”

It is not “state support” but “consumers support”. The state, the DOE or Malacanang or Congress have no money of their own. It is ultimately the consumers who pay for more expensive electricity, including those who (a) do not support more subsidies to REs in Luzon-Visayas, and (b) consumers in Mindanao who are not even members/part of WESM because Mindanao grid is not yet connected to Luzon-Visayas grids.

Imagine if only Luzon-Visayas consumers pay for FIT here, the price would have been about 18 centavos/kWh last year and could be 28 centavos/kWh this year. Remember also that these are just “intro prices”, first 3 years of FIT implementation with 17 more years for existing RE plants and with with RE plants added to the grid plus FIT price escalation, expect 30, 50 centavos/kWh or more in the coming years, FIT alone. Eh current WESM prices are only about P2.80/kWh, why do we pay P9+, P10+/kWh for wind and solar? Fluctuating pa every minute, every second.

Look at Europe again, the charts above. They have the longest system of subsidies for renewables, perhaps for the past 20 or 30 years. RE prices coming down? No, the opposite happens, (a) prices keep rising, and (b) grid instability rising, they are talking of blackouts soon in UK, Germany, Denmark, etc. because of more wind and solar added to the grid.

Meanwhile, more news reports about RE in Europe.

(1) “The cost of the botched renewable heat incentive (RHI) scheme to the Northern Ireland taxpayer will be £490m.” http://www.bbc.com/news/uk-northern-ireland-38414486

(2) “The way the Renewable Heat Incentive (RHI) scheme was set up in Northern Ireland meant the subsidies offered were greater than the cost of the fuel.[The scheme was run by offering £1.40 for every £1 spent on heating.]” http://www.thegwpf.com/renewable-energy-scandal-rocks-britain/

Many “more RE to save the planet” advocates say that REs like wind and solar are attaining “grid parity” and getting cheaper, more competitive. If this is true, subsidies can be cut or removed but when subsidies are cut, those REs shrink. No subsidies, cheaper electricity for consumers mean these REs will die. Case of UK.

(3) “The U.K.’s renewable and low-carbon energy sector shrank by 8.7 percent last year, partly because of cuts to subsidies. The sector, from wind farms to electric vehicles, turned over 42.2 billion pounds ($52.5 billion) in 2015, provisional figures by the Office for National Statistics showed on Friday. That’s lower than the 46.2 billion pound recorded in 2014.”

https://www.bloomberg.com/news/articles/2016-12-16/u-k-clean-energy-sector-shrinks-after-government-subsidy-cuts

Energy rationing, like food rationing, toilet paper rationing in socialist economies. May soon happen in industrial and former imperial power UK. And the “planet saviours” will jump with joy?

(4) “The British Infrastructure Group, led by former Conservative minister Grant Shapps, warned lights could go out across the country next winter because there is not enough spare capacity in the system to cope with higher demand. There is just 0.1 per cent spare electricity in the current system, a dangerously small amount of headroom in case of emergencies over the winter months, the report warned.”

http://www.telegraph.co.uk/news/2016/12/19/electricity-bills-set-rise-30-year-power-rationed-amid-shortage/

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Jarius Bondoc on FIT for renewables

I am reposting the article of Jarius Bondoc in his column in Philippine Startoday. My comments and discussions after his paper.

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Enough is enough. Developers of renewable energy (RE) must stop making us electricity users subsidize their insolvent solar and wind farms. They’re already wheedling P8 billion a year from us. That windfall, called feed-in tariff (FIT) in our monthly bill, enables their clean energy to compete with cheap but dirty coal. Yet precisely because the FIT is free money for them, they feel no compulsion to improve their output and bring down costs. And now they have the gall to ask for even higher subsidies starting next month.

RE inflicts a double whammy on our monthly electricity bill. The FIT subsidy of 12.4 centavos per kilowatt-hour per se swells the bill by two percent. Worse, RE further inflates the cost of generating electricity to almost 50 percent. That’s because the mix of power sources that go into the generation grid is such that 30 percent must come from the inefficient but favored RE plants.

Why is RE inefficient? That’s for the developers to explain. For decades they’ve been enjoying state subsidies worldwide to improve. Yet solar farms are only 23-percent capable of converting and storing sunlight to power. It even costs more electricity to produce one solar panel than the energy it will produce when laid out under the sun. That production process even uses acids and oxides that emit greenhouse gases and create waste, National Geographic reports. Statistics for wind are worse. The mills even directly kill flocks of birds and bats that fly into the rotors, as well as add to noise pollution. As it is now, RE worsens climate change.

To justify their subsidies, RE developers must point to a bogeyman: coal. Hiding their own bad effects on health and environment, they demonize coal as a killer fuel. They want the Philippines to switch to more RE and lessen coal from the present 39 percent of the generation mix. In truth, however, coal has become cleaner than it was three decades ago. Pollution is basically the result of wasteful processes. But coal plants have tremendously improved efficiencies, and this reduced waste and pollution. That is why Europe, where environment laws are strictest, has coal making up 25 percent of the generation mix.

Cases long have been made against subsidies to certain industries. Congress, controlled in the ‘60s-’70s by sugar barons, allocated billions of pesos a year to subsidize the plantations and central mills. Supposedly it was to enable the hacienderos to compete with foreigners, upgrade their facilities, and uplift their farm workers. The result is well documented. The sacada seasonal workers became poorer than ever, the plantation and mill technologies remained backward, while the hacienderos used the subsidies to buy Rolls Royces and Aston Martins.

That is what’s happening today. FIT subsidies of P8 billion a year are now blocked off for the next two to three decades for the new RE oligarchs. Some of them are relatives of the very politicos who imposed the FIT subsidies. Living off us electricity consumers, they will not improve their technologies or raise salaries of their workers or bring down their costs to below that of their hated coal. Why should they, when that would mean erasing the excuse for their FIT subsidies. Meantime, Filipinos remain poor because electricity cost – the highest in Asia – discourages employment-generating investments and ultimate economic development.  We electricity consumers should not let those RE oligarchs buy up all the luxury condos and executive jets at our expense.
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Many good points by Jarius. May I add the following:

1. Feed in tariff (FIT) Allowance for renewables, especially wind and solar, is not P8 B a year, much larger than that. It’s about P11 B in 2015, P20 B this year, and P23 B in 2017.

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Source: Transco petition for FIT-All for 2016, ERC CASE NO. 2015-216 RC, p. 10.

2. On solar inefficiency, its capacity factor can range from only 18% (in PH, WESM data) to 23-25% in developed countries like the US.

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3. On solar panels “production process even uses acids and oxides that emit greenhouse gases and create waste”, more than that, solar farms require zero trees within and near the vicinity. On average, it takes 2 hectares of land to produce 1 MW of installed capacity.

Consider this solar farm in Calatagan, Batangas: 63 MW capacity on 160 hectares of land. Zero tree allowed. The main hindrance to solar power generation is shade — from clouds and tall trees nearby.

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So while many environmentalists say, “Plant trees to save the planet”, the solar environmentalists say “Zero tree to save the planet.”

4. On “electricity cost – the highest in Asia”, more of 2nd highest after Japan. For the ASEAN, here’s one data.

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Source: M. Ravago, R. Fabella, R. Alonzo, R. Danao, and D. Mapa, “FILIPINO 2040 ENERGY: POWER SECURITY AND COMPETITIVENESS”, EPDP paper, October 2016, p.2.

Nonetheless, it is a good paper. Congrats, Jarius.

Who should set the energy mix, government or consumers?

* This is my article in BusinessWorld last November 02, 2016.

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This question seems to have a “default” answer: the government and it is time to revisit the premise of government being the central planning body that sets the Philippines’ energy mix.

The Energy Policy Development Program (EPDP) composed of mostly UP School of Economics (UPSE) faculty members as fellows and researchers produced their most recent paper, “Filipino 2040 Energy: Power Security and Competitiveness.” The 52-page long paper projects two scenarios for the Philippines until 2040, the strong/fast growth and slow/mediocre growth, and the projected energy demand and prices based on four policy options. Here are the projected cost of electricity by 2040 based on current technology and two Sensitivity Analysis (SA) that project the cost of variable renewable energy (VRE) on two scenarios. (see Table 1)

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The numbers for policy #4 under the three scenarios above do not account yet for these two costs: (a) intermittency cost of VREs (possibility of frequent brownouts) and (b) grid integration cost of VREs (will require additional investment by NGCP). The EPDP paper noted these two costs:

“For example, a 16 GW wind turbine in Scotland requires a grid investment of £4 billion… In Britain, a 34% share of renewables in their generation and transmission imposes a likely cost of £6.8 billion a year, or an extra 38% increase.”

This EPDP paper was presented by lead author, Dr. Majah Ravago during the Stratbase-Albert del Rosario (ADRi) and Foundation for Economic Freedom (FEF) forum on “Affordable Electricity: a Requisite for Competitiveness” held at Oakwood in Mandaluyong City last Oct. 26.

As one of the two reactors during the event, I expressed my disagreement with some of the numbers presented, as indicated on the table.

Even under current technology, the price gap between policy #2 (the current energy mix) and policy #4 (being pushed under RA 9513 or Renewable Energy Act of 2008) by 2040 will be small.

In Germany’s experience of feed in tariff (FiT) for instance, the price and subsidies did not flatten or decrease, they only kept rising, endlessly. From €0.20 cents/kWh in 2000 to €0.42 by 2003, €0.88 by 2006, €1.31 by 2009, €3.53 by 2011, €5.28 by 2013, €6.24 by 2014, €6.35 this year and projected to further rise to €7.1 by 2017. A whooping 35.5x increase after 17 years.

I also mentioned the case of massive, state-wide blackout in South Australia last Sept. 28.

Some areas lost power for five hours, others ten while others for one week or more.

While Australia is 69% dependent on coal, especially the state of Victoria, the state of South Australia is heavily dependent on wind power. When the wind does not blow, wind turbines’ output is zero. When the wind blows too much like the big storm that day, many wind operators shut down and lock their wind turbines to prevent damage, and wind output was also zero, triggering a series of power trips that resulted in state-wide blackouts.

Below are actual electricity production and not just installed electric power capacity for selected economies in Asia Pacific in 2012.

The ADB’s Key Indicators 2016 report has yet to be released as of this writing. Note the wide disparity in energy mix in favor of coal for many of them (see Table 2). Those that are more dependent on natural gas are Thailand, Malaysia and Singapore (84.3%).

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Note that all those countries that are more coal dependent than the Philippines have lower electricity prices than us except Australia because of the latter’s high grid or transmission charges, more than twice that of the Philippines.

Thus, if more coal reliance would result in cheaper, more stable, electricity supplies, why should the Philippine government — through the Department of Energy (DoE), Energy Regulatory Commission, and even Congress — impose regulations that will force us to have less coal power and instead, have more intermittent, unstable, expensive renewables?

So, who should set the optimal and consumers-oriented energy mix, the state or the public? The government or the consumers?

The obvious answer is the consumers; residential, commercial, agricultural, industrial consumers. They are the ones who will ultimately pay the monthly electricity bill, the ones who will suffer if brownouts become frequent.

Policy option #2 of EPDP should be pursued by the government. The DoE and Congress should step back and respect the consumers’ right to cheaper and stable electricity

TransCo and the big beneficiaries of feed in tariff

* This is my article in BusinessWorld last July 20, 2016.

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The Philippines’ expensive electricity prices in Asia — second only to Japan — was highlighted once again in a paper by The Lantau Group (TLG) during the Asia Clean Energy Forum (ACEF) 2016 at the ADB last June.

Metro Manila’s residential electricity prices were even higher than those in Amsterdam, Hong Kong, and Singapore, twice than those of Hanoi and Beijing, and about three times than those of Taipei and Kuala Lumpur (see chart).

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This will have negative consequences for the Philippines’ bid for industrialization. Many energy-intensive sectors and big foreign companies will put up their manufacturing plants in Vietnam, Thailand, Indonesia or Malaysia, where they enjoy cheaper and stable electricity there, then export these products to the Philippines at zero tariff because of the ASEAN Economic Community (AEC). So instead of attracting more manufacturing and higher-paying industrial jobs here, our neighboring countries will snap up those jobs instead.

The quick lesson from this reality is that we should find ways to further bring down the costs of electricity here. Identify those charges, costs, bureaucratic delays, taxes and royalties that contribute to our expensive electricity, and significantly shrink or abolish them.

Unfortunately, we are not moving towards that direction.

Instead we go the opposite, by creating new measures, new indirect taxes that contribute to even more expensive electricity via the feed in tariff (FiT) scheme for renewable energy (RE) companies, among others.

The FiT scheme as designed is very anomalous for three reasons, among others: (1) guaranteed price for 20 years, (2) initial price will be adjusted upwards yearly indexed to inflation, and (3) even consumers in Mindanao, who are not connected to the Visayas and Luzon grids, do not have Wholesale Electricity Spot Market (WESM), and suffer from frequent blackouts due to insufficient power supply for, pay for FiT.

Here are the adjusted FiT rates for 2016 and the corresponding FiT payments that electricity consumers must pay to RE companies via Transco. Wind 1 and 2 and Solar 1 and 2 refer to two tiers of FiT-eligible RE firms, the second tier is given lower rate in exchange for expanding the FiT-eligible new capacity addition (see Table 1).

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Last July 6, 2016, this column attempted to quantify how much the big RE companies have cornered the FiT revenues. The next day after it was published, I wrote to the National Transmission Corporation (Transco), a government corporation in charge of administering the FiT-All, and asked: (1) if my estimates of (a) P2.63 B for EDC Burgos, (b) P1.92 B for Caparispisan, (c) P0.73 B for San Lorenzo Trans Asia, etc. are correct; (2) if my estimate of P12.2 billion total FiT revenue for 2015 is correct; and (3) what are the correct numbers if those estimates are wrong.

I mentioned in my letter/e-mail that President Duterte will soon issue an EO for FoI since these are public funds collected from electricity consumers nationwide and administered by a public entity, Transco and hence, the numbers should be made public too.

Transco replied one week after and said the following:

  1. My estimates of (a) P2.63 B for EDC Burgos, (b) P1.92 B for Caparispisan, (c) P0.73 B for San Lorenzo Trans Asia, etc. are “roughly higher by 10% of what has been billed to Transco by these 3 companies in 2015.”
  1. My estimates of P12.2 B FiT-All for 2015 alone “are higher than the 2016 FiT-All Application levels of Transco on the basis of the following:
  1. There are RE plants in the Application that have not billed Transco in 2015. Although their generation may be in 2015, these plants have not gotten the final eligibility for FiT in 2015 (processing on going). Thus, they will bill Transco only upon completion of all necessary approvals;
  1. Transco also implements one month current-one month backlog billing consistent with the REPA (Renewable Energy Payment Agreement). Thus, there are plants that have gotten their FiT eligibility much later than their Commercial Operation Date (start date for FiT eligibility) and have not become current in terms of billing by the end of the December 2015 billing period;
  1. Transco estimate of FiT Revenue for 2014-2015 is about P10 B. it added that although the year has passed, it has yet to accrue all amounts pertaining to 2014-2015 since the concerned REs have yet to receive their final eligibility documents/are yet to bill Transco; and
  1. What has been actually billed to the FiT-All Fund for 2014-2015 energy generation is only around P8 billion.

Thank you Transco for the reply, which allows me to construct new estimates of FiT revenues per company (see Table 2).

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The 12.40 centavos/kWh FiT rate granted by ERC in February this year will soon be revised upwards because it was just a provisional order.

Forcing electricity consumers to pay more expensive electricity from new renewables is wrong. Consumer choice is compromised or killed. If people really believe that the new renewables’ costs are indeed falling and attaining grid parity with coal and natural gas, then they should support the abolition of RE law of 2008 or RA 9513. This way, RE developers can sell electricity to willing customers without any guilt or embarrassment.

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

Wind power firms corner billions of FIT money

* This is my article in BusinessWorld last Wednesday.

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From an introductory price hike of 4.06 centavos/kWh of Feed In Tariff Allowance (FiT-All) in 2014, this subsidy scheme of guaranteed price for 20 years became 12.40 centavos/kWh in 2016. As more renewable energy power plants are added to the country, the cost of FiT-All will keep rising and it is safe to assume that this FiT-All might further rise to 20 centavos or more by 2017. And even consumers in Mindanao who are not participants of the Wholesale Electricity Spot Market (WESM) are paying for this.

Such is the abuse received by consumers nationwide via expensive electricity from subsidies to renewable energy (RE) companies. Last month, I wrote to the National Transmission Corporation (TransCo), a government corporation in charge of administering the FiT-All, and asked who among the RE developers received how much.

TransCo sent me a statement of cash flow, Receipts minus Disbursements = Fund Balance, and Fund Payable as of end-2015. I thanked them for the reply but that was not the information that I needed, so I called up the officer and asked why the list of who received how much was not sent. She said that they cannot release it to the public, implying confidentiality of the information. I wish that President Duterte will release that new Executive Order on Freedom of Information (FoI) very soon. The Department of Budget and Management (DBM) releases yearly data on how much government agencies received from taxpayers so why can’t TransCo release data on how much RE developers received from electricity consumers nationwide?

Last month, the Department of Energy (DoE) posted on its Web site the “List of Renewable Energy (RE) Plants with Certificate of Endorsement (CoE) to Energy Regulatory Commission (ERC) for Feed-in Tariff (FiT) Eligibility” as of June 20, 2016. My first question as to which RE companies received FiT has been answered. There are some RE developers who did not receive FiT.

By virtue of their enormity (MW capacity) compared to other RE developers, these companies are the potential main beneficiaries of expensive electricity policy provided by the RE Act of 2008 (RA 9513):

  1. Burgos Wind Power Project (Phases 1 and 2) by EDC/Lopez group, 150 MW at P8.53/kWh
  1. Caparispisan Wind Power Project by North Luzon RE Corp./Ayala group, 81 MW at P8.53/kWh
  1. San Lorenzo Wind Power Project by Trans-Asia RE Corp./PHINMA group, 54 MW at P7.40/kWh
  1. Pililla Wind Power Project by Alternergy Wind One Corp./Vince Perez, 54 MW at P7.40/kWh
  1. Nabas Wind Power Project by PetroWind Energy, Inc., 36 MW at P7.40/kWh
  1. Bangui Bay Wind Power Project Phase 3 by Northwind Power Development Corp./partly Ayala, 19 MW at P8.53/kWh
  1. Cavite EcoZone Solar Power Project by Majestics Energy Corp., 41.3 MW at P9.68/kWh.

I only need to find out the answer to my second question: how much did other RE companies receive each? I went to the Energy Regulatory Commission (ERC) Web site and saw ERC Case No. 2015-216RC, the TransCo petition for FiT-All for 2016. The important factors and ingredients were there, so I began making my own estimates.

The FiT rates and installed capacity in MW for all RE developers already given by the DOE, I used the following factors and assumptions to construct a table of estimates.

a. Capacity factor — derived using TransCo filings with ERC which are per technology basis.

b. Generation (MWh) — derived from the capacity factor.

c. FiT Revenue — FiT rate multiplied by the generation.

d. FiT Cost Recovery Revenue (FCRR) — the amount that the RE firm got from WESM or the distribution utility (DU). This is derived using the average WESM rate per TransCo application to ERC. This amount may not be that accurate since the time of dispatch will not result to the average price.

e. FiT Differential (the basis of FiT-All) = FiT Revenue minus FCRR. For some power sources like wind plants, the calculated FiT Differential here may be under estimated since wind usually blows during off-peak hours period, and WESM prices are then below the average rate (see table).

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Now these are just estimates and there could be some corrections or mistakes in the last four columns on the right, even in the capacity factor. The capacity factor is not constant or flat the whole year, some months and days are more windy than others, and some months and days are more cloudy than others and hence, affect the output of solar PV.

I wish to be corrected by TransCo if those numbers are wrong, perhaps they should release the correct numbers. Is it true that the Lopez and Ayala groups cornered nearly P5 billion from FiT in 2015 alone? The other companies like Trans-Asia/PHINMA, Alternergy, Hedcor/Aboitiz, they also enjoyed perks by several hundred millions of pesos each because of the unjust system of high, guaranteed price system under FiT.

On a related note, it is good that Mindanao does not have any of those expensive and pampered solar and wind plants that are primarily responsible for more expensive electricity in the country. Mindanao has more hydro, big hydro with no FiT and run of river hydro with small FiT of P5.90/kWh. Recently, Mindanao added more coal plants, which is the right thing to do. Stable, dispatchable, non-intermittent and cheaper coal power, that is what Mindanao and the rest of the country should have if we are to sustain fast growth. The move by the new DENR Secretary for anti-mining policy will adversely affect coal mining and coal power development in the country. This policy move should be checked and discontinued.

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