Why the FiT-All is a burden to consumers

* This is my article in BusinessWorld today.

bw

Last May 15, Transmission Corp. of the Philippines (Transco) presented at the Energy Regulatory Commission (ERC) its petition of Feed-in-Tariff Allowance (FiT-All) for 2017 of 26 centavos/kWh. Very fast adjustments from 4.06 centavos/kWh in 2015, rose to 12.40 centavos in 2016, and soon 26 centavos starting mid-2017, all “to save the planet.”

The ERC still has to conduct public hearings in Visayas and Mindanao until early June and likely to make an order by late June, to be reflected in our monthly electricity bills starting July 2017.

The feed-in-tariff (FiT) provision in the Renewable Energy (RE) Act of 2008 (RA 9513) is very anomalous on the following grounds: (1) guaranteed price locked in for 20 years despite technology improving very fast these days, (2) the FiT rates are rising (see table below) yearly due to inflation and forex adjustments, (3) FiT rates of P8+ to P10+ per kWh for wind-solar are way high compared to current Wholesale Electricity Spot Market (WESM) average prices of P2-P3/kWh, (4) current capacity installations for wind and solar are higher than what was allotted, and (5) even consumers in Mindanao who are not part of WESM, not connected to the Luzon-Visayas grids, are paying for this.

The total forecast cost revenue of FiT-eligible plants would be (in P Billion): 10.22 in 2012-2015, 18.54 in 2016, 24.44 in 2017, and 26.14 2018. The bulk of this will go to wind and solar plants.

(a) Wind: 6.32 in 2012-2015, 8.00 in 2016, 9.20 in 2017, 9.20 in 2018.
(b) Solar: 1.50 in 2012-2015, 5.88 in 2016, 7.03 in 2017, 7.00 in 2018
(c) Biomass: 1.86 (2012-2015), 3.95 (2016), 6.69 (2017), 6.79 (2018)
Hydro is small, only 1.52 in 2017 and 3.15 in 2018.
(Source: ERC, Case No. 2016-192 RC, Docketed April 27, 2017, Table 4)

Below are the beneficiaries of expensive electricity via FiT scheme by virtue of their hugeness and higher FiT rates.

o4big_051717
Many renewable firms were not able to snatch the limited FiT eligibility but they can still make money from expensive electricity via the renewable portfolio standards (RPS) provision of the RE law. The RPS coerces and forces distribution utilities (DUs) like electric cooperatives and Meralco to purchase a minimum percentage of their electricity supply from these expensive renewables, the price differential with cheaper conventional sources they will pass to the consumers. If DUs will not do this, they will be penalized and the cost of penalty they will still pass on to the consumers.

fitThe government should step back from price intervention and price control, grid prioritization of intermittent and unstable energy sources via legislation. Consumer interest of cheaper and stable electricity should be higher than corporate interest of guaranteed pricing for 20 years, lots of fiscal incentives and other privileges that are marks of cronyism. RA 9513 is anti-consumers, anti-industrialization and hence, it should be abolished soon.

The quest for more stable and cheaper electricity in the ASEAN

* This is my article in BusinessWorld last April 28, 2017.

bw

High economic growth means high energy demand coming from stable supply and competitively priced energy, not unstable, intermittent, and expensive energy. This is what the Association of Southeast Asian Nations (ASEAN) economies need as their high GDP growth of 4.7% in 2016 is projected to improve to 4.8% this year and 5% in 2018 (ADB data), much faster than the projected growth of other regions and economic blocs.

One week before the ASEAN 50th Summit Meeting, the 7th Annual Meeting of the Nuclear Energy Cooperation Sub-Sector Network (NEC-SSN) hosted by the Department of Energy (DoE) was held. A pre-feasibility study showed that many ASEAN countries are in favor of using nuclear energy for commercial use. The ASEAN Center for Energy (ACE) also sees nuclear energy as a long-term power source for the member-countries.

The intensive infrastructure projects of the Duterte administration require huge amount of energy. The proposed 25-km. subway in Metro Manila by the Japan government alone would require high energy supply for the dozens of trains running simultaneously below the ground plus dozens of train stations below and above ground.

Lots of base-load power plants, those that can run 24-7 all year round except when they are on scheduled shut down for maintenance, will be needed. These baseload plants include coal, natural gas, geothermal, and nuclear. Hydro plants too but only during the rainy season.

How reliable and how costly are the different power generation plants that the Philippines and other ASEAN countries will need? This table will help provide the answer as I have not seen data for the ASEAN yet.

o4big_042817

Power reliability is represented by plant capacity factor or actual power output relative to its installed capacity. So unstable, intermittent sources like wind and solar have low capacity factor, not good for manufacturing plants, hotels, hospitals, malls, shops, and houses that require steady electricity supply.

Power cost is represented by the levelized cost of electricity (LCOE), composed of capital expenditures (capex), fixed and regular operation and maintenance (O&M), variable O&M, and transmission investment. CCS means carbon capture and sequestration.

The cost of ancillary services for intermittent sources, the standby power plants if the wind does not blow or if it rains make solar plants temporarily inutile, does not seem to be reflected in the transmission cost though.

ASEAN countries like the Philippines will need those power plants that have (a) high reliability, high capacity factor, (b) low LCOE, and (c) low or zero need for ancillary services.

However, more ASEAN countries are entertaining more solar PV and wind onshore since they were convinced to believe that they need unstable yet expensive electricity to “save the planet.”

During the Energy Policy Development Program (EPDP) lecture last April 20 at the UP School of Economics (UPSE), Ms. Melinda L. Ocampo, president of the Philippine Electricity Market Corp. (PEMC) talked about “Electricity Trading and Pricing in the Philippine WESM.” Ms. Ocampo discussed among others, the new management system where the interval for electricity dispatch has been improved from one hour to only five minutes.

I pointed during the open forum that the imposition of the lousy scheme feed-in-tariff (FiT) or more expensive electricity for favored renewables was unleashed even to consumers in Mindanao, which is not part of WESM, and is not connected to the Luzon-Visayas grids. The FiT-Allowance that is reflected in our monthly electricity bill has risen from 4 centavos/kWh in 2015 to 12.40 centavos in 2016 and this year, we should brace for at least 26 centavos/kWh soon because the 23 centavos petition by Transco starting January 2017 has not been acted by the Energy Regulatory Commission yet.

The issue of stable and affordable energy will be tackled in the forthcoming BusinessWorld Economic Forum this May 19, 2017 at Shangri-La BGC. Session 4 “Fuelling Future Growth”of the conference will have the following speakers: John Eric T. Francia, president & CEO of Ayala Corp. (AC) Energy Holdings, Inc.; Antonio R. Moraza, president & COO of Aboitiz Power Corporation; Josephine Gotianun Yap, president of Filinvest Development Corp., and DoE Secretary Alfonso G. Cusi. Yap and Cusi are still to confirm the invite.

Local energy players will have a big role in ensuring that the Philippines should have stable and competitively priced energy supply today and tomorrow.

Five myths of solar-wind energy

* This is my article in BusinessWorld on March 20, 2017

bw

Variable renewable energy (RE) like wind and solar are far out from giving humanity sufficient, stable, and cheap electricity to sustain growth and fight poverty. For the simple reasons that they are very intermittent and expensive. Below are five of the common myths that we hear and read about wind and solar.

  1. Solar, wind, biomass, and other REs will replace fossil fuels as major global energy sources in the near future.

Wrong. From the projections by the two of the world’s biggest oil and gas companies, these REs, which may also include geothermal, will produce only 8.5% of global energy demand (Exxon Mobil data) or 6% (British Petroleum data) by 2025.

  1. The share of coal, gas, and nuclear will further decline as the world moves towards implementing the Paris Agreement of 2015.

Wrong. From both EM and BP projections, there is no let up in global use and demand for fossil fuel and nuclear sources in the near future. This is for the simple reason that people anywhere dislike power interruption even for one minute, much more frequent and involuntary outages lasting many hours, daily or weekly.

o4big_032017

  1. Solar and wind are cheaper than coal now, their overall costs will keep falling.

Wrong. The feed-in-tariff (FiT) rates or guaranteed price for 20 years for solar-wind keep rising, not declining. For first group of solar entrants, their FiT rates in Pesos/kWh were 9.68 in 2015, 9.91 in 2016, and 10.26 in 2017. For second group of solar entrants, their FiT rates were 8.69 in 2016 and 8.89 in 2017.

For wind power first group of entrants, their FiT rates in Pesos/kWh were 8.53 in 2015, 8.90, in 2016 and 9.19 in 2017. For second group of wind entrants, their FiT rates were 7.40 in 2016 and 7.72 in 2017. Only the sun and wind are free but the panels, switchyards, cables, wind turbines, towers, access roads, etc. are not.

Current power prices in Mindanao are only around P2.80/kwh as many new huge coal plants compete with each other along with hydro and geothermal plants. No additional charges.

  1. Solar and wind have no social cost (SC) while the SC of coal is very high.

Wrong. Solar and wind are very land-intensive and, as a result, more areas for food, commercial, and forest production are diverted to accommodate more solar and wind farms. To have 1 MW of installed solar power, one will need about 1.5 hectare of land. So to have a 300 MW solar plant, one will need about 450 hectares of land; San Miguel power has a 300-MW coal plant in Mindanao sitting on only 30 hectares of land, or hectare/MW ratio of only 0.1 for coal vs. 1.5 for solar.

Since solar has a low capacity factor, only 18% of its installed capacity — from 450 hectares of land with installed power of 300 MW — can actually produce only around 54 MW.

Majestic solar, 66.3 MW in CEZA, Rosario, Cavite is not included here because it is a rooftop facility and hence, does not occupy extra land area.

  1. Carbon dioxide (CO2) pollution and emission from coal power plants will further warm the planet.

Wrong. CO2 is not a pollutant or evil gas. It is a useful gas, the gas that we humans and our animals exhale, the gas that our rice, corn, flowers, trees and other plants use to produce their own food via photosynthesis. More CO2 means more plant growth, more food production, more trees regenerating naturally, which have cooling effect on land surface.

The above five myths were among the topics discussed during the World Wildlife Fund (WWF) and Institute for Climate and Sustainable Cities (ICSC) “Roundtable on Philippine Energy Security and Competitiveness” last Friday, March 17 at UPSE in Diliman, Quezon City. The main speaker was Dr. Majah Ravago of UPSE and EPDP and she presented the main EPDP paper, Filipino 2040 Energy. The five reactors included Jose “Viking” Logarta of the ICSC and Dr. Christoph Menke of Trier University of Applied Sciences in Germany. Dr. Menke discussed the GIZ paper criticizing the EPDP paper.

201703201e1b5Governments should not create regulations that distort the energy market away from real competition. Insisting on dishonest claims like “carbon pollution” and “renewables to save the planet” only lead to more expensive and unstable energy supply, wasteful use of land and other natural resources.

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

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

bw

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).

o4big_012417

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.
————

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
————-

Meanwhile, look at these news reports and press releases by their respective companies. Phinma says it is earning good money in TAREC.

fit1
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.”

fit2

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.

fit3

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.

europeelectricprice

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.

europeelect

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/

europ

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.

jarius

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.
————

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.

fit
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.

fit2

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.

fit3

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.

fit4
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.