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

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


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).


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.

Top 10 energy news of 2016

* This is my article in BusinessWorld last January 6, 2017.


Here is my list of 5 international and 5 national or Philippine important energy issues last year.


  1. Donald Trump and his energy policies.

US president-elect Donald Trump’s energy policies are summarized in his major campaign platform, “Seven actions to protect American workers” and these include:

“FIFTH, I will lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal… SEVENTH, cancel billions in payments to UN climate change programs and use the money to fix America’s water and environmental infrastructure.”

So far some of Mr. Trump’s Cabinet Secretaries are his fellow skeptics of the anthropogenic or “man-made” climate change claim (climate change is largely cyclical and natural or “nature-made”), or simply pro-oil. These include: (a) Environmental Protection Agency (EPA) head is Scott Pruitt, former attorney general of Oklahoma; (b) DoE Secretary is former Texas Governor Rick Perry who is pro-drilling; and (c) Secretary of State is Rex Tillerson, CEO of the oil giant Exxon Mobil Corp.

  1. OPEC cut on oil production.

For eight years, OPEC never cut its oil production despite declining oil prices to protect its global market share under intense pressure from huge shale oil supply from the US. In November 2016, OPEC finally blinked and decided to cut their collective oil output by 1.2 million barrels per day (mbpd) hoping for an increase in oil prices. Non-OPEC countries like Russia and Mexico made an agreement with OPEC to cut output by another 0.56 mbpd, for a total projected output cutback of about 1.8 mbpd. So far, price impact was marginal as oil prices before this OPEC decision was already touching $50 a barrel. But once US shale oil output ramps up, this marginal price increase can easily be reversed.

  1. More wind-solar means more expensive electricity in selected countries in Europe.

The numbers below show that countries with expensive electricity (1-5) have zero or little nuclear power, have high wind power (except Belgium and Italy), and high solar capacity (except Spain). And cheaper electricity countries (6-10) have high nuclear power (except UK and Netherlands) and low wind (except Sweden), low solar capacity (see Table 1).


  1. By 2040, 46% of global energy demand will come from Asia Pacific.

Based on a recent report by Exxon Mobil which grabbed global energy headlines, it said that it expects China, India, and the rest of Asia Pacific (including Japan, ASEAN, and Australia) will increase its global share of total energy demand from 234 quadrillion British thermal units (BTUS) in 2015 to 322 quadrillion BTUs by 2040. The percentage share of the region will rise from 41% of global demand in 2015 to 46% by 2040. In contrast, the share of EU and the US combined will shrink from 28% in 2015 to only 22% by 2040 (see Table 2).


  1. By 2040, wind, solar, biomass, other renewables will contribute only 11% of total global power generation.

Coal will remain the dominant source in power generation worldwide by 2040 but its share will decline from 44% in 2015 to 34% by 2040. The share of natural gas and nuclear power combined will increase from 38% in 2015 to 45% by 2040. The share of wind, solar, geothermal and other renewables will marginally increase from 6% in 2015 to 11% by 2040, despite all the political noise worldwide that these renewables will get “cheaper than coal” and attain “grid parity” with conventional sources like coal and natural gas.


  1. Search for an Independent Market Operator (IMO) of WESM.

In the last Congress, then Sen. Serge Osmeña, Chairman of the Senate Committee on Energy conducted a series of meetings until January 2016 about the absence of an IMO that is supposed to manage the Wholesale Electricity Spot Market (WESM). The Philippine Electricity Market Corporation (PEMC) as market operator of WESM remains weird because (a) PEMC Board is chaired by the DoE Secretary, many board members are government officials; (b) Even the supposed four independent directors plus consumer representative (5 total) are all appointed by the DoE Secretary; and (c) PEMC is regulated by the Energy Regulatory Commission (ERC), which is under the administrative control of the DoE Secretary, who chairs the PEMC that is regulated by ERC.

  1. WESM Mindanao, IMEM.

Aside from issues on the new Market Management System (MMS) for WESM rules and the transition to a real IMO, the move to create a WESM in Mindanao via the Interim Mindanao Electricity Market (IMEM) is gaining ground. The Mindanao dispatch protocol will have to be spelled out in detail too.

  1. Imposition of Renewable Portfolio Standards (RPS).

In June 2016, the DoE issued a draft Department Circular (DC) on RPS, a provision in the RE Act of 2008 (RA 9513) that “requires electricity suppliers to source an agreed portion of their energy supply from eligible RE resources.” This RPS will result in more expensive electricity because wind, solar, biomass, and small hydro that are not given feed in tariff (FiT) privilege of guaranteed price for 20 years can demand higher price for their energy output because distribution utilities will have zero choice but buy from them otherwise the DoE will penalize them.

The draft DC wanted an initial “2.15% to be applied to the total supply portfolio of the Mandated Participant in each grid.” When asked what will be the projected price implication of such policy, DoE and National Renewable Energy Board (NREB) officials answered that no study on price implications has been made yet. A weird proposal where proponents have no clear idea on the cost of implementation to energy consumers, the DC was shelved.

  1. Shift in energy mix from energy source to system capability.

During the administration of DoE Secretaries Petilla and Monsada, the DoE wanted an energy mix based on energy source or technology, 30-30-30-10 for coal-natural gas-RE-oil, respectively. This is highly distortionary because many REs are either seasonal (hydro can be baseload only during the rainy season, biomass can be baseload only if feedstock is available) or intermittent like wind and solar. New DoE Secretary Cusi changed the energy mix based on system capability: 70-20-10 for base load-mid merit-peaking plants, respectively. This is a more rational mixture.

  1. Endless demand for expanded, higher feed in tariff (FiT).

As more solar farms and wind farms are constructed nationwide, their developers and owners are lobbying hard for an expanded FiT 2 with guaranteed price for 20 years. Even geothermal developers also lobbied that their new plants should also be given FiT. Currently, three wind developers — Trans-Asia Renewable Energy Corporation (TAREC), Alternergy Wind One Corporation (AWOC), and Petrowind Energy, Inc. (PWEI) are petitioning the ERC that their FiT rate be raised from P7.40/kWh to P7.93/kWh. Three wind farms were lucky or favored to get P8.53/kWh under the original FiT — EDC Burgos (Lopez group), Northern Luzon UPC Caparispisan (Ayala group) and Northwind Power Bangui (partly Ayala).

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
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.

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.”


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.


Germany’s RE on a wild ride

I am reposting two articles from NTZ below.

(1) ‘Manager Magazin’ Reports How Renewable Electricity Is TakingGermany On A Wild Ride28 December 2016

It’s the paradox of the German Energiewende (transition to green energy): power exchange market prices are lower than ever before, yet consumers are paying the highest prices ever – with no stop in the increases in sight. Moreover, the more green electricity that is fed into the grid, the more coal that gets burned…

Today German Manager Magazin here brings us up to date on the country’s “greening” power grid — taking a look at the control center of grid operating company Tennet. Manager Magazin calls it the heart of the German Energiewende. Here a team of engineers decide how much gets fed into the various grids and which windparks are allowed to feed in and which aren’t.

Today the task has become a challenging balancing act. According to Manager Magazin, facility manager Volker Weinreich says “we have to intervene more often than ever to keep the power grid stable. We are getting closer and closer to the limit.”

The reason for the grid instability: the growing amount of erratic renewable energy being fed in, foremost wind and sun. Manager Magazin writes that there are always four workers monitoring the frequency at the Tennet control center, just outside Hannover, making sure that it stays near 50 Hz. Too much instability would mean a the “worst imaginable disaster: grid collapse and blackout“.

Manager Magazin reports Germany now has a huge oversupply of power flooding into the grid and thus causing prices on the electricity exchanges to plummet to levels never seen before. Yet, renewable electricity producers are guaranteed, in most cases over a period of 20 years, exorbitant high prices for their energy. This means power companies have to purchase at a high price, yet can get only very little for it on the exchange markets.

The German business magazine then writes that once again consumers will be getting the serious shaft, as the feed-in subsidy consumers are forced to pay will climb another 0.53 cents-euro in 2017, bringing the total feed in tariff for power consumers to 6.88 cents-euro for every kilowatt hour they consume.

Bavaria faces Industrial power blackout

Another huge problem is that by 2022 Germany will be shutting down the remaining nuclear power plants, a source that much of Germany’s industrial south relies on. In the meantime, the necessary transmission lines to transport wind power from the North Sea to the south are not getting built due to protests and permitting bottlenecks. This puts Bavaria’s heavy industry at risk. manager writes that the transmission lines are not expected to be completed by 2025!

In Part 3 of its report, manager Magazin reports that operating a power grid has become more complex and costly, due to the renewable power, and that the Energiewende has turned into “ecological foolishness“.  Weinreich describes how on stormy days wind parks are forced to shut down to keep the grid from frying. And the more wind turbines that come online, the more often wind parks need to be shut down. This makes them even more inefficient…

Weinreich reports that the grid is so unstable that in 2015 it was necessary for Tennet to intervene some 1400 times. In the old conventional power days, it used to be only “a few times a year“.

In Part 4, Manager Magazin reports that all the intervention and shutdowns of runaway wind parks are “costing billions” for the consumers. Alone in 2017 Tennet says grid operating fees will rise 80%, translating to 30 euros more burden each year for each household. The money of course ends up flowing from poor consumers and into the pockets of wealthy solar and wind park operators and investors.

(2) Analysis: Adding More Solar, Wind Power IncreasesDependence On Fossil Fuels, ‘Doubles’ CO2 Emissions24 November 2016

A 2011 decision to phase out nuclear power by 2022  has meant that renewables like wind and solar power are expected to swiftly take the place of nuclear energy on the German power grid.  The portion of Germany’s power generation from wind and solar (renewables) has indeed risen dramatically in the last 10 years:

And despite the steep, expensive rise in power generated by renewables since about 2000, Germany still obtained about 44% of its power from coal as of 2014, which is a higher share than in the United States (33% as of 2015)…

“As more solar and wind generators come online, … the demand will rise for more backup power from fossil fuel plants.”

The full article, entitled “Rise in renewable energy will require more use of fossil fuels”  also points out that wind turbines often produce a tiny fraction (1 percent?) of their claimed potential, meaning the gap must be filled by fossil fuels:

Wind provided just 33 megawatts of power statewide in the midafternoon, less than 1% of the potential from wind farms capable of producing 4,000 megawatts of electricity….

wind and solar energy must be backed up by other sources, typically gas-fired generators. As more solar and wind energy generators come online, fulfilling a legal mandate to produce one-third of California’s electricity by 2020, the demand will rise for more backup power from fossil fuel plants. 

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.

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 https://www.electranet.com.au/what…/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, 2016http://www.abc.net.au/…/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.”https://wattsupwiththat.com/…/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.”http://grattan.edu.au/…/09/877-Keeping-the-lights-on.pdf

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

Wind power firms corner billions of FIT money

* This is my article in BusinessWorld last Wednesday.


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).


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.