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Tariff impedes Philippines’ new love affair with solar
  • Tariff impedes Philippines’ new love affair with solar

Copyright: Heldur Netocny / Panos

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  • IEA says 17 per cent of the Philippine population live without electricity

  • Solar is booming but still accounts for less than 0.01 per cent of its energy mix

  • Off-grid areas have best use for solar but tariffs are turning off investors

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In the Philippines, a burgeoning interest in solar is prompting small households to large companies to install solar panels, contributing to a sentiment among some analysts that solar has the brightest future out of all the types of renewable energy.

“The sun is the only major energy source that arrives into our closed system, which is the main reason why there’s such huge potential,” Marlyne Sahakian, a research associate at the University of Lausanne and author of a book about energy use in South-East Asia, tells SciDev.Net. [1]

Lately, Philippine companies have been keener to capitalise on the opportunity. As of December 2014, the Department of Energy (DOE) has awarded 77 solar projects under the Renewable Energy Act, with a combined potential capacity of close to 1,300 megawatts. That represents almost a 30 per cent increase in the number of projects approved in the previous year. [2] However, while solar use is increasing, it still accounts for less than 0.01 per cent of the country’s energy

Energy is badly needed

The Philippines, which has been suffering from rotating power blackouts since the late 1980s, requires a stable flow of energy to sustain its status as Asia’s second fastest growing economy and support its rapidly growing population.

But electricity in the Philippines, which is not subsidised by the government, is among the most costly in South-East Asia, according to the International Energy Agency (IEA). [3]

“Vietnam is four pesos per kilowatt hour. Indonesia is eight pesos per kilowatt hour,” Jose Alejandro, a director at the Philippine Chamber of Commerce and Industry who focuses on energy, tells SciDev.Net. “Philippines is 12 pesos. Why invest here?”

Those losing out the most are the poor. As of 2010, 16 million people in the Philippines or 17 per cent, live without electricity, according to the IEA. [4]

Some non-profit organisations are working hard to address the gap, using solar. Litre of Light, for instance, uses simple materials, including a 2-litre plastic bottle and bleached water, to create a 50-watt conventional light bulb. The bottle is installed on the roof of a home so that sunlight refracts through the water and into the room. Litre of Light has put up bottled lights in over 140,000 homes in the Philippines alone. [5]

Off-grid areas

A small but growing number of companies and schools in Metro Manila have recently started installing solar panels on their rooftops or are planning on doing so in the near future.

In just the past few months, Manuel L. Quezon University became the first solar-powered university in Manila and which was soon followed by several other schools. Last year, Central Mall Binan earned the distinction of being the first solar-powered shopping mall in the country and just last December SM North EDSA became what is said to be the biggest solar-powered mall in the world.

But growth in solar energy has the most potential in off-grid areas, says PCCI’s Alejandro.

Many off-grid areas are located in popular tourist destinations, such as Palawan and Mindoro islands, which are sparsely populated rural areas. They are also appealing because they have more space to accommodate the physically huge solar panels needed to power a small community.

Moreover, off-grid areas, which are unlikely to house factories or huge power plants, have modest energy demands that can be met with an already established base load, possibly sourced from coal-fired power plants, one of the Philippines’ main sources of energy. Solar will then complement the base load and reduce the use of fossil fuels, says Alejandro.

Low feed-in tariffs

But growth in solar energy faces many challenges and chief among them is arguably the unexpectedly low “feed-in tariffs” (FiT), a policy measure that requires power companies to purchase renewable energy at higher rates from anyone who wants to produce it. The Energy Regulatory Commission, a government body, approved a FiT of 9.68 pesos (US$0.23) per kilowatt-hour for solar, which is 50 per cent less than the 17.95 pesos proposed by the National Renewable Energy Board.

Sahakian notes that the rate for solar is so low that it barely allows for a break-even investment.

Sahakian quotes Naderev Saño, a Philippine climate change commissioner, who speculates that the reason for the low FiT could be because the public is allegedly concerned that renewables would lead to a rise in electricity prices, and renewable energy would make the power grid unstable.
“The cost of the technology becomes an issue if the feed-in tariffs are not attractive,” Sahakian says.

In the Philippines, importing renewable energy technology is exempt from taxes under the Renewable Energy Act. But Sahakian notes that it only applies to technology that’s used to build power plants, not for suppliers or people who want to import solar panels.

And while solar technology is quickly evolving, it still has a long way to go.

In December 2014, researchers at the University of New South Wales in Australia were able to convert 40 per cent of the sunlight entering a solar electric system into electricity — the highest efficiency ever reported. But their strategy was designed to be used with the photovoltaic power towers being developed in the country and has not yet been proven to work outside Australia. [6]

Most PV cells on the market are only 15 to 20 per cent efficient, “and since the intensity of solar radiation (that makes it to the Earth’s surface) is low to begin with, huge and costly assemblies of such cells are required to produce even moderate amounts of power”. [7]



This article has been produced by SciDev.Net's South-East Asia & Pacific desk.

References

[1] Marlyne Sahakian Keeping cool in Southeast Asia: Energy use and urban air-conditioning (Journal of Industrial Ecology, 2014)
[2] Department of Energy Summary of Projects as of January 31, 2014 (accessed 11 February 2015)
[3] International Energy Agency Measuring progress towards energy for all: Power to the people? In: World Energy Outlook (Chapter 18) (IEA, 12 November 2012)
[4] International Energy Agency Southeast Asia Energy Outlook (IEA, September 203)
[5] Liter of Light How to build a solar bottle bulb (3.0) (YouTube, accessed 11 February 2015)
[6] University of New South Wales UNSW researchers set world record in solar energy efficiency (UNSW, 8 December 2014)
[7] Encyclopedia Britannica Solar energy (accessed 12 February 2015)
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