Policy problems hamper Philippine renewables growth

... but geothermal sector powers ahead
Date: 
August 02, 2011
Philippines wind turbines

Renewable energy is making progress in the Philippines but is fraught with difficulties, including a long delay in finalizing a feed-in-tariff (FIT) policy. And the solar industry accusing the government of policies which are hampering investment.

One bright side, however, a major player in the geothermal sector has announced six new development projects. Geothermal already generates 27 percent of the country's electricity.

Across the renewable energy sector investors are increasingly frustrated by that government's failure to come up with a solid (FIT) policy, despite it being called for under the Renewable Energy Law which came into effect at the beginning of 2009.

Jesse Ang, the International Finance Corporation's resident representative in the Philippines, recently warned that investors will pull out of the country if it is not be able to get its act together in terms of renewable energy policies. He said investors have been waiting for the FIT since June last year.

Ang said the proposal made by the National Renewable Energy Board (NREB) is already is acceptable to investors. The proposal is for a 20-year contract which has a provision for forex and inflation adjustment, making it more generous than Thailand's FIT scheme.

The Philippine Solar Power Alliance (PSPA), a domestic advocacy group supporting the development of solar power in the country, has meanwhile told the Department of Energy (DOE) that its limits on project size would mean the country missing out on USD650 million in potential investments.

The DOE has decided on an installation target for solar facilities at 50 MW, well below the recommendation of the NREB of 100 MW over three years. According to the PSPA, these numbers fall far short of the 269 MW originally presented by the DOE Secretary to President Aquino during the launch of the National Renewable Energy Program (NREP) on June this year.

The lower solar capacity solar will only bring in USD150 million in investments, as opposed to a target of 269 MW, which could bring investments to as much as USD800 million, according to the PSPA. It also pointed out that the process of putting up solar power plants is the fastest among all energy technologies

"A 10 MW solar power plant can be installed in less than 6 months due to the absence of fuel or environmental concerns. This is in contrast to the multi-year construction phases of fossil fuel, large RE hydro and geothermal, and the other emerging RE technologies," it said in a statement.

According to the documents from the Department of Energy, as of May this year, there were 40 local and international developers with applications for solar energy which could generate more than 400 MW in additional capacity.

According to a report in the Philippine Daily Inquirer the Philippine affiliate of Belgium-based Enfinity has filed applications for solar projects that could generate 192 MW in 15 sites, including in the off-grid islands as well as the economic zones in Clark, Cavite, Mactan and Zamboanga City. Other project applications from Lopez-owned First Philec, Ayala-led PhilNewEnergy and international players Youil Ensys and Sunconnex.

The geothermal sector looks healthier, with Energy Development Corporation (EDC) announcing at least six new projects during the recent Mindanao Renewable Energy forum. EDC's senior vice president Agnes de Jesus do not divulge the cost or expected power output from the new projects as they are still at planning stages.