Energy Transition in the Philippines: Challenges and benefits of leaning into renewable energy, reducing coal dependence
By: Joyce Ann C. Vildosola
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| Renewable Energy Plant [11] |
Energy Transition
The Department of Energy (DOE) commits to pursuing and attaining inclusive and equitable economic growth made possible by providing secure, sustainable, and resilient energy strategies. The Philippine Energy Plan (PEP) 2020-2040, the predecessor of PEP 2018-2040, is the second comprehensive energy blueprint supporting the government's vision Ambisyon Natin 2040. It reiterates the goal for a transformative direction towards attaining a clean energy future. With former President Rodrigo Roa Duterte's instructions to the energy sector, Energy Secretary Alfonso G. Cusi directed the policies such as the aggressive implementation of Renewable Energy (RE) and Energy Efficiency and Conservation (EEC) institutionalization programs, with a goal of clean energy scenario of 35% and 50% renewable energy share of power generation mix by 2030 and 2040; the moratorium for further coal power projects, allowing the foreign sectors' ownership on large-scale geothermal projects under financial and technical assistance agreement of FTAA for further energy development, the resumption of indigenous oil and gas exploration, the introduction of liquefied natural gas (LNG) portfolio, the establishment of strategic petroleum reserves and exploration of Hydrogen's potential. In defiance of these policies, the Secretary affirms the sector's mindfulness in putting consumers first, providing their energy needs, and that energy must be equitable to all Filipinos. [3]
Renewable Energy Potential
The Philippines is a country that's rich in natural resources ideal for renewable energy, which is crucial as we're aiming to go beyond sustainability. The country has a potentially good amount of various renewable sources like solar, wind, hydro, geothermal, and biomass, making its way to leading globally in terms of renewable energy. [4] A geothermal power plant having a power capacity is 1918 megawatts (MW) is the country’s third-largest installed geothermal plant. The 2021 report identified 7.1 Giga-watts (GW) of renewable energy capacity. 4.3 GW came from hydropower plants, with a further 896 MW sourced from solar energy, while the wind power plants only make up 427 MW. Despite having an estimated potential of 76 GW, the administration targets 2.3 GW by 2030. [5]
With this country having a great potential for renewables, the National Renewable Energy Program (NREP) planned out five steps to reach the renewable power capacity target as early as 2027. Start with raising geothermal capacity by 75%, expanding hydropower capacity by 160%, adding 227 MW of biomass power capacity, extending an additional 2,345 MW of wind power capacity, and developing an ocean energy facility. With these goals, studies still show optimism that the Philippines can aim higher and a more ambitious 100% renewable energy is feasible. [5]
Challenges and Benefits
Pursuing a renewable energy transition pathway is essential for the Philippines; with its energy challenges, the government and private sectors believe an energy transition can help sustain and strengthen the country's energy resiliency. However, this energy transition also implies risks, concerns, and uncertainties. [6]
The power sector has favored coal-fired plants for years because of their coal price reduction. It also secures investments providing continuous revenue streams, while renewable energy projects are considered high-risk investments as resources fluctuate widely yearly. Expanding coal plants would also make the grid coalition of variable renewable energy more difficult. Coal-powered plants cannot be turned on and off anytime to cope with intermittent renewable energy supply. [7] Only a few domestic banks support renewable energy projects, and in recent years there have been significant decreases too in investments. With the presentation of an International Renewable Energy Agency, the main challenges revolve around high upfront and technology costs, inaccessible financing, and a lack of competitiveness in the market. [5]
Despite these challenges, many benefits and opportunities are awaiting this energy transition. The commitment to a renewable energy transition could offer much-needed resilience. Generating electricity without fuel sourcing also provides a fresh opportunity for energy security. The energy transition projects also foster de-risking investments in the energy storage systems, enrich market participation, and facilitate the modernization of the power grid, thus enabling the Philippines to reach the RE potential and climate targets. [8] It will also benefit the Wholesale Electricity Spot Market (WESM), allowing the market to absorb and dispatch all renewable ahead of all other generations and will be enhanced for accurate economic dispatch. The DOE Moratorium on coal power plants will develop; renewable power will now be competitive in many areas. As for the National Renewable Energy Plan (NREP), the plan can target higher shares in renewable and aim for the goals for the next few years. [9]
Conclusion
The Philippines' energy transition aims not only to improve the total capacity of supply but meet a growing need for improved sustainability and energy security. [10] The country would need to focus on renewable energy development to retain its leadership position in renewable energy utilization. The policy and objectives under the RE Law of 2008 were apparent: develop indigenous renewable energy sources to achieve energy independence and mitigate GHG emissions. [7] More importantly, this energy transition will also help the country develop a cleaner and safer future for the environment, society, and people.
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