- Category: Asia
22 Apr 2012
- Published on Sunday, 22 April 2012 19:38
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By Eric DorenteAt a recent gathering of key people in the Philippine renewable energy community in Manila, things were a bit quiet. The event was called the "2nd Philippine Renewable Energy Summit," attended by about 150 government officials, business executives, bankers, technical experts, and others. The first one was held two years ago. "It's very sad. Indonesia moved ahead. Thailand moved ahead. You've got an abundant potential," said Markus Dietrich, a renewable energy consultant for the German Agency for International Cooperation. In December 2008, the Philippines approved Republic Act 9513, the country's Renewable Energy Act. The law was supposed to "accelerate" the development of renewable energy resources by providing fiscal incentives to private sector investors. However, the law was confronted by several challenges, like how to balance renewable energy growth with the need for cheaper electricity, in a developing country whose power rates are already among the highest in Asia. Now, three years and four months since the law's enactment, and with no major renewable energy project put in place, this has all boiled down to one specific issue - delays in approving the feed-in tariff rates. Political will For many observers, it comes down as a question of political will, and a willingness to really move things forward on the part the country's leaders. "At this point, it's a token approach. There is no definite policy direction. The policy shift is not clear," says Teddy A. Casiño, who represents the party-list group Bayan Muna (People First) in the Philippine House of Representatives. Theresa Cruz-Capellan, who heads the Philippine Solar Power Alliance and is country advisor for SunEdison, says political inaction may be coming from uncertainties with the new technology. "Just like with any new technology, the future of renewables is uncertain. The delay is because of that fear of the uncertain. And usually the resistance comes from lack of knowledge," Ms. Capellan says. Vested interests But one specific issue seems to be at the heart of the political debate, as can be gleaned from experts' comments – the politics of vested interests. In deciding for the approval of the feed-in tariff, all major energy players, including those coming from the traditional sector, have a say. In energy debates, it's a right they usually exercise. In the past years, complaints from and issues raised by many groups - like the Philippine Chamber of Commerce and Industry and the Foundation for Economic Freedom, both of which have criticized the country's renewables plan - have been formally accommodated by the country's Energy Regulatory Commission, the agency that will approve the feed-in tariff rates. "There were many issues that had to be resolved," said the commission's executive director, Francis Saturnino Juan, whose agency was left explaining the delay to people in the summit. "It took some time because of opposition by certain entities. Every time we receive cases, we have to hear them and give due process. These are all provided for in our administrative code. But we tried to really move forward." Mr. Casiño, an advocate of distributed solar power generation, says groups strongly pushing for the reconsideration of the country's renewable energy efforts are actually engaging in a "comprehensive, systematic and sustained lobby." "This is the biggest stumbling block we have right now," he says. "The government is mainly relying on the major players to dictate the terms of our energy policy." Ms. Capellan adds that ultimately it comes down to the fact that government agencies like the Department of Energy are having a difficult time adopting a new paradigm in energy thinking. "They've been used to that regime. It's harder for them to appreciate renewables." President Aquino's position Meanwhile, Philippine President Benigno S. Aquino III's actions leave certain groups unconvinced about his commitment to renewables. Publicly, Mr. Aquino has supported renewable energy. In June last year, the president made this statement: "I have said many times before that renewable energy is vital in moving this country forward. It empowers more than our cities, more than our machines, and more than just entire industries. Renewable energy fuels our movement toward the rebuilding of this nation." However, according to environment advocacy group Greenpeace, some 800 megawatts' worth projects in the pipeline for the southern region of Mindanao, whose power concerns recently hugged headlines, are all coal-fired. Renewables are in no way taking center stage, they said. "The president is not moving toward renewable energy. While the president talks about promoting renewable energy, I don't think he will be able to sincerely defend this pronouncement publicly," said Francis Joseph de la Cruz, a public outreach campaigner for Greenpeace Southeast Asia. Cost of inaction The renewable energy board has submitted feed-in tariff rates per kilowatt-hour of 17.95 Philippine pesos ($0.42) for solar, 10.37 pesos for wind, 7 pesos for biomass, 6.15 pesos for run-of-river hydropower and 17.65 for ocean power. All of these are now on the hands of the commission, for approval. Inaction does have a cost. In the last three years without the feed-in tariff, the Philippines has been sitting on $2.5 billion dollars' worth of mostly foreign investments in proposed renewable energy projects. The local currency conversion for that amount is 100 billion pesos. That's three times the size of the Department of Social Welfare and Development's budget last year. "If we don't have a feed-in tariff, developers can't get projection for revenues to be generated. Then they won't have something to show to financers and won't get to financial closing for their projects," says Pedro H. Maniego, Jr. who chairs the National Renewable Energy Board, the government's main consultative body for renewables. As of July last year, the Energy Department has approved 760 MW worth of renewable energy projects to the Energy Regulatory Commission, 50 MW of which are solar and 200 MW are from wind. "All of these renewable energy projects are waiting for the feed-in tariff to be approved," Mr. Maniego said. Another cost is the value of all that time spent. "It takes at least five years of a learning curve for this ecosystem. That learning curve is being delayed," Mr. Dietrich says. Not surprising But despite the delays, some are still optimistic. Ron Steenbergen, managing director of Australia-based renewable energy consultancy group and developer Projectioneering Pty Ltd, is one. "It's the political reality in nearly every country or region I've seen. In Australia, where I come from, we have faced and even now are facing enormous challenges to renewable energy from the coal lobby. It's the same in Europe. The Philippines is no different," Mr. Steenbergen, who has spent the last two years in the Philippine renewables scene, told EcoSeed. Mr. Steenbergen adds that the seriousness of the Philippine government to move to renewables is clear in acts following the establishment a couple of years ago of the country's Climate Change Commission. Meanwhile, other issues are emerging on the energy horizon - things which may exacerbate a situation already affected by delays. The first is that the door is now closing for carbon financing for many projects still not registered with the Clean Development Mechanism. From a maximum price of about 24 euros ($32) in the third quarter of 2008, carbon is now just hovering at over 3 euros. The sentiment in the future of the carbon market is not positive. And as the power problems in Mindanao continue, some fear that the government may be forced to make hasty decisions leaning to coal that might unfortunately set the term for future government actions on energy. And of course, even the approval of the feed-in tariff, as some experts have rightly pointed out, will just be the beginning. After that, a lot of issues still have to be resolved, not least in how all that electricity will be accommodated by the national grid operators. Next step In an interview, Mr. Juan told EcoSeed that the regulatory commission is still hoping to get the feed-in tariff rates approved within the year. "Starting May, we will review the entire proposal after getting all the comments from stakeholders," he said. But until then, all those projects will just have to wait. In the middle of the summit, the mood in the room was one of resigned helplessness. Everyone already knows what the problem is and are just waiting for something to actually happen so that things will begin moving forward. "You can't get it right the first time. No matter how many consultations and conferences you do, some things may always turn out wrong. But what needs to be done is to put the system now so that the process of learning starts," Mr. Steenbergen said.