Article Republished By Javier Troconis
THE country’s target to achieve a 35-percent renewable energy (RE) share of the total generation mix by 2030 is gaining ground after the Department of Energy (DOE) approved an increase in the yearly renewable portfolio standards (RPS) from 1 percent to 2.5 percent.
The increase of 2.52 percent shall take effect in 2023 based on Department Circular 2022-09-0030, which prescribes the adjusted annual percentage increment for all participants of the RPS for on-grid areas, signed by Energy Secretary Raphael P.M. Lotilla on September 23, 2022.
The adjustment is meant to meet the aspirational RE share of at least 35 percent in the country’s energy mix by 2030, and achieve an even higher RE share by 2040 at 50 percent.
“The increase in the utilization of renewable energy in our power generation mix would encourage more investors and end-users to develop and utilize domestic energy sources,” Lotilla said.
As of June 2022, a total of 998 RE contracts with an aggregate installed capacity of 5,460.59 megawatts (MW) and potential capacity of 61,613.81 MW have been awarded by the DOE. This generated around P270.8-billion investments for the country. The figures already include prospective RE projects.
From 2009 to 2022 data provided by the agency showed that the total investment cost of RE projects reached P270,779,797,236.62. Solar investments during the period reached P130,444,836,889.27 for 1,386.506MW; wind investments stood at P52,913,060,400.00 for 409.9MW; hydro investments amounted to P38,726,532,331.26 for 269.29MW; biomass investments at P38,159,320,654.74 for 634.91MW; and geothermal investments reached P10,536,046,961.35 for 82.5MW.
The DOE circular also mandates an annual review of percentage increment to monitor compliance, and adjustments in case of constraints in the timely completion of eligible RE facilities.
Private sector role
LOTILLA said private sector investments are central in achieving the country’s RE targets and vision.
In 2021, DOE figures showed RE’s in the gross power generation mix is 22 percent. The mix, based on DOE’s 2021 data, is still dominated by coal at 58 percent, natural gas, 18 percent; and oil, 2 percent.
Of the 22-percent RE share, 10 percent comes from geothermal, 9 percent from hydro, and 1 percent each from biomass, solar and wind.
RE players well-positioned
RE firms welcomed the new policy, stressing their commitment to support the growth of RE in the country.
Aboitiz Power Corp. said the hike in RE percentage is in line with its plans to ramp up its RE portfolio.
“We are in full support of this and as you know well know, we have committed to grow our RE capacity to 4,600MW by the end of this decade. To date, we already have about 1,000MW of disclosed renewable energy projects and a number more in the pipeline,” said Aboitiz Power President Emmanuel Rubio in a text message.
Aboitiz Power will build an additional 3,700MW of RE, growing its existing Cleanergy capacity threefold by 2030.
The power business of conglomerate San Miguel Corp. (SMC) is also adding more renewables into its power portfolio, utilizing technologies to significantly cut its carbon footprint, while continuously addressing the country’s need for reliable and affordable power.
“We support the DOE’s latest move to increase the share of renewable energy in our power generation mix. In San Miguel, we have been investing heavily in advanced technologies and new facilities to meet our country’s increasing power needs and significantly reduce our emissions. Our approach has always been to maintain a broader portfolio of both the stable traditional and variable renewable sources with the balance shifting towards more clean energy and less fossil fuels,” SMC President Ramon Ang said in a text message.
“Our goal is to put up 10,000MW of new renewable energy capacity over the next 10 years. In support of this, we recently completed building 31 battery energy storage systems (BESS) facilities nationwide,” added Ang.
The company has already started its transition to cleaner energy with its ongoing construction of 31 BESS facilities all over the country. It also plans to put up solar plants in combination with BESS at 10 locations throughout the country. It has also lined up several hydroelectric power plants in Luzon.
“All of these are in support of our country’s goal to speed up our transition to a clean energy future,” said Ang.
The power generation arm of the Manila Electric Company (Meralco) lauded the move, saying it will advance deployment of clean energy in the country.
Meralco PowerGen Corp. President Jaime Azurin said via e-mail that the updated policy, together with other RE-related policies such as the Green Energy Auction Program (GEAP), would keep the power rates unaffected.
“We at MGEN have set our sights on building 1,500MW of renewable energy projects in the next seven years to support the country’s energy transition, starting with Bulacansol’s 55-MWac solar plant in San Miguel, Bulacan. Construction of solar plants in Rizal and Ilocos Norte are also underway,” he said.
ACEN Corp. is also well-positioned to help the government achieve the numbers.
“This is a very welcome development in the industry and aligns the RPS policy with the country’s goal of reaching 35 percent renewables share of generation by 2030. This will boost the transition towards a sustainable and clean energy future for the country,” ACEN Corp. President Eric Francia said in a Viber message.
ACEN is the listed energy platform of the Ayala Group. It has about 4,000MW of attributable capacity in the Philippines, Vietnam, Indonesia, India and Australia, with a renewable share of 87 percent, which is among the highest in the region.
ACEN’s aspiration is to be the largest listed renewables platform in Southeast Asia, with a goal of reaching 20 gigawatts in renewables capacity by 2030.
The RPS, meanwhile, is a policy mechanism under Republic Act 9513 or the Renewable Energy Act of 2008, designed to increase the use of RE sources for electricity generation. This requires or encourages electricity suppliers, particularly the distribution utilities, to source or produce a specified fraction of their power supply from eligible renewable energy resources.
Lotilla said the RPS is also a mechanism designed to provide a guaranteed market for RE.
RPS, REM to boost RE
ANOTHER key tool to boosting the country’s RE share is the Renewable Energy Market (REM), which is the venue for the trading of RE certificates equivalent to an amount of power generated from RE sources.
“We are also hopeful that as part of this important development, that the Renewable Energy Market will also be implemented soonest in order to establish the appropriate market and pricing for renewable energy certificates.
“All this will help scale up renewables in the country, which is much needed to address energy adequacy and independence,” added Francia.
DOE-Electric Power Industry Management Bureau (DOE-EPIMB) Director Mylene Capongcol said the agency awaits the Energy Regulatory Commission’s (ERC) issuance of rates. “We already launched the Interim RE Market. So far, we are waiting ERC approval of the REC price cap and methodology,” she said via Viber.
The Philippine Independent Power Producers Association Inc. (PIPPA), meanwhile, said it will comply with the new directive. “Our members will endeavor to comply with the direction set by the DOE and work towards increasing generation investments,” said PIPPA President Atty. Anne Estorco Montelibano.
RE 100% foreign ownership?
THE new energy chief has said he is open to allowing 100-percent foreign ownership of RE projects.
At present, the Constitution allows a 60-40 percent ownership in favor of Filipinos for most RE sources, except biomass and geothermal.
Lotilla recently underscored before the Senate Energy Committee the urgency to address the country’s power requirements. “One way of doing that is to open renewable energy to 100-percent foreign ownership so that foreign locators can actually develop their own sources of power.”
Foreign companies have been allowed to participate in large-scale geothermal exploration, development and utilization activities. However, there are some conditions that foreign investors should meet. The project should be large scale, with a minimum investment cost of about $50 million, and it should be under Financial and Technical Assistance Agreement (FTAA) as provided under the Constitution.
For biomass projects, the DOE also allowed 100-percent foreign ownership, which means foreign firms no longer need to partner with a local entity.
The new policies are seen to further brighten the prospects of the country’s RE landscape, boosting the transition towards a sustainable and clean energy future for the country. “By increasing the annual percentage overtime, renewable energy would drive us on a path toward energy sustainability,” Lotilla added.