Mindanao will have yet another solar power plant, aside from this one in Cagayan de Oro City, this time a much bigger one. MindaNews file photo by FROILAN GALLARDO First of two parts BY ELYSSA LOPE…
Mindanao will have yet another solar power plant, aside from this one in Cagayan de Oro City, this time a much bigger one. MindaNews file photo by FROILAN GALLARDOWhen industrial engineer Paul Baes returned from an official work assignment in France in 2020, he was determined to turn his first home in Imus, Cavite into a sustainable one. After spending two years in the four-season country, Baes saw the benefits of owning a solar-powered home in tropical Philippines. It simply made sense.
But Baes’s home is one in a million. As of October 2022, only 7,365 of the total 26.4 million households in the country have benefited from the government’s “net metering” program, more than a decade since it was introduced through the Renewable Energy Act. These sources are available in abundance and are replenished by nature such as the sun, wind, and water, and emit little to no greenhouse gases or pollutants into the air. The passage of the law was meant to ride on this momentum, help spur the development of affordable and cleaner energy sources, and lessen the country’s high dependency on fossil fuels.
The petitioners accused the two departments of allowing “coal plants to proliferate, making the country more, instead of less, dependent on fossil fuels.” “The problem with the DOE is it has circulars, but can they implement it?” a solar energy farm operator told PCIJ. “Policy is not enough.”Before the 2017 Supreme Court case unlocked multiple Renewable Energy Law mechanisms, the DOE had already started implementing the Feed-in-Tariff scheme, a widely used tool for developing renewable power.
“At the early part of the implementation of the feed-in tariff, there was a lot of opposition,” former energy undersecretary Jay Layug told PCIJ. “In fact, one of them even filed a case… Foundation For Economic Freedom . They were complaining about renewables being expensive.” Aside from guaranteed payments, eligible RE developers under the FiT scheme were also assured of connection to and transmission from the grid. This is called the “priority dispatch policy.” As price takers in the wholesale electricity spot market or WESM, RE plants can then displace the more expensive energy resources like coal-fired power plants.The scheme did attract investments.
This was common among renewable energy developers, which had renewable power produced but could not sell it because the electricity grid isn’t fully developed in areas where they are located. “But it was not enough. It was not enough to stem the huge uptake on coal-fired power plant generation,” he said.
For context, data from the International Renewable Energy Agency show that in 2010, the average global cost of electricity from solar projects was $0.417/kwh or P23. By 2021, it had dropped by 88% to $0.048/kwh or P2.66. “What was important was the presence of a regulatory framework,” CleanTech CEO Salvador “Aboy” Castro said. “But for the past six years , there was no incentive for us, no way for us to secure long-term offtake agreements.”
Industry players had high hopes for the program. In August 2022, the DOE increased the RPS requirement to 2.52%. For the first round, it allocated 2,000 MW, distributed to solar, wind, hydro, and biomass. Like FiT, the auction winners were guaranteed profits under a fixed price. The ERC, then headed by Agnes Devanadera, said in a statement that the GEAR prices were set “using the Discounted Cash Flow Model with 46 parameters and assumptions for each technology.”
Leviste had been partnering with conglomerates to fund his projects. In 2020, Solar Philippines signed a joint venture with Enrique Razon-led Prime Metroline Infrastructure Holdings Corp. to build a solar farm in Tarlac. In 2021, a subsidiary of Solar Philippines went public. The company initially started as a rooftop solar builder in 2013, but it has since pivoted to developing solar farms.
For the solar farm operator, such moves limit companies like his, which had previously relied on FiT incentives to expand. “Here, you’re depending on one corporate entity to deliver 1,350 MW. Just one. I’ll be more comfortable if there were like 10 of those companies building the plants,” he said. “The delivery time of the projects is also by 2025… if we had quote-unquote expensive solar coming in quicker, it may have addressed our near-term power requirements.”
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