Renewable energy in the Philippines

Renewable energy accounted for 26.44% of the Philippines' total electrical energy needs in 2013. In terms of gigawatt-hours, renewable energy sources provided the Philippines with 19,903 gigawatt-hours of electrical energy out of a total need of 75,266 gigawatt-hours in 2013.[1]

In the Philippines, five main types of renewable energy are used. These are hydropower, geothermal power, wind power, solar power and biomass power.

In recent years, there has been a drive to increase the Philippines' usage of renewable energy sources. Reasons include the disadvantages of using fossil fuels, such as pollution, accelerated climate change and fluctuating prices.[2][3]

The Philippine Government has responded to the increased demand for renewable energy by enacting certain laws. In 2001, the Philippine Congress enacted the Electric Power Industry Reform act, which promotes the use of local and sustainable energy sources, as opposed to imported fossil fuel sources.[4] In 2006, Congress passed the Biofuels Act, which promotes the use of biomass fuels.[5] In 2008, the Renewable Energy Act[6] was passed, which further encouraged the development and usage of renewable energy in the Philippines.[7] In 2009, the Climate Change act was passed, which provided a legal basis for the tackling of climate change through sustainable development.[8]

The laws enacted by Congress has resulted in a significant degree of cooperation from private companies producing renewable energy, hundreds of whom have contracts with the Philippine Government.

Rationale for renewable energy in the Philippines

Renewable energy implementation is considered important in the Philippines for several reasons.[9] Given its geographic characteristics, the Philippines is highly vulnerable to the adverse effects of climate change. Rising sea levels are a threat to the Philippines, as it is an archipelago with many cities located near coastal areas. As the coastline recedes due to rising seas, coastal cities in the country will become more vulnerable to flooding. In the long run, rising sea levels may even make these cities uninhabitable. Climate change has also been linked to altered weather patterns and extreme weather events.[10]

The continued reliance on fossil fuels is also detrimental to the government’s goal to maintain energy security, which pertains to the country’s ability to readily and affordably procure energy resources.[11] The Philippines does not have a sizeable domestic production of oil and coal, and so it is a net importer of both these fossil fuels. In 2012, the Philippines imported 20 million tons of coal to generate energy, but only domestically supplied 8 million tons.[12] Likewise, the Philippines needed 54 million barrels of oil in 2010, but only domestically produced 33,000 barrels.[13] Given its heavy dependence on imported coal and oil, the Philippines is more vulnerable to power shortages caused by price fluctuations and supply constraints affecting these commodities.[3] This in turn can lead to higher energy prices for consumers, as well as the possibility of energy rationing in certain areas.

Fossil fuels are also an unsuitable long-term energy source because rapidly depleting coal, oil and natural gas stocks. In the succeeding decades, it is predicted that diminishing fossil fuel reserves will result in supply constraints that appreciably drive up coal, oil and natural gas prices. Thus, the costs associated with procuring and using fossil fuel are expected to rise. It is also predicted that nearly all economically recoverable sources of fossil fuels will be fully depleted before the end of the 21st century.[14]

Given the disadvantages of using fossil fuels to meet the Philippines’ energy needs, there have been movements to promote the wider use of renewable energy. The main drivers behind this are the desire to use cleaner and more secure energy sources. This is reflected in a statement released by the Philippine Department of Energy:

“The harnessing and utilization of renewable energy comprises a critical component of the government's strategy to provide energy supply for the country. This is evident in the power sector where increased generation from geothermal and hydro resources has lessened the country's dependency on imported and polluting fuels. In the government's rural electrification efforts, on the other hand, renewable energy sources such as solar, micro-hydro, wind and biomass resources are seeing wide-scale use.”[15]

Renewable electricity overview

Renewable electricity production (GWh) by source.[1][16]
Hydropower [1](GWh) Geothermal (GWh) Solar, wind, and biomass (GWh) Total renewable energy produced (GWh) Total energy produced (GWh) Renewable energy as a percentage of total energy production
2004 8,593 10,282 - 18,875 55,957 33.73%
2005 8,387 9,902 19 18,308 56,568 32.36%
2006 9,939 10,465 55 20,459 56,784 36.03%
2007 8,563 10,215 59 18,836 59,612 31.60%
2008 9,834 10,723 63 20,620 60,821 33.90%
2009 9,834 10,324 79 20,237 61,934 32.68%
2010 9,788 9,929 90 19,807 67,743 29.24%
2011 7,803 9,942 205 17,950 69,176 25.95%
2012 10,252 10,250 259 20,761 72,922 28.47%
2013 10,019 9,605 279 19,903 75,266 26.44%
2014 9,137 10,308 364 19,809 77,261 25.64%
2015 8,665 11,044 1,254 20,963 82,413 25.44%

Despite its heavy reliance on fossil fuels for energy, the Philippines does utilize renewable sources of energy in its current energy mix. In particular, the Philippines utilizes hydropower, geothermal, solar, wind and biomass resources. Together, these renewable energy sources contributed 19,903 GWh of electrical energy in 2013, or 26.44% of the country’s power needs.[1]

Sources

Hydropower

Angat Dam, a major hydropower facility in the Philippines

Hydroelectric plants in the Philippines are evenly split between conventional (dam) hydro and run-of-the-river. Out of 29 hydropower sites in the country, 14 of these use dams while the remaining 15 use run-of-the-river.[17][18][19]

An advantage of hydropower in the country is that it can be implemented in almost every region. According to the Department of Energy:

“Potential sites for mini and micro-hydro projects are evenly distributed in all the regions.”[20]

This makes hydropower more suitable for nationwide implementation than other renewable energy sources, such as solar and wind.

Hydropower can cause flooding in upstream areas, thereby damaging or destroying the homes and crops of local residents.[20] This is especially true during the rainy season in the Philippines, where dams are forced to release water or risk overflowing. Oftentimes, releasing water during these times further harms residents and farmers already severely impacted by the inclement weather.[21]

Hydropower output of the Philippines[1][16]
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Hydropower Output (GWh) 8,593 8,387 9,939 8,563 9,834 9,788 7,803 9,698 10,252 10,019 9,137 8,665
Percentage Change (2.40%) 18.50% (13.84%) 14.84% (0.47%) (20.28%) 24.29% 5.71% (2,27%) (8.80%) (5.45%)
Major hydropower sites
Facility Name[17][18][19] Type Installed Capacity (MW) Location Owner Year Commissioned
San Roque Dam 411.0 Pangasinan San Roque Power Corporation 2003
HEDCOR Run-of-River 33.8 Benguet HEDCOR 1993
Kalayaan PSPP Dam 739.2 Laguna CBK Power Company Ltd. 1998/2004
Magat Run-of-River 360.0 Isabela Aboitiz Power 1983
Caliraya Dam 35.0 Laguna CBK Power Company Ltd. 1942/1947/1950
Botocan Run-of-River 22.8 Laguna CBK Power Company Ltd. 1967/1986
Angat Dam 246.0 Bulacan PSALM 1967/1986
Pantanangan-Misiway Dam 132.0 Nueva Ecija First Gen Corp. 1977/1981
Ambuklao Dam 105.0 Benguet Aboitiz Power 1957
Binga Dam 132.0 Benguet Aboitiz Power 1960
Bakun Run-of-River 70.0 Ilocos Sur Luzon Hydro Corp. 2000/2001
Casecnan Dam 165.0 Nueva Ecija CE Casecnan Water & Energy Co. 2002
Sabangan Run-of-River 13.2 Mt. Province HEDCOR 2015
NIA-Baligtan Run-of-River 6.0 Isabela NIA 1987
JANOPOL Run-of-River 5.2 Bohol BOHECO I 1992
AGUS 1 Dam 80.0 Lanao del Sur PSALM 1992
AGUS 2 Dam 180.0 Lanao del Sur PSALM 1992
AGUS 4 Dam 55.0 Lanao del Norte PSALM 1985
AGUS 5 Dam 200.0 Lanao del Norte PSALM 1985
AGUS 6 Dam 54.0 Lanao del Norte PSALM 1953/1971
AGUS 7 Dam 255.0 Lanao del Norte PSALM 1983
PULANGI 4 Run-of-River 232.0 Bukidnon PSALM 1985/1986
Sibulan HEP Run-of-River 42.6 Davao del Sur HEDCOR 2010
Agusan Run-of-River 1.6 Bukidnon FG Bukidnon Power Corp. 1957
Bubunawan Run-of-River 7.0 Bukidnon BPC Inc. 2001
Cabulig HEP Run-of-River 9.2 Misamis Oriental Mindanao Energy Systems 2012
Talomo HEP Run-of-River 4.5 Davao del Sur HEDCOR 1998
Tudaya 1 Run-of-River 6.6 Davao del Sur HEDCOR 2014
Tudaya 2 Run-of-River 7.0 Davao del Sur HEDCOR 2014

Geothermal power

Palinpion geothermal facility

Geothermal energy is derived from the heat found beneath the earth’s surface.[22] In general, geothermal energy is derived from the pockets of heated water and rock that lie beneath the earth’s surface.

In temperate countries, geothermal energy is used directly to provide heating for homes.[23] However, such an application is not used in the Philippines, and for the most part geothermal energy is used to generate electrical energy. Two technologies are used in the Philippines, the higher temperature flash steam method and the somewhat lower temperature binary cycle]] method.[24] Almost all of the Philippines’ 11 geothermal power plants use the flash steam method. The only exception is the MAKBAN plant, which is a flash steam-binary process hybrid.

Geothermal energy is a renewable energy source without large green-house gas emissions, and is widely available in the Philippines. Geothermal plants can be opened in areas with low wind incidence, such as Mindanao, and areas that frequently experience rainy weather, such as Batanes. Thus, geothermal plants can be used to serve areas that cannot be serviced by other renewable energy sources.

However, the process of extracting geothermal energy sometimes releases toxic substances from beneath the earth’s surface. Such substances include mercury, hydrogen sulfide, arsenic and selenium.[25] There have been instances of human poisoning that have been linked back to geothermal plants in the Philippines. One of the most known events happened at a geothermal plant in Biliran, where eight plant workers were hospitalized because of hydrogen sulfide poisoning.[26]

Geothermal energy output[1][16]
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Geothermal Power Output (GWh) 10,282 9,902 10,465 10,215 10,723 10,324 9,929 9,942 10,250 9,605 10,308 11,044
Percentage Change (3.70%) 5.69% 2.39% 4.97% (3.72%) (3.83%) (0.13%) 3.10% (6.29%) 7.32% 7.14%
Major geothermal sites
Facility Name[17][18][19] Type Installed Capacity (MW) Location Owner Year Commissioned
MAKBAN Flash/Binary 442.8 Laguna AP Renewable Inc. 1979
BACMAN Flash 130.0 Sorsogon Bac-Man Geothermal Inc. 1993
Tiwi Flash 234.0 Albay AP Renewable Inc. No date
MANITO-Lowland Flash 1.5 Albay Bac-Man Geothermal Inc. No date
MAIBARARA Flash 20.0 Batangas Maibarara Geothermal Inc. 2014
Palinpinon GPP Flash 192.5 Negros Oriental Green Core Energy 1983
Leyte Flash 112.5 Leyte Green Core Energy 1983
Unified Leyte Flash 610.2 Leyte Energy Development Corp. 1996/1997
Nasulo GPP Flash 50.0 Negros Occidental Energy Development Corp. 2014
Mt. Apo Flash 103.0 North Cotabato Energy Development Corp. 1996

Solar power

Photovoltaic solar cell

Although located in a region that receives high amounts of sunlight, the Philippines does not utilize solar energy on the same scale as it does hydropower and geothermal power. However, the country has opened an increasing number of solar farms in recent years. In 2015 alone, three large solar farms were opened within the country.

Solar energy resources are large in the Philippines, thanks to the country's position near the equator. The Philippines receives 5.1 KWh per square meter per day on average. Given the high amount of incident sunlight received by the country, a significant amount of energy can be derived by solar farms operating in highly sunny areas. Solar energy systems are also more easily installed in remote areas, especially rural areas, where it can be expensive to extend the power grid.

Adverse weather conditions, such as during rainy and cloudy weather, somewhat limit the available solar resources, as the country has an average of 144 rainy days per year.[27]

Major solar power sites
Facility Name[17][18][19] Type Installed Capacity (MW) Location Owner Year Commissioned
Majestic Photovoltaic 41.3 Cavite Majestic Power Corp. 2015
Pampanga Solar Photovoltaic 10.0 Pampanga Raslag Corp. 2015
Burgos Solar Photovoltaic 4.0 Ilocos Norte Solar Philippines 2015
CEPALCO Solar PV Photovoltaic 1.0 Cagayan de Oro CEPALCO 2004
Solar, wind, and biomass energy output[1][16]
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Solar, wind, and biomass output (GWh) 19 55 59 63 79 90 205 259 279 364 1,254
Percentage change 189.47% 7.27% 6.78% 25.40% 13.92% 127.78% 26.34% 7.72% 30.66% 244.50%

Wind power

Pililla Wind Farm

All wind power sites in the Philippines are on-shore facilities.

Besides generating power, wind farms, such as those in Ilocos Norte, are locally known as tourist sites.[28][29] Thousands of visitors have visited the Bangui Wind Farm ever since its opening in 2005. During the Lenten break in 2016, over 61,000 tourists came to see the wind turbines at Bangui.[28] A similar trend is seen in wind farms outside Ilocos, as tourists are also known to flock at the Pililia Wind Farm in Rizal.[29]

Major wind power sites
Facility Name[17][18][19] Type Installed Capacity (MW) Location Owner Year Commissioned
Bangui Wind Farm Power Phase 1 and 2 On-Shore 33.0 Ilocos Norte North Wind Power Development Corp. 2005
Bangui Wind Farm Power Phase 3 On-Shore 18.9 Ilocos Norte North Wind Power Development Corp. 2014
Burgos Wind On-Shore 150.0 Ilocos Norte EDC 2014
Carispisan Wind On-Shore 81.0 Ilocos Norte North UPC 2014
Pililia Wind Farm On-Shore 54.0 Rizal Alternegy Philippine Holdings Corp. 2015
TAREC On-Shore 54.0 Guimaras TAREC 2014
NABAS Wind Phase 1 On-Shore 36.0 Aklan PWEI 2015

Biomass power

Bagasse, a kind of biomass fuel
Rice husks

Biomass energy refers to energy derived from plant and animal sources.[30] Biomass resources are abundant in the Philippines. Being an agricultural country, the Philippines is rich in sources of biomass energy. At present, bagasse, rice husks and coconut husks are used in the country to generate power.[31] According to the Department of Energy, Regions III, IV, VI and VII are abundant in bagasse. Coconut husks are abundant in Regions IV, VIII, IX and XI. Meanwhile, Regions II, III, IV and VI are rich in rice hulls. Because of the abundance of these materials in the country, biomass fuel sources are a cheaper source of energy than imported fossil fuels.

To a lesser extent, the Philippines also uses landfill gas as a biomass energy source.

The primary disadvantage of biomass energy use in the Philippines is that its availability is tied to the plant and animal sources they are derived from.[32] If the country experiences an event, such as a drought, that cuts rice, sugar or coconut production, the production of biomass energy can be expected to fall.

Major biomass power sites
Facility Name[17][18][19] Type Installed Capacity (MW) Location Owner Year Commissioned
Green Future Bagasse 19.8 Isabela Green Future Innovation Inc. 2014
5JC Power Rice Husk 12.0 Nueva Ecija I Power Corp. 2015
Montalban LFG Landfill Gas 9.3 Rizal Montalban Methane Power Corp. 2009
Laguna LFG Landfill Gas 4.2 Laguna Bacavalley Energy Inc. 2011
Lucky PPH Bagasse 4.0 Isabela Lucky PPH International Inc. 2008
Pangea Landfill Gas 1.2 Metro Manila Pangea Green Energy Phil Inc. 2013

Government support

The Philippine government has passed four laws that seek to improve the state of renewable energy in the Philippines: the Electric Power Industry Reform Act of 2001 (RA 9136), the Biofuel Act of 2006 (RA 9367), the Renewable Energy Act of 2008 (RA 9513), and the Climate Change Act of 2009 (RA 9729). The Philippine Department of Energy (DOE) was lead agency mandated to implement the provisions of the former three laws.

Republic Act 9136

Republic Act 9136, or the Electric Power Industry Reform Act of 2001 (EPIRA), declared that “it is the policy of the state to promote the utilization of indigenous and new and renewable energy resources in power generation in order to reduce dependence on imported energy.” It stated that the DOE shall “encourage private sector investments in the electricity sector and promote development of Renewable energy Sources including small-scale renewable energy generating sources”[4]

Moreover, for government efforts of missionary electrification, EPIRA promoted the utilization of renewable energy resources whenever feasible, providing power generation and its associated power delivery systems in areas that are not connected to the grid. This act also set criteria for determining qualified third parties that may participate in providing electricity to remote and unviable areas, giving preference to parties that would utilize least-cost renewable energy resources.[4]

Republic Act 9367

Republic Act 9367, also known as the Biofuels Act of 2006, declared that “it is the policy of the State to reduce dependence on imported fuels with due regard to the public health, the environment, and natural ecosystems by mandating the use of biofuels,” wherein one aim is the availability of alternative and renewable clean energy without any detriment to the ecosystem and food reserves of the country.

It encourages investments in biofuels with the following incentives: specific tax on local or imported biofuels component. The sale of raw material used in the production of biofuels shall be exempt from the value added tax. Moreover, government financial institutions, such as the Development Bank of the Philippines, Land Bank of the Philippines, Quedancor and other government institutions providing financial services shall extend financing to Filipino citizens or entities that shall engage in activities involving production biofuel feed-stock as certified by the DOE.

Finally, the law saw the creation of the National Biofuel Board (NBB), which would monitor the implementation of, and evaluate for further expansion, the National Biofuel Program (NBP) prepared by the DOE.[5]

Republic Act 9513

Republic Act 9513, also called the Renewable Energy Act of 2008 pushed for the wider use of renewable energy in the Philippines. In particular, the law called for the state to:

(a) Accelerate the exploration and development of renewable energy (RE) resources such as, but not limited to, biomass, solar, wind, hydro, geothermal and ocean energy sources, (b) Increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in the use of RE systems, and promoting its efficient and cost-effective commercial application by providing fiscal and non-fiscal incentives; (c) Encourage RE resources as tools to effectively prevent or reduce harmful emissions for the protection of health and the environment; and (d) Establish the necessary infrastructure and mechanism to carry out the mandates specified in this Act and other existing laws."[7]

On-grid renewable energy development

Under Section 6 of RA 9513, A Renewable Portfolio Standard (RPS) was made to set a minimum percentage of generation from eligible renewable energy resources and determine to which sector RPS shall be imposed on a per grid basis.

Under Section 7 of RA 9513, A Feed-In Tariff System was implemented for electricity produced from wind, solar, ocean, run-of-river hydropower and biomass. FiT encourages RE capacity by guaranteeing prices in the form of long-term contracts to RE producers, typically based on the cost of generation of each technology.[33] Under the FiT System, qualified developers of emerging RE sources are offered on a fixed rate per kilowatt-hour (kWh) of their exported electricity to the distribution or transmission network. This scheme excludes the energy utilized from RE plants eligible for own use. FiT is one of the policy mechanisms eyed by the DOE as it aims to maintain the share of RE to at least 30% in the country’s power mix. The DOE highlights that FIT subscriptions for RE resources has significantly increased to 806.82 MW from 646.65 MW installations since the start of 2016.

Under Section 10 of RA 9513, Net-metering for Renewable energy was promoted by having the distribution utilities enter into net-metering agreements with qualified end-users of RE systems.

Off-grid renewable energy development

Under Section 12 of RA 9513, NPC-SPUG, in charge of providing missionary electrification, was ordered to source a minimum percentage of its total annual generation from available RE resources in the area concerned.

Incentives

Under Section 15 of RA 9513, developers of renewable energy facilities duly certified by the DOE are entitled to many incentives, particularly an income tax holiday for the first seven (7) years of its commercial operations, duty-free importation of renewable energy machinery, equipment and materials within the first ten (10) years upon the issuance of certification, under certain provisions, special realty tax rates on renewable energy equipment and machinery, net operating loss carry-over, zero percent Value-Added Tax (VAT) Rate for the sale of fuel or power generated from renewable sources of energy, and Tax Credit on domestic capital equipment and services.

Under Section 21 of RA 9513, the renewable energy sector was declared a priority investment sector that will regularly form part of the country’s Investment Priority Plan. DOE-accredited manufacturers, fabricators and suppliers of locally produced renewable energy equipment and components are entitled to tax and Duty-Free Importation of materials, tax credit on domestic capital materials, Income Tax Holiday and exemption for seven (7) years, and zero-rated VAT transactions.

Under Section 22 of RA 9513, DOE-certified individuals and entities (i.e. farmers) engaged in the plantation of crops and trees used as biomass resources are entitled to duty-free importation and be exempted from Value-Added Tax (VAT) on all types of agricultural inputs, equipment and machinery for a period of ten (10) years after the effectiveness of the Act.

Provisions

Under Chapter 8 of RA 9513, the National Renewable energy Board (NREB) was created to evaluate and recommend the mandated RFS and minimum RE generation capacities for off-grid areas, to monitor and recommend specific actions for implementing the National Renewable energy Program (NREP), and other such functions to attain the objectives of the Act, and the Renewable energy Management Bureau was created for the purpose of implementing the provisions in the Act. The Renewable energy Trust Fund, overseen by the NREB was also established for financing the enhancement of development and greater utilization of renewable energy.

Republic Act 9729

Republic Act 9729, also known as the Climate Change Act of 2009, stated that "it is the policy of the state to afford full protection and the advancement of the right of the people to a healthful ecology in accord with the rhythm and harmony of nature. It is to make it a policy of the State to incorporate a gender-sensitive, pro-children and pro-poor perspective in all climate change and renewable energy efforts, plans and programs." The state aims "to strengthen, integrate, consolidate and institutionalize government initiatives to achieve coordination in the implementation of plans and programs to address climate change in the context of sustainable development."[8]

Issues with implementation

Despite the enactment of the Renewable Energy Act in 2008, new investments in renewable energy have reportedly been slow on the uptake. The FiT were approved only in 2012, and thus far, there have been two investments in solar facilities that are expected to be operational in 2016. The four-year span in the approval of the FiT delayed a potential investment of $2.5 billion. Compared with the original FiT tariffs filed by the National Renewable energy Board (NREB) before the energy Regulatory Commission in April 2011, the approved rates in July 2012 are much lower. In 2015, the regulators are looking at even lower FiT tariff levels for the next batch of FiT applicants.[33]

Feed-in tariff program statistics

FIT Monitoring Board summary[34]
Resource For Nomination / Conversion With Certificate of Confirmation of Commerciality With Certificate of Endorsement to ERC
No. of Projects Capacity (MW) No. of Projects Capacity (MW) No. of Projects Capacity (MW)
Hydro - - 66 610.93 4 26.60
Wind 7 1,023.55 5 431.00 6 393.90
Solar 18 681.30 30 892.54 6 131.90
Biomass - - 4 24.37 11 94.25
TOTAL 25 1704.85 105 1,958.84 27 646.65
FiT degression[33]
RE Technology Proposed FiT ($/kWh)* Approved FiT ($/kwh)* Degression Rate
Solar 0.407 0.220 6% after 1 year from effectivity of FiT
Wind 0.235 0.193 0.5% after 2 years from effectivity of FiT
Biomass 0.159 0.150 0.5% after 2 years from effectivity of FiT
Run-of-River Hydro 0.139 0.134 0.5% after 2 years from effectivity of FiT
*Based on USD 1.00 : PHP 44.00

Involvement of the private sector

Republic Act 9531, or the Renewable Energy Act of 2008 encourages the involvement of the private sector in renewable energy, given that there is an increasing shift towards clean and sustainable energy.[35] The Renewable Energy Act of 2008 seeks to attract members of the private sector to contribute to the development of renewable energy in the country by offering fiscal and non-fiscal incentives.

Fiscal incentives include tax breaks, as well as funding assistance from both the government and third parties. A number of international organizations have expressed willingness to aid Philippine businesses in developing local renewable energy infrastructure. Such organizations include: German Technical Cooperation (GTZ), United States Agency for International Development (USAID), Asian Development Bank (ADB), United Nations Development Programme (UNDP), and Japan International Cooperation Agency (JICA).[36]

Barriers to private sector participation

However, there are factors that makes their involvement challenging or that may hinder potential actors from entering the industry in the first place. Such barriers include high transaction costs, social engineering costs, need for political connections, lack of local technology/expertise, and government price ceilings on energy prices derived from renewable energy sources.

High transaction costs

Many private sector businesses are facing high transaction costs due to bureaucratic inefficiency and procedural delays. For instance, many private sector players face troubles due delays in the issuance of standard documents, which are caused by intra-governmental conflict. Such delays are problematic on the side of the private sector actors, as they face increasing transaction and labor costs as time draws on.

An itemized partial list of required permits, licenses and certificates for RE project application:[37]
Required Documents issued by the National Government Required Documents issued by the Local Government Units
  1. SEC Registration
  2. DOE Certificate/Endorsement
  3. DOE Accreditation
  4. BOI Registration
  5. CSR Approval — Anti-poverty Commission
  6. DENR EPC Certificate
  7. DENR Environmental Certificate (ECC)
  8. DENR Permit to Operate
  9. Development Permit (endorsed to LGU)
  10. Transfer Certificate of Title (LRB, HLURB)
  11. BIR Certified Tax Declaration
  12. ERC Certificate of Compliance
  13. NTC Permit to Purchase
  14. NTC License to operate
  15. ERC Compliance to Grid Code
  16. ERC Compliance to Distribution Code
  17. WESM Registration
  18. Right of Way permit
  19. Power Purchase Agreements
  20. Certificate of Registration as Importer
  1. LGU Endorsements (Governor, Mayor, Councils)
  2. Realty Tax
  3. Barangay Clearance to operate
  4. Business and Operations Tax
  5. Building permit
  6. Real Estate Tax Receipt
  7. Sanitary Permit
  8. Barangay Clearance for Construction
  9. Right of Way permits
  10. Water Rights

Social engineering costs

In addition to the previously mentioned transition costs, private sector players also face social engineering costs. This type of cost involves certain indigenous groups and non-governmental organizations in which they engage in “informal forms of ‘harassment’ such as public information threats, mobilization of protests, and the ‘slander of corporate reputation’ in exchange for financial concessions.” These can reach up to approximately US$20 million which are distributed among the different types of government officials.[37]

Lack of local technology

Many renewable energy sources, such as wind power and solar power, require specialized equipment that are not produced in the Philippines. Because of this, many private sector players involved in renewable energy must import needed equipment and tools from other countries before they can begin operations in the country. Since doing this can prove to be prohibitively expensive, many private firms choose not to get into renewable energy in the Philippines.[37]

Price ceilings on electricity rates

Due to the high costs associated with investing in renewable energy infrastructure, private sector firms try to recoup their investment through higher rates. However, certain government agencies, such as the energy Regulatory Commission (ERC) impose lower generation rates on power producers in order to safeguard consumer interests. Because imposed rates are significantly lower than the proposed rates submitted by renewable energy producers, many private firms are reluctant to enter the renewable energy sector, because this could mean a long payback period and low profits, if any at all.[35]

Renewable energy Technology[35] Issued FIT rate (per kWh) Proposed rate (per kWh)
Solar Php 9.68 Php 17.95
Wind Php 8.53 Php 10.37
Biomass Php 6.63 Php 7.00
Hydropower Php 5.90 Php 6.15

Public-private partnership

Public-private partnerships are a kind of contractual agreement between a government entity and private sector player, wherein the private sector player provides a public asset or service with the government's support.[38] In public-private partnerships, the government benefits by tapping into the expertise of the private actor, who can provide assets and services to the public more efficiently. The government also benefits by offloading some investment cost onto the private partner. In exchange for taking on the risk of providing a public asset or service, the private partner gets to benefit economically from the public-private partnership.

As of June 2015, the Department of Energy (DOE) has awarded 646 service contracts to private sector players under the Renewable Energy Law with installed capacity of 2,760.52 MW.[39]

Resources Awarded Projects Installed Capacity Potential Capacity
Geothermal 42 1,896.19 750.00
Hydro 407 136.73 7,884.54
Wind 51 426.90 1,168.00
Solar 93 108.90 2,206.51
Biomass 45 191.80 357.00
Ocean energy 8 - 31.00
TOTAL 646 2,760.52 12,397.05

The DOE posts updates of its Private Sector Initiated Power Projects—both committed and indicative, of all types of power sources, and of all regions—every month in its official website.[40]

Listed below are the current committed private sector initiated power projects that involve renewable energy:

Island Group Resource Project Name Project Proponent
Luzon[41] Hydropower Kapangan Cordillera Hydro Electric Power Corporation
Bulanao DPJ Engineers and Consultants
Prismc PNOC-Renewables Corporation
Magat A Isabela Electric Cooperative, Inc.
Magat B Isabela Electric Cooperative, Inc.
Tubao Tubao Mini-Hydro Electric Corporation
Catuiran* Sta. Clara Power Corp.
Inabasan* Ormin Power, Inc.
Solar San Rafael Solar Power Plant SPARC Solar Powered AgriRural Communities Corporation
Morong Solar Power Plant SPARC Solar Powered AgriRural Communities Corporation
Cabanatuan Solar Power Project First Cabanatuan Renewable Ventures, Inc.
Palauig Solar Power Plant SPARC Solar Powered AgriRural Communities Corporation
Currimao Solar Photovoltaic Power Project Mirae Asia energy Corporation
Macabud Solar Photovoltaic Power Project ATN Philippines Solar energy Group, Inc.
Sta. Rita Solar Power Project Jobin-Sqm Inc.
YH Green YH Green
Tarlac Solar Power Project PetroSolar Corporation
Calatagan Solar Power Project Phase I Solar Philippines Calatagan Corporation
Geothermal Bacman 3 (Tanawon) Geothermal Project energy Development Corporation
Maibarara 2 Geothermal Project Maibarara Geothermal Inc.
Biomass 2 MW ACNPC WTE Biomass Power Plant Project Asian Carbon Neutral Power Corporation
12 MW Biomass Power Plant Project Green Innovations for Tomorrow Corporation
5 MW Bicol Biomass energy Corporation Bicol Biomass energy Corporation
8.8 MW Biogas Power Plant Project AseaGas Corporation
24 MW SJCiPower Rice Husk-Fired Biomass power Plant Project (Phase 1 - 12MW Phase 2 - 12 MW) San Jose City I Power Corporation
70 kW Biomass Gasification Power Plant Project* PowerSource Philippines, Inc.
Visayas[42] Geothermal Biliran Geothermal Plant Project Biliran Geothermal Incorporated
Hydropower Villasiga HEP Sunwest Water & Electric Co., Inc.
Igbulo (Bais) Hydroelectric Power Project Century Peak energy Corporation
Cantakoy Quadriver energy Corp.
Amlan HEPP Natural Power Sources Integration, Inc.
Solar Miag-ao Solar Power Project COSMO Solar energy, Inc.
La Carlota Solar Power Project Phase A (SACASOL II-A) San Carlos Solar energy Inc.
Cadiz Solar Power Project Phil.Power Exploration & Development Corporation
Wind Nabas Wind Power Project Phase I - 34 Phase II-16 PetroWind energy Corporation
Biomass 12 MW Multi-Feedstock Biomass Power Plant Project Megawatt Clean energy, Inc.
2.5 MW Rice Husk-Fired Biomass Power Plant Project Megawatt Clean energy, Inc.
Mindanao[43] Hydropower Lake Mainit Agusan Power Corporation
Puyo Hydroelectric Power Project First Gen Mindanao Hydropower Corp.
Asiga Asiga Green energy Corp.
Manolo Fortich I Hedcor Bukidnon, Inc.
Manolo Fortich 2 Hedcor Bukidnon, Inc.
Solar Kibawe Solar Power Project Asiga Green energy Corp.
Digos Solar Power Project Phase I Enfinity Philippines Renewable Resources, Inc.
Digos Solar Power Project Phase II Enfinity Philippines Renewable Resources, Inc.
Biomass 3 MW Biomass Cogeneration Facility Philippine Trade Center, Inc.
15 MW LPC Biomass Power Plant Project Lamsan Power Corporation
3.5 MW Biomass Cogeneration System Green Earth Enersource Corporation
10MW Malay-balay Bioenergy Corporation Multi Feedstock Generating Facility Malaybalay Bio-energy Corporation
23.5 MW EPC Woody Biomass Power Plant Project Eastern Petroleum Corporation
12 MW Napier Grass-Fired Biomass Power Plant Project Manolo Fortich Biomass energy Corporation

*—off grid project

See also

References

  1. 1 2 3 4 5 6 7 Membrere, Leah N. "2013 Philippine Power Statistics". www.doe.gov.ph. Retrieved 2016-04-08.
  2. ↑ Worl, Justin. "See How Climate Change Affect the Philippines". TIME.com. Retrieved 2016-04-08.
  3. 1 2 Brahim, Sahara (2014). "Renewable energy and energy security in the Philippines". energy Procedia.
  4. 1 2 3 "Republic Act No. 9136 - An Act Ordaining Reforms in the Electric Power Industry, Amending for the Purpose Certain Laws and for Other Purposes". www.doe.gov.ph. Retrieved 2016-04-12.
  5. 1 2 "Republic Act No. 9367 - An Act to Direct the Use Of Biofuels, Establishing for this Purpose the Biofuel Program, Appropriating Funds Therefor, and for Other Purposes". www.doe.gov.ph. Retrieved 2016-04-13.
  6. ↑ Renewable Energy Act
  7. 1 2 "Republic Act No. 9513 - An Act Promoting the Development, Utilization and Commercialization of Renewable energy Resources and for Other Purposes". www.doe.gov.ph. Retrieved 2016-04-12.
  8. 1 2 "Republic Act No. 9729 | GOVPH". Official Gazette of the Republic of the Philippines. Retrieved 2016-04-13.
  9. ↑ http://www.reurasia.com/single-post/2016/09/13/Latest-Renewable-Energies-Projects-in-the-Philippines
  10. ↑ Verifying Greenhouse Gas Emissions. Washington, DC: National Research Council. 2010. pp. vii–36. ISBN 978-0-309-15211-2.
  11. ↑ "energy security". www.iea.org. Retrieved 2016-04-08.
  12. ↑ "Coal Statistics". www.doe.gov.ph. Retrieved 2016-04-08.
  13. ↑ "Philippines Crude Oil Production by Year (Thousand Barrels per Day)". Retrieved 2016-04-08.
  14. ↑ Nelder, Chris (2009-07-24). "The End Of Fossil Fuel". Forbes. Retrieved 2016-04-08.
  15. ↑ Membrere, Leah N. "Renewable energy". www.doe.gov.ph. Retrieved 2016-04-08.
  16. 1 2 3 4 "2015 Philippine Power Statistics".
  17. 1 2 3 4 5 6 "List of Existing Plants (Luzon)" (PDF). Department of Energy. Department of Energy. 2016.
  18. 1 2 3 4 5 6 "List of Existing Plants (Visayas)" (PDF). Department of Energy. Department of Energy.
  19. 1 2 3 4 5 6 "List of Existing Plants (Mindanao)" (PDF). Department of Energy. Department of Energy.
  20. 1 2 "Hydropower". www.doe.gov.ph. Retrieved 2016-04-08.
  21. ↑ "Release of Angat, Ipo dam water aggravates Bulacan floods". InterAksyon.com. Retrieved 2016-04-08.
  22. ↑ Yang, Jianwen (2012). Geothermal energy, Technology and Geology. New York: Nova Science Publishers. ISBN 9781619427655.
  23. ↑ "Geothermal energy". www.renewableenergyworld.com. Retrieved 2016-04-08.
  24. ↑ "Geothermal Power & Electrity Production". www.renewableenergyworld.com. Retrieved 2016-04-08.
  25. ↑ Society, National Geographic (2012-11-20). "geothermal energy". National Geographic Education. Retrieved 2016-04-08.
  26. ↑ "At Biliran geothermal project eight workers hurt in gas poisoning". philstar.com. Retrieved 2016-04-08.
  27. ↑ "Rainfall in Manila, Luzon, Philippines Average Precipitation and Wet Days". www.manila.climatemps.com. Retrieved 2016-04-08.
  28. 1 2 Bulletin, The Manila. "Ilocos N. breaks tourists record". mb.com.ph. Retrieved 2016-04-08.
  29. 1 2 "Wind farm drawing tourists to Rizal | News Feature, News, The Philippine Star | philstar.com". www.philstar.com. Retrieved 2016-04-08.
  30. ↑ "What is BIOMASS?". www.biomassenergycentre.org.uk. Retrieved 2016-04-08.
  31. ↑ "Biomass, Solar, Wind and Ocean". www.doe.gov.ph. Retrieved 2016-04-08.
  32. ↑ "Advantages and Disadvantages". science134.tripod.com. Retrieved 2016-04-08.
  33. 1 2 3 Roxas, Fernando (30 January 2016). "Alternative framework for renewable energy planning in the Philippines". Renewable and Sustainable energy Reviews. doi:10.1016/j.rser.2016.01.084. Retrieved 12 April 2016.
  34. ↑ "FIT Monitoring Board Summary". www.doe.gov.ph. Retrieved 2016-04-16.
  35. 1 2 3 Brahim, Sahara Piang (2014-01-01). "Renewable energy and energy Security in the Philippines". energy Procedia. 2013 International Conference on Alternative energy in Developing Countries and Emerging Economies (2013 AEDCEE). 52: 480–486. doi:10.1016/j.egypro.2014.07.101.
  36. ↑ Marquardt, Jens (2015-11-01). "The politics of energy and development: Aid diversification in the Philippines". energy Research & Social Science. 10: 259–272. doi:10.1016/j.erss.2015.07.013.
  37. 1 2 3 Taguibao, Jalton Garces. "Renewable energy (RE) Sector Development in the Philippines Based on the Perspectives and Experiences of Selected Industry Managers". Asia-Pacific Social Science Review. 10 (2). doi:10.3860/apssr.v10i2.1903.
  38. ↑ "What are Public Private Partnerships? | Public Private Partnerships | World Bank". ppp.worldbank.org. Retrieved 2016-04-16.
  39. ↑ "Renewable energy on the rise..." (PDF). Philippine ANALYST. July 2015.
  40. ↑ Department of Energy official website
  41. ↑ "2016 PRIVATE SECTOR INITIATED POWER PROJECTS IN LUZON (COMMITTED)" (PDF).
  42. ↑ "2016 PRIVATE SECTOR INITIATED POWER PROJECTS IN VISAYAS (COMMITTED)" (PDF).
  43. ↑ "2016 PRIVATE SECTOR INITIATED POWER PROJECTS IN MINDANAO (COMMITTED)" (PDF).
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