By BenCyrus Ellorin
THE approval of the feed-in-tariffs for renewable energy may mean big for power deficient Mindanao.
The country’s biggest producer of solar energy has remained bullish that with the right government support, 100 – 150 megawatts of clean solar energy can be online in the next three years, with the first 20 mw plant ready to supply the grid in less than a year.
And civil society organizations are calling on the Department of Energy and the Asian Development Bank to mobilize funding for this solar project and the rehabilitation of the hydro electric plants of the island from the Clean Technology Fund (CTF).
The Cagayan Electric Power and Light Company (Cepalco) which operates the country’s only on-grid solar power plant with an installed capacity of one megawatt, plans to build at least 40 mw solar power facilities in Northern Mindanao with the first half available in 2013 if they find government support sufficient to sustain growth in the long term.
The Energy Regulatory Board has released after years of work the feed-in-tariffs (FIT) for renewable energy sources such as solar, wind, run-of-river hydro, biomass and ocean last July 27.
The FIT is one of the non-fiscal incentives provided by the Renewable Energy Act of 2008 (RA 9513) that guarantees payment of fixed tariff for renewable energy generation over a mandated period.
According to Engr. Cecilio Suma-oy, Cepalco senior manager in charge of the company’s solar development program, “If there is a window of opportunity we shall commission the first 20mw within 2013 to help address the supply shortage in the Mindanao Grid.”
He said however they are still studying the ERC’s FIT rules to see if the approved FIT for solar, which is at P9.68/kwh would be economically and financially feasible in the long term.
“Ideally, the FIT must be able to sustain the development of the solar industry in the country (and avoid a seesaw scenario – projects are viable in some years and not in other years). With the current FIT based on a temporary ‘oversupply’ situation, succeeding projects will no longer be feasible when the solar PV market has recovered.”
Cepalco is advocating for the installation of 100-150 megawatts of solar power plants in Mindanao to complement optimally the hydro capacities, especially during prolonged dry season. Cepalco’s one-mw on-grid solar power plant was the biggest among developing countries when it opened in 2004. Many country’s like Thailand have however overtaken it.
“In terms of investor interest, there are already investors who are interested to pursue solar PV projects in Mindanao but got stalled due to the absence of concrete government support for these initiatives,” Sumaoy said.
Advocates of renewable energy are also taking on the opportunities opened by the approved renewable energy FIT.
The national civil society coalition Aksyon Klima (AK) sees the FIT rules which is mandated in the RE law as a game changer.
In fact, the AK is now calling on the Asian Development Bank (ADB) which is in the process of approving about $500 million loan to the Department of Energy (DOE) under its Clean Technology Fund (CTF) to support the funding needs of Cepalco’s solar initiative in Mindanao.
Renewable energy advocates have been criticizing the DOE’s plan to use the CTF loan for electric tricycles which they suspect as being used as leverage by politicians as dole-outs during the election.
They criticize the design of the load funded project to distribute more than 200 thousand e-trikes in the country as ill-advised.
Although e-trikes are cleaner compared to gasoline-fed tricycles, charging these vehicles may entail additional baseload demand which may come from fossil fuel, like coal plants.
According to AK lead convenor and CTF observer for the Asia Pacific, lawyer Elpidio Peria, the ADB can avoid being dragged into controversies if it invest the loan to actual renewable energy projects and help Mindanao overcome its power problems.
“The Committee (of ADB CTF) can avoid to being dragged in the potential political mess of the e-trikes being rolled out in the local government units in an election period,” Peria said.
The problem of Mindanao is power supply not tricycles, said Red Constantino of the Institute for Climate and Sustainable Cities.
National Renewable Energy Board (NREB) chairperson Pete Maniego Jr. said the approval of the FIT mechanism should encourage investors in renewable energy.
The NREB has initially targeted 760 mw of new renewable energy power project in the short term.
Maniego allayed fears that the FIT would result in increased power rates, saying that in the medium to long term, the initial cost on FIT will be small compared to fossil fuel like coal, it is still low.
Coal and other fossil fuels he said have consistently increased over the years, while renewable energy, although relatively higher now, “it will grid reach parity in 7-8 years.”
“Fit allowance will be paid only for the first 7 years totaling Php14 billion but thereafter, RE will contribute to lower grid rate amounting to Php105 billion over 13 years,” Maniego explained.
Sumaoy said solar energy is the best alternative to the urgent energy needs of Mindanao as it can be installed in shortest time possible,
Aside from drum-beating financing for solar energy in Mindanao, AK also recommended the re programming of the ADB’s CTF loan to support the rehabilitation of the Agus-Pulangi hydro-electric plant and provide seed capital of the Mindanao Power Company which is envisioned to take over the management of the Agus-Pulangi hydro electric plants, the back bone of the island’s energy generation. It produces more than half of Mindanao’s power needs.
The Mindanao Development Authority is batting for the establishment of the MPC and the rehabilitation of the the Agus Pulangi hydro plants to provide much needed power reserves in the shortest possible time.
The Mindanao grid is currently pressed by very low reserves. Studies have indicated that by 2014, it will have a total power shortage of 250 megawatts.