Industry players seek stronger energy policy framework

MANILA, Philippines - The Philippines should have a firmer and more consistent policy framework in the energy sector to entice the private sector to invest in a balanced fuel mix while meeting the country’s growing energy demand, industry players said yesterday.

Speaking at a forum organized by the European Chamber of Commerce of the Philippines, Shell country chairman and president Edgar Chua said the country needs a stronger policy framework to have a more diverse source of energy.

“We need a framework and this is where a stronger policy from government is going to come in,” he said.

Among the points he mentioned was the need for a clear statement of energy mix priorities, particularly on the roles of natural gas and renewables in the power sector.

Earlier this year, the Department of Energy (DOE) issued a new policy mix mandating a 30 percent installed capacity for renewable energy (RE). Currently, RE capacity is at 28 percent.

However, data from global analytics firm IHS showed the Philippines is seen increasing its dependence on coal from 40 percent in 2013 to 70-80 percent in 2030.

This is a reversal of trend compared with Asian neighbors like India, Indonesia, Malaysia, Singapore and Thailand.

From the regulator point of view, Chua said the Energy Regulatory Commission (ERC) should recognize the competitiveness of natural gas in mid-merit for approval of power purchase agreements.

“When ERC looks at the dispatch of power plants, they look at generation costs. But system costs should be managed as a portfolio, then you will see adding this one-third fuel mix will actually be more cost effective,” he explained.

The Shell official also said government should put in place a regulatory framework to provide sufficient confidence to investors in required energy infrastructures.

“We need to ensure there is consistency throughout this so that investors will get a fair return on the significant investments they put in,” Chua said.

In the same event, Bronzeoak Philippines president Jose Maria Zabaleta said government should give encouragement to those that are working to innovate in the energy sector.

He noted that the past two to three years has been a clear demonstration of innovation in the sector, particularly in the RE space, resulting in “a significant number of comfort, no amount of power shortage in the next five years.”

From 2013 to 2016, a total of 1,200 MW of RE projects is seen coming in, of which 528 MW is solar, 294 MW is wind, 185 MW is biomass and 160 MW is hydro.

“We’d like to encourage those that’s looking to the sector for the first time, certainly those that are bringing in further innovations in technology,” Zabaleta said.