DOE warned vs premature promotion of solar energy

Manila, Philippines - Sen. Sergio Osmeña III believes it is not the right time to develop the use of on-grid solar energy in the country as proposed by the National Renewable Energy Board (NREB) because of the high cost that would be passed on to the consumers.

Osmeña, chairman of the Senate committee on energy and co-chair of the Joint Congressional Power Commission, said that the feed-in-tariff (FIT) system of the Department of Energy (DOE) for promoting renewable energy should be implemented with caution, especially for solar energy.

“The DOE should exercise extreme caution in the implementation of the FIT system considering that it imposes additional costs on the consumers particularly in the early years. Solar energy, if introduced in haste, will unnecessarily burden the consumer,” he said.

The FIT is an incentive system for renewable energy investments that involves paying a premium for power generated from renewable energy sources.

The NREB, created by the Renewable Energy Act of 2008, is mandated to recommend policies and programs to be implemented by the DOE.                                                                      

The DOE partners with stakeholders in the power industry including the National Transmission Corp., Philippine National Oil Co., as well as private representatives.

Osmeña said the board’s proposal to allocate 100 megawatts (MW) to solar energy at P17.95 per kilowatt-hour (kWh) under the FIT would not be viable at this time when costs of solar panels are still too high.

He noted that the FIT for other renewable energy sources will be lower at P6.15/kWh for mini-hydro, P7/kWh for biomass energy, and P10.37/kWh for wind power.

Ocean energy will have a tariff of P17.95/kWh just like solar but only 10 MW is allocated for it because it is an experimental technology.

Osmeña warned the proposal would result in additional charges to consumers over a period of 20 years.

He said that in the first three years alone, subsidy for solar energy would amount to P1.7 billion a year. In the remaining 17 years, the subsidy cost would still be P1.4 billion a year.

“The NREB proposal for on-grid solar energy is like buying a Mercedes Benz when there are still Hyundais, Nissans and Toyotas available at less than half the price,” Osmeña said.

He cited the projections of energy experts that the cost of solar panels would drop 50 percent in five years.

“That would be the proper time to consider using solar energy, a P9/kWh rate for 20 years would certainly be more tolerable,” Osmeña said.

In the meantime, Osmeña suggested that a larger allocation be given to biomass plants so that Filipino farmers would earn additional income from selling their rice husk, wood chips, and other products as fuel.

He said that if the use of solar power is to be developed in the country, solar installations should be constructed in off grid areas where as much as 200 MW can be allocated.

On the other hand, Sen. Edgardo Angara, the principal author of the Renewable Energy Act, said large-scale deployment of solar installations throughout the country is a viable option for alternative energy because new technology to make solar panels more affordable are now being developed.

Angara noted that the Asian Development Bank supports the development of solar energy in the Asia-Pacific region, targeting to have 3,000 megawatts of installations constructed by 2013 through its financial aid.

The ADB plans to invest $2.25 billion in financing solar projects, with an additional $6.75 billion to be funded by the private sector.

“ADB’s commitment shows that solar (energy) is a potential game-changer and will grow much faster now that production of solar panels is dropping due to new, more efficient technology,” Angara said.

He noted that local firm First Philippine Electric Corp. (First Philec) is putting up a solar wafer slicing plant in partnership with Korean firm Nexolon Corp.

The plant will be capable of producing 400 megawatts worth of solar wafers per year.

First Philec has also partnered with the Congressional Commission on Science Technology and Engineering in developing renewable energy systems, such as the country’s first solar testing facility located in the First Philippine Industrial Park in Tanuan, Batangas.

The testing facility, which has a 180 kilowatt on-grid capacity, is capable of testing photovoltaic modules for efficiency and resilience in field conditions. 

“This is solid proof that government and industry collaboration can work successfully, and that continued investments through the public-private partnerships (PPP) program can spur the growth of innovation especially in S&T (science and technology),” said Angara.

“The government can encourage local and foreign manufacturers to invest in the RE industry by creating a hospitable environment through policy, infrastructure and incentive support,” he added.