Bottleneck

Most of us agree that renewable energy (RE) is the way to go despite current price and reliability issues. But the policy bottlenecks need to be cleared.

The Department of Energy (DOE) plans to raise RE share in the country’s total energy supply to 35 percent by 2030 and 50 percent by 2040. This is an ambitious goal. It will not be achievable unless the policy issues concerning grid management, pricing and permitting are immediately clarified.

DOE wants to see increased investments in impounding hydro and pumped-storage hydro facilities between 2028 and 2030. It takes about five to six years for these hydro facilities to be built and made operational. The investment decisions will have to be made at around this time.

The program to increase our geothermal energy generation should begin this year and continue into the medium term. But the industry still awaits enabling mechanisms that will make the new power projects viable. The DOE and the Energy Regulatory Commission needs to work more closely to move the planned green energy auctions (GEA) that will finally open the grid for renewables.

Industry players detect a certain lack of urgency in putting the myriad components of our energy infrastructure in place to bring RE into the mainstream.

Producers of solar, wind and hydro energy are looking forward to the August schedule for the GEA to happen. But their enthusiasm is restrained by lack of clarity over whether the grid will be ready to accept the renewable energy we expect to generate.

The country certainly needs to go through a complex transition towards increased use of RE. The roadmap for that ought to be more clearly defined.

For instance, we will definitely continue relying on fossil fuels in generating the energy our economy needs. In fact, even as we plan towards greater reliance on RE sources, we also need to encourage more investments in traditional fossil fuel technologies. Government needs to encourage investments in both RE and fossil fuel plants as our energy demand grows. We need a clearer roadmap to guide investors with assurance there will be returns on investment for all players.

There are a lot of positives about RE. The cost of solar panels and wind turbines are going down and will continue to do so as technology improves. New turbines for hydropower are getting more efficient.

But we still cannot rely entirely on RE for our baseload capacity. RE sources may eventually become abundant, but the vagaries of weather will continue limiting the reliability of these sources. On cloudy days, for instance, the power we generate from solar panels will be reduced.

Hydro power, particularly those facilities using pumped storage, is vastly more reliable. It may even be relied upon for part of the baseload capacity. But there is not enough of these facilities – unless we see major investment flows in hydroelectric generation.

We definitely need better orchestration to get the many parts of the energy industry moving in harmony. But the ERC appears to have difficulty getting through its own bureaucratic red tape to get the complex transition moving. The agency needs to provide the power industry a better pricing determination methodology as well as clearer cost parameters for Non-Feed-In-Tariff (Non-FIT) eligible RE technologies.

Right now, the rapidly improving RE technologies appear to constantly outrun our regulatory policies. The energy bureaucrats need to be more nimble.

As the national economy expands, energy demand will be growing at an even faster rate. As we finally begin attracting investments in manufacturing, energy demand growth will be even faster.

We cannot speak confidently about attracting more investments into our economy until we are sure we will have the power supply to support expansion – and, given our carbon mitigation goals, improve the RE share in our energy supply.

If we were completely unconcerned about carbon emission mitigation, the situation would be a thousand times simpler. We simply build the fossil fuel plants that will reinforce our energy supply.

Things are a thousand times more complicated if, as we build our energy supply, we attempt to increase the share of RE sources in that supply. RE producers do not, individually, supply the volume of, say, coal-fired plants. But collectively, they can eventually account for half of our total energy supply in the near future.

There are many questions at the back of the minds of potential energy industry investors. Among the most important of these is: Are we investing enough to modernize our grid to transmit dramatically larger loads coming from increasingly diverse sources?

The full interconnection of the Luzon, Visayas and Mindanao grids has been delayed by many years. The power outage that hit Panay island at the start of this year was blamed on the inability of the grid to maintain power stability after several power plants conked out.

Government cannot be accused of failing to incorporate more RE in our national energy supply. The commitment to expanded RE use is commendable. We are taking advantage of financial resources available to reduce our carbon footprint and modernize our power system. With more diversified energy production, we have improved our resilience in the face of the challenges posed by climate change.

What the industry complains about is the bottleneck in the creation of forward-looking regulations that will both expand RE use and rapidly modernize our energy transmission and distribution systems. That bottleneck, as usual, is blamed on an unready bureaucracy.