2014/09/24

Government moves to fast-track renewable energy projects

Posted on September 16, 2014 10:23:00 PM
By Claire-Ann Marie C. FelicianoSenior Reporter


THE ENERGY department is keen on fast-tracking the development of the renewable energy (RE) projects, with a number of service contracts already cancelled due to lack of progress.


“So far, we have already cancelled over 100 RE contracts because they are not moving forward,” Energy Secretary Carlos Jericho L. Petilla said during a budget hearing in Pasay City.

“Of the total, 67 contracts are already cancelled with finality but we also have those which are supposed to be cancelled but are still under appeal,” he added.

Mr. Petilla said this is part of the Energy department’s program to support the country’s RE sector.

“We have already cut the service contract processing to 45 days from two years to attract more developers to invest in RE,” he said.

“However, we are also very fast in canceling. Within six months, if the project proponent is not going to perform, we cancel the contract.”

Data from the department showed that since the enactment of the Renewable Energy Act of 2008, there are currently a total of 614 RE contracts with combined capacity of 12,040.28 megawatts (MW).

RIGHT MIX
Mr. Petilla said that among the thrusts of the department is to formulate the right mix of RE and traditional energy sources, such as coal and diesel.

“At present, the Philippines is harnessing 30% of RE in our energy mix. If we keep it at that level, we will have a secure energy source, even if oil prices go up or if there is a shortage in supply in the international market,” Mr. Petilla told reporters separately.

“Because RE is indigenous which means it is locally available, we can depend on it for energy security even if there are political issues such as war in other countries,” he added.

The official noted that benefits of RE projects are expected to outweigh the cost implications.

As part of the government’s efforts to use RE in a larger scale and attract new investments, it expects the effective implementation of the feed-in tariff (FIT) scheme.

Under the FIT, RE developers will dispatch the capacity of their projects to the grid at a premium rate for a period of 20 years.

The FIT rates -- approved in July 2012 -- provides the following rates for RE technologies: run-of-river hydro (P5.90 per kilowatt-hour), biomass (P6.63/kWh), wind (P8.53/kWh), solar (P9.68/kWh).

These were based on the installation targets -- which limit the capacity of projects for each RE technology -- that have been set by the Energy department.

The targets for RE technologies total some 750 megawatts (MW). Currently, run-of-river hydro and biomass projects are allocated at 250 MW each, wind power at 200 MW, and solar power at 50 MW.

This year, the department allowed the increase of solar to 500 MW.

Concerned stakeholders are also evaluating the possibility of hiking the allocation for wind projects to 500 MW.

EXPENSIVE BUT ESSENTIAL
“The FIT is a testament that while RE seems to be more expensive than traditional energy sources, admittedly, it is needed because it is essential to the country’s energy security,” Mr. Petilla said.

“In the long term, we hope to develop systems in order for RE to compete toe-to-toe with traditional energy resources and eventually lower the cost of electricity,” he added.

The Energy department is working with other government agencies such as the Climate Change Commission and organizations like Deutsche Gesellschaft für Internationale Zusammenarbeit to improve public and business perception on RE and promote the shift towards a more sustainable energy supply in the country.

http://www.bworldonline.com/content.php?section=Economy&title=Government-moves-to-fast-track-renewable-energy-projects&id=94599

2014/09/17

‘Lousy managers don’t deserve extra powers’

  • Written by   
  • Monday, 15 September 2014 00:00
    • http://www.tribune.net.ph/headlines/lousy-managers-don-t-deserve-extra-powers

SERGE HINTS PALACE TRYING TO BYPASS SENATE
The proposal to grant President Aquino emergency powers to address a supposed power supply crisis next year will have to pass through the proverbial needle’s eye before the Senate even if the Palace and the House which is packed with allies of Aquino collude to railroad the granting of the special authority.
Sen. Sergio Osmeña slammed the Palace and its allies insistence on the grant of emergency powers to Aquino, saying the expansion of the President’s authority will not be an assurance in addressing the energy supply problems which he said were the result of Aquino’s poor management skills.
“It’s an accepted fact that they are lousy managers and it is almost criminal,” the chairman of the Senate energy committee commented, on the apparent negligence of the Aquino administration in addressing the problem of the power sector as well as the worsening condition of the public transport system and port congestion which has led to losses in income in both the government and private sector.
Now, if they need emergency powers because there’s a crisis, we will look into it. How long do they need this power? How much
power do they need? At what price they will charge the customers? We will look in all of that,” he explained.
He said that the blame for the pile up of problems facing the nation should be on the Aquino administration and its poor governance skills.
“Had this happened in other countries such as the United States, woe to the government. It will be facing suits,” Osmeña said.
Osmena also revealed that the supposed meeting the Joint Congressional Oversight Power Commission (JCPC) held with Energy Secretary Jericho Petilla and business groups did not happen since it did not involve any representative from the Senate energy committee which is part of JCPC.
The meeting was supposedly called to discuss Malacanang’s proposal to grant Aquino emergency powers by Congress but Osmeña said only members of the House  energy committee were present in the meeting.
“We, the JCPC, did not have a meeting. It was only the congressmen who had a meeting. Besides, it was not correct to say the JCPC will be the one providing for the resolution (to grant emergency powers to the President) because the JCPC does not have any jurisdiction insofar as coming up with a legislation. The JCPC is an oversight committee and the resolution should be referred to the energy committee of the lower house and the Senate,” he said.
“Even if the House approves and the Senate does not, the proposal (for emergency powers) will not pass. We want to make it hard because we are tolerating inefficiency by reasoning that emergency powers can always be granted,” he said. “That means the management is very lousy. They don’t even know what emergency powers means. There is no definition for emergency powers. It just gives the government a temporary right to contract a power, to buy power,” he said.
In the event that a resolution for such provisional and additional authority to the President is introduced, the senator said it will have to undergo a series of public hearings to ascertain the nature of the shortage, the period of its coverage and other available solutions, he said.
“Since there are other solutions, giving government contracting power is not necessary. Contracting power means the power to contract for energy. The government will pay and at the same time grant guarantees (to contractors). That is not allowed under EPIRA (Electric Power Industry Reform Act) because we guaranteed to the private sector that government will not compete with them,” he said.
Investments for power is huge, something like $2 million or almost P88 million per megawatt (MW). So to build 100MW, that’s P8.8 billion. And that’s a 25-year payback. So, the government promised okay, we will not compete with you, Osmeña added.
“We need to know how it came to this. The government had long been warned since 2011, 2012, 2013, 2014. Four years. Nobody listened,” he said.
Besides anticipating the power supply problem, Osmena said the government should have also addressed some other related concerns such what he called as permitting process which could have lure potential investors in the energy sector.
Under the present set-up, before any power producer could put up a plant, they would have to go through a tedious process effectively requiring 162 signatures of government officials.
“The government should have prepared for that a long time ago. Until now there is nothing being done about it. So now if you want to invest, it will take you two years just to finish all the permitting process,” he said.
“That is a last resort (emergency powers). I will ask them how did all these problems came about?, we will put that on record. What did you not do? And what should you be doing now?,” he said.
“We will examine through the hearings the reasons therefore. We will examine, do we really need to give the government the power to contract additional power or can this be supplied by existing generating sets that are in the hands of the private sector, which the private sector uses as their back-up or standby power,” he said.
A lawmaker, meanwhile, asked both houses of Congress to act swiftly on President Aquino’s request for a joint congressional resolution—which will have the force of law—so the government can contract additional generating capacity of around 600 megawatts.
Rep. Sherwin “Win” T. Gatchalian said it is crucial that the Congress act fast in approving the emergency powers being sought by Aquino to effectively address the looming power shortage that is expected to hit Luzon early next year.
“If congress doesn’t approve the request for emergency powers by October, we will have brownouts in Luzon next year. We will see massive layoffs especially contractual workers. And unemployment will surely go up,” Gatchalian, who attended last week’s hearing of the joint congressional power committee, said.
It was the first time that Aquino admitted the reality of a looming power shortage in Luzon and is now asking Congress to grant him emergency powers “that will authorize the national government to contract an additional generating capacity to address the 300-megawatt projected deficit, and, on top of that, to have sufficient regulating reserves equivalent to 4 percent of peak demand, for another 300 megawatts.”
The President sought to assure the private sector that government intervention will be focused solely on addressing the projected shortage. “We have no plans of intervening to distort the market or complicate the situation even further,” he said, echoing Petilla’s proposal contained in the 2014 State of the Nation (SONA) technical report.
The SONA technical report pegged the energy shortage in Luzon at 400 MW to 1,000 MW from March to May 2015.
“Right now, Congress and Malacanang must move as one team and decide how to stave off this serious problem in our energy supply which is expected to be a full-blown crisis during the dry season,” Gatchalian said.
Petilla was the first to propose the granting of emergency powers to the President to deal with the impending power crisis in the form of contracting modular power plants from Dubai and the United States that can be installed from four to five months. The mini power plants can generate anywhere from 2 to 30 MW and can be contracted on a short-term basis.
“I fully support the granting of emergency powers to deal with the power crisis but this should be specifically defined by Congress in the joint resolution by the House and Senate. Such emergency powers should be specific and time-bound to allay fears of possible executive abuse like what happened during the time of the Ramos administration,” said Gatchalian.
Gatchalian pointed out that Secretary Petilla’s original proposal makes sense as no new power plants can be installed in the next two years since natural gas pipe plants can take two to three years to build while coal-fed plants take three to five years to install and become fully operationalized.
“And since the EPIRA law prohibits the government from setting up its own power plant, it is more practical to rent modular powers plants that are easy to install and disassemble once the power crisis is over,” he noted.
Gatchalian said it is also vital that the government and the private sector work together so the energy sector can realize its full potential.
“A public-private partnership in the energy sector will definitely be a critical factor in finding solutions to the looming power crisis and addressing existing issues once and for all,” he said.
Aside from contracting additional generating capacity, the President also instructed the Department of Energy to “continue to solicit participation” in the Interruptible Load Program (ILP) until 2015.
The program taps those with spare generators like Manila Electric Co. to make their units available to come up with additional capacity. The government would compensate the generator owners with the approval of the Energy Regulatory Commission, according to the President.
“But the problem with the ILP is that being a voluntary program, private companies cannot be compelled to participate in this venture as they will have their own, valid reasons to choose to participate or not. The government should lead the way in averting the power shortage by using emergency powers,” Gatchalian said.
Gatchalian attributed the increased electricity demand to the country’s economic resurgence, with the Philippine economy growing by an average of 6.3 percent from 2010 to 2013.
“The rotational brownouts experienced in Metro Manila and in nearby provinces long after Typhoon Glenda are indicators of the likely power crisis as existing power plants cannot catch up with the energy requirements,” he concluded.