MANILA, Philippines — Energy Secretary Alfonso Cusi has ordered Manila Electric Co. (Meralco) to explain how it came up with the eight centavos per kilowatt-hour (kwh) increase in electricity bills as a result of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
Cusi said he has written Meralco to explain the projected increase in electricity bills. He has also has directed Energy Undersecretary Jesus Posadas to scrutinize the impact of the TRAIN law as estimated by country’s largest distributor.
“They are saying the increase is eight centavos (for the tax in transmission and coal tax)…we are discussing that now and I told them to scrutinize it because I will not just accept it as a matter of fact,” he said. “It is my responsibility so that I can tell the public.”
Cusi said this is to protect the interests of consumers, particularly Meralco customers.
“That is the role of DOE, we set the policy, we make sure that everybody will follow the policy,” he said.
Earlier this week, Meralco said its customers can expect an increase of at least eight centavos per kwh in their electricity bills, taking into consideration the impact of TRAIN.
Meralco head of utility economics Lawrence Fernandez said electricity rates will be pushed up by implementation of the coal excise tax and the removal of the value added tax (VAT) exemption of the National Grid Corp of the Philippines (NGCP) under TRAIN.
Under Republic Act 9511, NGCP was exempted from paying income tax and VAT. This was repealed in Section 86 of the TRAIN Act, subjecting NGCP to the VAT provision under the National Internal Revenue Code (NIRC).
Based on Meralco’s computation, the VAT on transmission charge will translate to an additional seven-centavo per kwh in its rates which can take effect in February bills, Fernandez said.
For the impact of the coal excise tax, Meralco is awaiting the response of suppliers to compute the increase in electricity rates.
Under the TRAIN law, what was approved was a lower coal excise tax of P50 per metric ton in 2018, P100 in 2019, and P150 in 2020 compared with the original Senate proposal of a “100-200-300” hike scheme.
At P50 per metric ton, Fernandez said the excise tax of coal and oil will translate to an increase of around one centavo per kwh.
However, DOE Undersecretary Felix William Fuentebella said the impact of coal excise tax on electricity rates are expected to reflect on consumers’ electricity bills by March or April because coal plant generators maintain coal reserves good for at least 30 days.
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Reference:
Rivera, D. (January 13, 2018). Meralco told to explain rate hike due to TRAIN. The Philippine Star.
2018/02/04
CUSI ORDERS MERALCO TO EXPLAIN P0.08 PER KWH POWER RATE INCREASE
Energy Secretary Alfonso Cusi has asked Manila Electric Co. to explain its computation of a P0.08 per kilowatt-hour increase in electricity rates following the implementation of the Tax Reform for Acceleration and Inclusion, or TRAIN, tax package.
“… I asked Meralco how did it arrive at P0.08 per kWh,” Cusi told reporters.
Cusi directed Energy Undersecretary Jesus Posadas to study the impact of the TRAIN on the power sector.
“That is the role of DoE, we set the policy, we make sure that everybody will follow the policy,” the energy chief said.
Meralco head of utility economics Lawrence Fernandez said early this week the company was waiting for the billing of National Grid Corp. of the Philippines to reflect the lifting of the value added tax exemption that would increase rates by P0.07 per kilowatt-hour.
Fernandez said the impact of the higher excise tax on coal was around P0.01 per kWh.
Cusi said the department was also studying the impact of the TRAIN on the Small Power Utilities Group, or the missionary areas of National Power Corp.
“These people are scrutinizing all of those to make sure that the consumers are protected,” he said.
Cusi said he had a responsibility to the public to ensure the rates passed on the utilities were accurate.
Fernandez said NGCP was previously exempted from the VAT on transmission wheeling charges until it was repealed by the TRAIN.
“For NGCP, the TRAIN is in effect January 1. We expect them to apply the VAT on transmission wheeling charges, Fernandez said, adding a 12 percent percent VAT would add P0.07 per kWh to the electric bills of consumers.
He said the earliest Meralco could pass on the TRAIN impact to consumers would be in the February billing.
“If NGCP incorporates it in their January billing, we should expect by February that it will be effective,” Fernandez said.
He said the impact of higher excise tax on coal on Meralco customer was estimated at P0.01 per kWh.
“For generators, it will depend on their stock of coal if they bought it new or in stock. Our expectations is they will stagger the implementation of the coal tax,” he said.
(For solar enegry solutions and supplies visit our website: www.eastgreenfields.com or email us at inquiry@eastgreenfields.com)
Reference:
Flores, A. M. S. (January 12, 2018). Cusi orders Meralco to explain P0.08 per kWh power rate increase. Manila Standard.
COAL TO TOP 55% OF PH POWER MIX BY 2027 COAL TO TOP 55% OF PH POWER MIX BY 2027
Despite its higher excise tax under the new tax reform law, as well as initiatives to promote the use of renewable energy (RE), coal will dominate the Philippines’ energy mix in the next 10 years, a BMI Research study found.
“[T]he share of coal [is]actually increasing over our 10-year forecast period—from just under 50 percent in 2017 to over 55 percent by 2027,” Fitch-owned BMI said.
The gradual commissioning of coal plants in the pipeline would boost this increase, it added.
BMI noted some efforts to diversify the country’s power mix toward cleaner fuels, like natural gas and RE, as part of its commitment to cut 70 percent of its carbon emissions by 2030 under the United Nations Paris Agreement that took effect in November 2016.
“[H]owever, the country has released few details on how they intend to reach its target, particularly given the dominance of coal in the project pipeline,” the company said.
Citing its Key Projects Database, BMI said “54 percent of all the power projects under development are coal projects.”
Latest Department of Energy (DoE) data show it only endorsed Orion Pacific Prime Energy Inc.’s 1,000-megawatt (MW) coal-fired power plant in Barangay Awasan, Tagkawayan town, Quezon province.
The study came more than a month after President Rodrigo Duterte signed Republic Act 10963, or the Tax Reform for Acceleration and Inclusion Law (Train) Act. It took effect New Year’s Day.
Under the new law, the coal excise tax was raised from P10 per metric ton (MT) to P50 this year, P100 in 2019, and P150 in 2020.
The new tax aims to reduce the country’s dependence on fossil fuels and slash power rates by removing price volatility from importing coal and leveling the playing field from generating costs across all sources.
The Philippines imports about 75 percent of its coal supply from Indonesia and Australia, BMI said.
While the study questions the effectiveness of this move to lower electricity rates, it said it could help incentivize investment in the domestic energy sources, namely RE, over the longer run as it becomes more competitive against coal.
Meanwhile, RE is expected to contribute about 20 percent to the total power generation mix in 2020, decreasing to 16 percent in 2027.
Total non-hydro renewables capacity is projected to reach just under 5.4 gigawatts (GW) by 2020, about 50 percent higher than the 3.56 GW installed in 2016, mainly boosted by the wind and solar sectors.
Capacity additions post-2020, however, will be limited, and there is a noticeable absence of new projects, meaning RE’s share would dwindle as thermal sources expand.
Although BMI said the gas-fired project pipeline strengthened recently, its share is only 10 percent, and the use of gas will be capped by regulatory and infrastructural headwinds to liquefied natural gas (LNG) projects and competition from cheap coal.
The depletion of domestic gas supplies is a significant concern, as the Malampaya gas field off Palawan province will be nearly depleted by the end of the firm’s 10-year forecast period.
“This, combined with the lack of any significant new upstream gas projects in the pipeline, has led the Philippines to seek LNG imports for the first time,” BMI said.
Reference:
Lagareon, J. S. (February 1, 2018). Coal to top 55% of PH power mix by 2027. The Manila Times.
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‘YELLOW LABEL’ MAY HELP CONSUMERS CUT ENERGY BILLS
It is the color most hated by this administration, but according to Energy Secretary Alfonso Cusi, “the yellow label” will be a major redeeming factor that could help Filipino consumers save on punishing energy bills.
He was referring to the yellow-based “energy efficient labeling” that the Department of Energy (DOE) sets on appliances so it can guide consumers which one would have less energy use when operated. In turn, that will yield cost savings to consumers.
“The yellow energy labels on common household appliances state the energy efficiency ratings of the latter and should be used by consumers as a guide in purchasing said items,” the energy chief said.
With government-induced tough times because of higher excise taxes on products and services, Cusi is ardently appealing to Filipino consumers on self-imposed discipline on energy usage so they would be able to cut their costs.
The energy chief prescribes purchase of “energy smart” appliances; because of their higher efficiency rating. Nevertheless, such may entail higher upfront costs also that penny-pinching Filipino consumers cannot just easily afford.
And with high energy costs literally nailing Filipinos on the cross at the implementation of the Tax Reform Acceleration and Inclusion (TRAIN) Act of the Duterte Administration, Cusi asserted that such must also usher in a phase when efficient use of energy becomes “a way of life” for Filipinos.
Cusi sets emphasis on “the concept of smart energy utilization so consumers can save on energy costs based on strategies already laid down by the government.”
He cited that one strategy could be the “proper use of energy efficient appliances” or those rated on Minimum Energy Performance Standard.
Cusi also apprised consumers “to turn off and unplug unused appliances to avoid electricity wastages,” adding that regular cleaning of light bulbs, refrigerator, television, electric fan and air-conditioners must also be resorted to in saving power usage.
With not just energy prices going up under the TRAIN measure but also that of vehicles, Cusi expounded that consumers must also be “more rational in their choice of vehicles to buy, as well as in their fuel purchases.”
He stressed that “planning trips and properly maintaining vehicles will also save consumers money while prolonging the service life of their rides.”
The department similarly cited data that burning less fuel on travels could spare the earth of carbon dioxide (CO2) emissions, to the tune of 2.7 kilograms of per liter-diesel saved; and 2.3 kilograms on per liter savings of gasoline.
Reference:
Velasco, M. M. (January 6, 2018). ‘Yellow label’ may help consumers cut energy bills. Manila Bulletin.
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2018/01/21
Long, uphill climb before PHL could rid of COAL dependence for power generation
The country is still very much dependent on coal as a source of power, amid increasing support and encouragement for the utilization of renewable energy (RE).
“In terms of electricity production, we have noticed a high dependency on coal recorded at 44 percent as of March 2016. Natural gas and renewable energy supplied 22 percent and 25 percent, respectively,” Department of Energy (DOE) Officer in Charge Undersecretary Mylene Capongcol said in her welcome speech during the fourth Annual Philippines Power and Electricity Week.
“While we saw significant growth in the use of variable renewable energy due to the different incentives provided by the Renewable Energy Act, the supply of electricity from hydro had been adversely affected by El Niño, registering a 1-percent decline over the past five years,” she added.
The DOE official said the country managed to achieve a balanced energy-supply mix in 2015, with oil accounting for around 31 percent; followed by coal at 23-percent share; geothermal at 19-percent share; natural gas and hydro accounts for around 10 percent; while other RE sources, such as biomass, solar and wind, comprised the remaining 17 percent.
More than 53 percent of the country’s total energy requirement is largely being supplied by indigenous energy, while 47 percent accounts for imported oil, mainly used for transport and coal, used for generating electricity.
The DOE is collaborating with the Climate Change Commission (CCC), the National Economic and Development Authority (Neda) and the Department of Environment and Natural Resources (DENR) in crafting a sustainable national energy policy that will decide on the future of coal-power projects in the country. “For now, we encourage power generation using high efficient and innovative technologies to meet the expected demand in electricity,” she said.
The new administration targets a GDP growth of 6 percent to 7 percent in 2016; 6.5 percent to 7.5 percent in 2017; and 7 percent to 8 percent until 2022, with most of the spending expected to support higher infrastructure needed to deliver basic services to the people. As such, higher growth for energy use, specifically for electricity, is expected, entailing significant amount of investments mainly coming from the private sector, Capongcol said.
“I am taking this opportunity, therefore, to provide a glimpse of what the Philippine energy sector offers,” she added.
For the upstream oil-and-gas development, the DOE will continue the conduct of the Philippine Energy Contracting Round (PECR) with a target of 18 service contracts for award from now to 2030. The service contracts will form part of the petroleum reserves estimated at 94.74 million barrels (MMB) of oil, 3.96 trillion cubic feet (TCF) of gas and 41.34 MMB of condensate.
In terms of indigenous coal, the agency is monitoring 48 exploration service contracts for declaration of additional coal reserves in commercial quantity to enable the conversion of these service contracts to production contracts. “With this, we estimated the in-situ coal reserves to reach 4,297.7 MMT [million metric tons] by 2030,” the DOE official said.
Despite achieving significant growth in the past, the downstream oil industry needs to sustain further investments to improve competition and achieve resiliency in the very volatile nature of oil prices in the international market. “With this, we are inviting foreign investors in oil refinery to provide a more stable and bigger oil-supply base for the country,” Capongcol said.
Moreover, there is an expected higher demand for biofuels with the continuing implementation of biofuels law. “Biodiesel will increase from the current blend of 2 percent to 5 percent in the shor term, i.e, by 2019, to reach 20 percent in the long-term period,” she said.
For bioethanol, the increase will start at 10 percent for the short term to reach 20 percent in the medium- to long-term period. Likewise, the DOE will promote a voluntary increase in bioethanol blend by 80 percent in the long term, depending on the availability of feedstock.
In terms of power development, based on the 2015 to 2030 Distribution Development Plans (DDPs) of 140 distribution utilities nationwide, Luzon grid will need additional capacities of about 5,000 megawatts (MW); the Visayas grid will need 1,300 MW; and Mindanao grid will require around 900 MW of new generation capacities.
In Mindanao, specifically, the agency is looking at new developments to make investments more attractive, such as putting in place an electricity market and, ultimately, making the interconnection with Luzon and the Visayas possible.
“We will, likewise, study further if there is a need for another round of installation targets for FiT [feed-in tariff] or can we now make RE market-based without prejudice to the need of the consumers of having affordable power rates,” Capongcol said.
Moreover, investments in natural-gas industry are also needed primarily to support the power industry, and later on, other possible uses. By 2021, the supply of Malampaya gas may no longer suffice for higher requirements of gas, thus, investments in exploring and developing potential areas are necessary.
“As mentioned by DOE Secretary Alfonso G. Cusi, one of the projects that the DOE will be undertaking is putting up an LNG [liquefied natural gas] receiving and distribution center, where initial discussions with World Bank, through the International Finance Corp. were made for the conduct of feasibility studies,” the DOE official said.
Reference:
Lectura, L. (July 21, 2016). ‘Long, uphill climb before PHL could rid of coal dependence for power generation’. Business Mirror. Retrieved from http://www.businessmirror.com.ph/2016/07/20/long-uphill-climb-before-phl-could-rid-of-coal-dependence-for-power-generation/
Hike in Coal Excise Tax to trigger spikes in power rates
The proposed three tiered increment in excise tax for coal as fuel for power generation was objected to because of anticipated spikes that such could trigger on the electric bills of consumers.
This was rationally raised by Senate Committee on Energy Chairman Sherwin T. Gatchalian on his manifestation of opposition to the increases in coal excise tax to be enforced on “staggered basis” of R100, then R200 and later on at R300 per metric ton as propounded under the Tax Reform for Acceleration and Inclusion (TRAIN) Bill. That will be tranches of increases from currently at R10 per metric ton.
Spikes in electricity rates due to the tax imposition, the senator added, would be unavoidable for Filipino consumers because 50 percent of the country’s electricity supply relies on coal-fed power generation.
The lawmaker said “the impact of R100 increase in excise tax on coal will be R4.70 increase in the bill of an average consumer consuming 200 kilowatthours (kWh) every month.”
At R200 excise tax, the cost impact will roughly double to R9.57 for the same consumption bracket of consumers; and at R300 excise tax, it will be a higher cost burden of R14.35.
Gatchalian coherently stated “the proposal on increasing the excise tax on coal seems sound if it will reduce carbon emissions in our country, but since this is a pass-on charge, there is no incentive for the coal companies or the coal power producers to reduce the consumption of coal because this will just be passed on to the consumers.”
It is worth noting that close to 60 percent of the rate component in the electric bill accounts for the generation charge – wherein the fuel for power generation such as coal, gobbles up bulk of the cost.
The lawmaker’s lament is anchored on the fact that “the consumers basically have no choice but to accept what is being billed to them every month.”
Beyond “financial distress” it will have on households, Gatchalian similarly warned on probable “repulsive effect on investments” when industrial users of electricity would be hit.
He stressed that industries may equally suffer as they are “going to be burdened directly by the increase in excise tax on coal.”
Reference:
Velasco, M. M. (November 29, 2017). Hike in coal excise tax to trigger spikes in power rates. Manila Bulletin. Retrieved from https://www.pressreader.com/philippines/manila-bulletin/20171129/281973197970711
2016/07/06
Common Misconceptions When Buying Solar
Reference: BY DAMAN COLE APRIL 27, 2016 IN MARKETS, TECHNOLOGY
Yingli Blog
As one of the fastest growing industries, there are many opinions and marketing taglines used which ultimately result in many misunderstandings.
Below are contradictions that you may have come across before:
1. All solar panels look similar, are they the same?
With over 500 brands that have been sold within the Australian market (between 2011-2015), it’s difficult for even an experienced professional to tell the difference. Accepting the idea that the label or datasheet has typical information as below – doesn’t mean they’re all the same:
- 10 year product warranty
- 25 year performance warranty
- Power class rating (eg. 250wp/260wp)
The manufacturers around the world have gained the majority of their market share through their ability to manufacture high standard products, which demonstrates a high level of research & development including exposure to different types of environment and life cycle tests. These are seldom regarded as important in the eyes of many retailers and consumers.
The best way to determine global exposure is asking for project references in other countries. Chances are if evidence can be provided that the products are used in larger projects in a number of other markets – there has been enough due diligence to suggest it will work for you in your market.
2. Kilowatts & Kilowatts – (kW, kWp, kWh)
Traditionally there is much confusion on this topic for non-technical buyers. Also, it’s commonly referred in the retail spaces that you are buying a system size.
For example, solar systems in Australia are sold as “5kW systems”, but really should be sold as 5kWp.
- The ‘p’ indicates “peak”, as in the amount of power being generated at peak production (being 1,000 w/m2 irradiance of direct sunlight).
- Kilowatts are the measurement of energy units. When referred as kWh (kilowatt hours), it means the energy used at a constant rate over a period of time.
- Referencing of kW or kWp does not indicate the yield or likely performance over a day, week, month or year – providing an unrealistic outcome of the solar system’s potential. It’s like saying a car that drives at 200km/h is a “200km car” – where in truth it’s only highlighting the ‘peak performance capacity’.
Once again, if larger global projects have specified and used a nominated brand of product, it is because their independent and technical due diligence suggests there is high level of confidence in a manufacturer’s ability to consistently create a product that generates a reliable quantum of electricity generation year on year.
3. What does “Tier 1” mean?
The solar industry has struggled for years with a methodology to rank and assess the relative strengths of PV manufacturers. In the absence of a true quantifiable testing regime, many have resorted to the views of financial analysts. In many instances, the industry use this term as a mean of quantifying quality, without placed onus on any specifics.
The tier system is a ranking structure used by varying financial analysts and firms. The most commonly accepted definition is based on “bankability”, which ultimately is a determination based on whether projects using the solar products are likely to be offered non-recourse debt financing by banks.
Other definitions and interpretations of ‘tier-ranking’ have included theories around vertical integration of product, presence of a local office and support, all of which indirectly suggests a level of product quality or after-sales support.
Tier-ranking can be highly subjective without substance of what it actually defines.
YGE Global - Photos - R&D, Lab, Testing - 01
The reference of a product’s country of origin is an age old method of oversimplifying quality, by providing an emotive feel good to buyers – which supersedes the requirement for further due diligence.
Solar PV has been one of the most rapidly expanding industries within a manufacturing sector for years, however with this rise, it has seen significant players trip, if not fall through this massive growth phase. Many manufacturers prefer to diversify their base and expand by opening many plants around the world. It simply isn’t fair to assume a quality of engineering or product based on the location of where product is assembled or where the headquarters of the business is operating.
It’s deceptive and misleading to suggest the quality of a product can be determined solely from its country of origin, especially if the suggestion is that a product made in Asia is created to a lesser standard, when compared with other non-Asian markets. In 2013, it was reported that over 90% of solar panels imported to Australia were made in China, despite the popular non-Chinese brands being prevalent in the offers from retailers.
With such high level of market penetration from solar PV brands from China, the quality gap is broad, making the importance of differentiating quality is why some manufacturers stay in business and others don’t.
5. Doesn’t all solar PV manufacturers provide the same warranty protection?
Australia is one of the world’s most dynamic retail residential markets, and with a flood of messages in the industry, it has been easy to think that if a solar panel offers a 25 years (performance) warranty, then you will be protected?
This is true, but only to an extent.
The 25 years warranty is a performance warranty pertaining to minimum expected performance or output year on year. This is separate to the performance of the system as a whole, which is subject to the system design and performance of other components.
Although many customers are sold on the belief that there would never be a fault, this is largely misleading and for the following reasons:
- The technologies are well proven, so are installation done by people, and human error is always an unquantifiable risk.
- Transportation risk can affect a product, it’s unlikely that defects from transportation show.
- The technology is exposed to the outdoor environment, which is subject to wind, rain, dust, dirt and bird droppings, trees, twigs, possums – just to name a few.
So, do buyers ask – what is the process in the unlikely event of fault or failure?
- How do I know?
- Is the system being monitored? Is the monitoring only for the homeowners viewing, or is there a back to base system which communicates to you, the owner and also the installer?
- What happens if you don’t know or can’t find the installer?
- Who supports the installer?
- What are your consumer rights?
- Do the major component suppliers have a local representative? If so, who are they and what is their phone number?
Performance warranties are valid if there is adequate evidence to suggest your performance is less than designed. Regardless, an assessment will need to be done, preferably by the company or installer who sold you the system. If they cannot be found, then buy from a reputable and industry-qualified professional.
6. It’s all about price!
It’s a common reality in buying anything, when in doubt, select the best value for money. This suggests that value has been presented, on the contrary, the lowest cost solar is no exception. In many instances, the lowest cost components generally require a higher level of repair and replacement – the consumer may not be aware of this, and it will cost them more in the long run.
With any capital investment, you want certainty in the unlikely event of any fault or failure, above and beyond long-term guarantees.
It is strongly encouraged that you conduct research about some technical differences, and have a list of questions about how you will receive after-sales support and service. The reality is if you don’t understand the differences, the only value you can see is one based only on the price.
7. Capabilities of product and installer
With such an expansive list of products and installers – it can be difficult to know the good from the not so good. The buying market has no point of reference to determine if a solar panel or inverter is good versus average – as it is based on Clean Energy Council’s approval.
Aside from generic references, which are meant to instill confidence, like “we have installed over 3,000 systems”, there is no means for buyers to understand the experience or quality of services they are paying for.
One of the biggest concerns is whether the installer is based locally, and we suggest you to ask these questions:
- If the installer does not have a local office, have you enquired their service standards and response times in the unlikely event of a fault?
- What is the policy and commitment of the after-sales service?
- What is their responses time frame?
- Is there a difference in receiving service within 48 hours or over 4 – 8 months?
There are many fantastic and integrated installers in the market but unless a series of questions are being asked, how will a solar buyer know? The age-old method of testing this is to ask for references, preferably from people in similar situations as you, and a customer who had bought from them previously.
We encourage those interested in solar to do their research, the team at Yingli Solar are available to help answer any products, services or technical questions you may have!
We in the Philippines can help you to install Yingli Solar for your energy needs. Please send your email to inquiry@eastgreenfields.com or call/text 0917-8232530.
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