FASTLANES: Just energy transition now

MALAYBALAY CITY (MindaNews / 01 July) — Energy transition will happen. It is just a question of who will play prominent roles in the energy transition following the global agenda of reduction from fossil-based fuels to zero-carbon energy consumption and production.

We are now in a situation where the game starts with or without us. By us, I meant the electric consumers. Thus, the need for a call for action.

The Philippine electric industry is deregulated and market-driven. Unbundled, however, the distribution of power is supposed to be consumer driven. Electric cooperatives are supposed to be owned by member-consumers, yet it is still debated if these are genuine cooperatives that follow the principles of subsidiarity and democracy – one member, one vote. That while consumers vote for their electric cooperative board of directors, the national government, through the National Electrification Agency (NEA) still has the power to hire and fire general managers of these supposed cooperatives.

Since the inception of the Energy and Power Industry Reform Act (EPIRA), RA 9136, power generation has been taken away from the National Power Corporation except in island and small grid areas or Small Power Utility Group (Spug). Transmission legally remains public, but the government has ceded it to the private sector through a franchise. The franchise of the country’s power transmission system is now held by the National Grid Corporation of the Philippines (NGCP).

With the exit of Napocor in 2001, the private sector now holds power generation. Ownership of Napocor power plants was transferred to the Power Sector Assets and Liabilities Corporation (PSALM) whose primary mandate is to sell generation assets of the government. Privatization of the Agus and Pulangi Hydro Electric Power Plants in Mindanao has hit a bottleneck over debates of its significance to the island’s energy security.

With market forces left to determine power prices, our backward economic and political system has allowed skyrocketing power prices. While the government has been true to form in subscribing to neo-liberal economics, oligarch ownership of power plants prevents real market competition, which on paper, brings down prices.

Supposedly the deluge of private investment in power plants would provide Mindanao with an affordable and efficient power supply. Short-cuts were made to address the shortfall of power supply in Mindanao, paving the way for the sharp growth of dirty coal dependence on the island that is historically dependent on renewable energy because of an abundance of water and geothermal resources.

Some twenty years ago, while acknowledging the need to increase Mindanao’s power generation capacity, we argued that it should be focused on rehabilitating the Agus and Pulangi hydro plants and fast-track the Mindanao-Visayas Interconnection. The Visayas then had surplus power, especially in Leyte and Negros, where geothermal resources are abundant.

We had argued that it was inaccurate to base power consumption increase to forecast year-on-year GDP growth rate plus 1 (N+1). The projected growth rate then was around 8%. We warned that the formula of power demand growth would be unfair to consumers as oversupply results in high power rates.

True enough, in the last few years, power oversupply in Mindanao peaked at 2,200 megawatts. As assurance for investments to get high return-on-investment (ROI), the power supply agreements then called purchased power agreements, have off-take provisions or provisions that would give power plants assured power sales, even if these are not fed to or used by power consumers. Now, it has dwindled to 800 to1,000 megawatts.

A few years ago, I had a conversation with Dean Cielito Habito, then director of the National Eeconomic Development Autority, during the Ramos administration, admitting that we were right in our arguments against the N+1 formula in computing energy demand growth. He admitted the GDP growth forecasts “were over bullish,” explaining further that government economic planners tend to make high estimates to project an image of a robust economy to boost investor confidence.

Even with high power supply margins, prices of power in Mindanao increased. Worse, the abundant power supply did not result in better power services. Remember the episodes around 2010, where power outages were widespread, and power bills increased? Eventually, consumers are made to pay for unused power from private generators.

Thus, the need for just energy transition. In gist, just energy transition places more power in the hands of consumers. It frees the consumers, in a way, from oligarch control of the power industry. Just energy transition also means power consumers should have options on what power source to use.

The Renewable Energy Act of 2008, RA 9513, has among its objectives the development of capacities for clean, efficient, and self-reliance in energy.

The implementation of the law is slow. The Renewable Portfolio Standards (RPS) took 12 years to implement. The adoption of net metering by electric cooperatives has also been slow.

RPS requires all electric utilities to increase the use of renewable energy by 1% per year, beginning in 2020 until 2030. The RPS has been raised to 2.52% this year.

According to reliable sources, many electric cooperatives submit RPS compliance reports to the DOE citing dubious renewable energy suppliers. Yet, the DOE says that by this year, 19 of the 23 electric cooperatives in Mindanao are RPS non-compliance this year.

RA 9513 is 15 years old this year, yet its objective energy self-reliance has not been achieved. Data from DOE indicate that the country’s electricity self-sufficiency has been declining. In 2008, energy self-sufficiency was 67.9%, and in 2019, it was 46.6%.

The Mindanao Development Authority (MinDA) led by Sec. Mabel Acosta and the indefatigable Asst. Sec. Romeo Montenegro, deputy executive director, has bitten the bullet and showed leadership in the drive for 50:50 renewable energy and fossil fuels in the energy mix of Mindanao in 2030.

It signals investors to invest in renewable energy – solar, biomass, wind, mini hydros, ocean currents, etc.

In Cagayan de Oro, the City Local Environment and Natural Resources Office (CLENRO) found in the greenhouse gas (GHG) emission study up to 42% of GHG emissions in the city are from plug-in power or purchased electricity.

It means that GHG emission in the emerging 4th metropolitan city of the country is from the coal power plants of Steag in Villanueva, Misamis Oriental, the FDC power plant also in Villanueva, the Cepalco-Minergy coal plant in Balingasag, Misamis Oriental, and even the GN coal-fired power plant in Kauswagan, Lanao del Norte.

That 42% of GHG emission comes from stationary sources — buildings and houses. It means that the solution is in the problem itself. Homes and buildings have a thing in common – rooftops.

Data from Greenergy Solar PH, a CDO-based company specializing in solar power installation, reveal that in the last five years, they installed rooftop solar photovoltaic (solar PV) energy systems in this city with a combined capacity of around five megawatts.

Many of these solar PV systems are on-grid and net-metered to Cepalco. This rooftop solar PV capacity is around fivefold to  the capacity of the Cepalco/Minergy’s 1MW solar PV power plant in barangay Indahag, Southeast Asia’s largest on-grid solar power plant, at the time of its commissioning, in 2004. (Kudos, by the way, to Cepalco for its net metering system. I hope it is not true that it is getting harder to apply for net metering now. Net metering allows users of solar PV energy systems to sell unused or surplus power to the electric distribution utility.)

The Mindanao 50:50 by 2030 campaign has to be supported by the power consumers. Power consumers must become aware that they have choices in where to sources of electricity.

(MindaViews is the opinion section of MindaNews. BenCyrus G. Ellroin is one of the authors of the Mindanao Renewable Ecosystem Report published in 2022. He is one of the pioneers of the country’s anti-coal power movement. He is now a consultant of the Mindanao Renewable Energy Acceleration and Coordination Hub. Comments can be sent to bency.ellorin@gmail.com)

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