Solar deals could mark renewables shift in Philippines

Eight solar projects worth a total of $1.65bn have been given the go-ahead in The Philippines.

And the projects could be the start of a government shift away from coal and diesel generation to renewables.

The Philippine Board of Investments’ approval of the eight deals marks an enormous opportunity to replace imported-coal and diesel models with indigenous alternatives, according to Sarah Jane Ahmed, energy finance analyst at the Institute for Energy Economics and Financial Analytics (IEEFA).

She highlights how the Philippines continues to lag global trends toward power-sector modernization, which are gaining momentum around rapidly-declining costs and technological advances in renewable energy, energy efficiency and distributed storage.

But she adds that the government “is in a position to change the longstanding status quo, which disproportionally puts fuel-price and foreign-exchange risk on consumers, while utilities and power generators remain insulated from market changes. As a result, power suppliers have no incentive to transition away from coal and diesel or to hedge against price-change and currency risks.

“Solar, wind, run-of-river hydro, geothermal, biogas, and storage are competitive, viable domestic options that can be combined to create a cheaper, more diverse and secure energy system,” she said, adding that this could save The Philippines up to $2.2bn annually in its current account deficits as well as $200m per year in diesel subsidies.

In March, Manila Electric Company (Meralco) received the country’s lowest wind electricity generation bid ever on a new 150 MW wind turbine project in the Rizal province, for PhP3.50 per kWh. Solar is competing similarly, with Meralco having contracted for a PhP 2.99-per kWh, 50MW capacity plant.

In comparison, coal-fired power generation costs upwards of PhP 3.8-5.5 per kWh while the “˜true’ cost of imported diesel-fired power ranges from PhP 15 to PhP 28 per kWh.

Rooftop solar costs PhP2.50 per kWh (without financing expenses) to 5.3 per kWh (with financing expenses), utility-scale solar power can cost as little as PhP 2.99 per kWh, wind is PhP3.5 per kWh, geothermal is PhP3.5-4.5 per kWh, and run-of-river hydro costs PhP3-6.2 per kWh.

Ahmed estimates that of 8 GW of solar installations planned by 2030 in The Philippines, 35 per cent will come from rooftop solar, with an investment value of $2.8bn.

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