A Position Paper by the People of Mindanao on the Solar Capacity Development in the Philippines
A. Background
1. There is a Power Capacity Shortage in Mindanao
The demand for power in Mindanao is constantly increasing, however, no significant additional power generating capacities are expected within the next two to three years to address this problem. The power reserves are insufficient that even during the rainy month of July 2011, the National Grid Corporation of the Philippines (NGCP) had to resort to load curtailment when one of the National Power Corporation’s (NPC) generating facilities conked out. The current Mindanao generation mix is still heavily dependent on the hydro plants, which are very vulnerable to changes in weather condition.
2. Renewable Energy Law was Enacted in December 2008
While the Renewable Energy Law (RE Law) was enacted in 2008, its implementation has been very slow despite the specific timetables provided in the law. Mindanao is blessed with areas suitable for harnessing renewable energy resources, the development of which could have been accelerated under the RE Law and consequently address the ailing Mindanao power condition.
3. Solar is the Fastest to Deploy to Address Mindanao Capacity Shortage
Among the available renewable energy resources, solar photovoltaic (PV) technology is the fastest to deploy as demonstrated in countries that adopt large-scale solar PV technology for utility applications such as the 70MW PV power plant in Italy, which was commissioned in only seven (7) months. Since at least 50% of Mindanao’s energy needs are currently supplied by hydro power plants, solar will immediately address the current capacity shortage and effectively complement the hydro power plants, especially during the dry seasons.
4. Solar can be Cheaper than Fossil-fired Power Plants
Based on National Renewable Energy Board (NREB) figures, adding 760 MW of renewable energy plants eligible for the proposed Feed-in tariff (FIT) will result to a rate impact of only P0.1050 per kWh, with solar contributing only P0.0114/kWh. The FIT rate impact is much less than the P0.50/kWh additional electricity payments experienced by the people of Mindanao at the height of power shortage in 2010. Solar electricity production matches the daytime peak in Mindanao so it can displace oil-fired power plants or enable large hydro power plants to store and reserve water for the night time peak, resulting to savings in generation costs. Since most solar power plants are embedded in the distribution networks, solar power plants can mitigate transmission constraints in the grid and avoid transmission costs. While the proposed solar FIT is P17.95/kWh, the rate impact as mentioned above is only 1.14 centavos per kWh (at 50MWp solar capacity installed) when solar electricity generation is mixed with the other generating plants in the country; only the P0.0114/kWh shall form part of the Feed-in Tariff Allowance (FIT-All) and billed to the consumers but not the P17.95/kWh FIT.
In accordance with the ERC issued FIT Rules, the FIT-All attributable to the currently proposed renewable energy capacities is expected to decrease over the years due to the increase of on-grid electricity consumption; while the same cannot be said for fossil-based power plants which are heavily dependent on the price of imported fuels.
The 1.14 centavos per kWh rate impact is only 11% of the total FIT rate impact; biomass and wind, on the other hand, get 39% and 32%, respectively, due to the higher capacity targets allocated for biomass and wind. This unbalanced and discriminatory allocation of target renewable capacity is contrary to the spirit and intent of the RE Law and deprives Mindanao of the immediate solution to the island’s current capacity shortage problems.
5. The Department of Energy (DOE) Endorsed only 50MW Solar Capacity for the Next Three Years
The DOE has endorsed or certified only 50MW of solar capacity (both ground- and rooftop-mounted) for the entire country. On the other hand, it is claimed that, for Mindanao alone, not less than 150MW of solar projects are currently filed before the DOE.
B. Our Position
1. The Mindanao Capacity Shortage Problem must be Addressed NOW Numerous power summits, conferences and press briefings had been conducted to address the Mindanao power problem yet no new significant power plants have come on stream in Mindanao despite these initiatives. Mindanao demands concrete plans and directions to address the Mindanao capacity shortage problem. Mindanao cannot again afford to bleed economically for the next two or three years; power plant capacities in the grid must be immediately augmented.
2. Government to Increase Solar Capacity Targets Especially for Mindanao Considering the benefits of solar as discussed above we request His Excellency, President Benigno S. Aquino III, and the Honorable Secretary Jose Rene Almendras, to consider increasing the solar PV capacity targets, especially for Mindanao. A few centavos may be added due to the addition of renewable energy, however, this is far below the rate impact experienced in the past year even if there were no new capacities added to the grid.
THE PEOPLE OF MINDANAO
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