The government has set its sights on achieving grid parity for the Philippines in 20 years with the launch of the National Renewable Energy Program (NREP) on Monday.
Speaking with reporters on the sidelines of the NREP launch in Makati, Energy Undersecretary Jose Layug said that with the rising cost of fuel, grid parity is not difficult to achieve for the country.
“Renewable energy is expensive right now because these are just emerging technologies. But for the long-term, we are looking at grid parity, if not, maybe renewable energy can even be cheaper,” Layug said.
Grid parity is the point when the cost of producing electricity from renewable energy sources is the same as that of conventional grid-supplied electricity.
Layug said that at its current state, non-renewable electricity sources cost about 5 to 5.50 centavos per kilowatt-hour (kWh).
“But every time the oil goes up, we see electricity prices rising as well,” he pointed out.
With the NREP, Layug said the government hopes to triple the country’s dependence on renewable energy to 15,000 megawatts in the next 20 years.
He said this is consistent with the requirements of the Renewable Energy Act of 2008, which mandates a 1 percent yearly increase in dependency in renewable energy.
“Right now 34 percent of our energy needs are delivered by renewable energy. We’re hoping to achieving 50 percent by 2030,” he reiterated.
According to Department of Energy data, the total installed capacity in the country as of the first quarter of 2010 is 15,896 MW, led largely by coal-based power plants with an installed capacity of 4,523 MW.
Cost of renewable
This dependence on oil- and coal-fired energy sources is what NREP is designed to address, Layug added.
Based on the feed-in tariff (FIT) rates submitted by the DOE for approval by the Energy Regulatory Commission (ERC), the proposed rates are: P7/kWh for biomass energy, P6.15 per kWh for hydroelectric power, P10.95 for wind energy, P17.95 for solar power and P17.65 for ocean energy.
Layug, however, clarified that these figures will still have to be divided by the total energy consumption of the population to come up with a universal rate for all types of renewable energy, otherwise known as the FIL-tall rate.
“At this point, the FIT-all rate is 12 centavos/ per kilowatt hour,” he said.
The rate makes renewable energy twice as expensive as conventional power.
Off-grid areas
Despite this, Layug maintained that renewable energy can bring benefits to the country, especially to off-grid areas where electricity is very expensive.
The DOE official cited the case of areas where electricity is sourced from plants powered by bunker oil, which raises power costs to about P25 per kWh.
“In off-grid areas, it still makes sense to go renewable than fuel. That is the balance we want to achieve, that’s why we need to put renewable energy to off-grid areas where power is high,” he said.
He maintained, however, that there are areas in the country wherein conventional power sources can’t be replaced entirely by renewable energy sources.
“The Bangui windmills, for example, produces only 20 percent of the energy needs of the region. These are called ‘intermittent’ energy sources,” he said.
