Green is gold

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By Neil Honeyman

An Independent View

Wednesday, May 21, 2014

LAST Thursday, President Benigno S. Aquino III inaugurated the solar power plant developed by San Carlos Solar Energy Inc (Sacasol). The power will be supplied to the Visayas grid.

Renewable energy projects are welcomed though it should be remembered that we, the Nation, are supporting the renewable energy industry by subsidies called feed-in-tariffs (FIT). The feed in tariff for solar energy is currently P9.69 per kilowatt hour (KWH). The technology associated with solar panel is improving rapidly which means that more usable electricity is being obtained per unit of solar panels.

It may mean that the current FIT level will be high so that investors will make an excellent return on their capital investment from the subsidy alone. Hence the money obtained from sales will be the “icing on the cake” and what is already an adequate capital return becomes a substantial return. As Greenpeace tells us “green is gold.” It should never be forgotten that we, the people are providing the gold.


At a press briefing last Thursday, Energy Secretary Carlos Jericho Petilla said that the government is eyeing to increase from 50 megawatts (MW) to 500 MW the cap for solar energy projects to lure in more investors.

“Cap” is not quite the right word. There is no cap. There are, however, limits to the amount of electricity from renewable energy sources which will attract the FIT subsidy.

The FIT subsidies were introduced via the Renewable Energy Act of 2008 (RA 9513). There have been considerable efforts made to quantify the subsidies for electrical energy obtained from renewable energy (RE) sources.

In May 2013 Secretary Petilla announced that the subsidy for wind, biomass, solar, hydro would be P8.53, P6.63, P9.69, P5.90 per Kwh and the maximum amount that would attract these subsidies are 200 MW, 250 MW, 50 MW, and 250 MW.

Quantifying the subsidies is helpful. If the maximum amount of electricity is produced 24/7 by the various RE sources, the annual FIT subsidies are Wind: P14.9 billion, Biomass: P14.5 billion, Solar: P4.2 billion, Hydro: P12.9 billion. Hence the total subsidy is P46.5 billion.

Now Petilla is thinking about raising the quantity of solar energy that will attract FIT from 50 MW to 500 MW, we should be aware of the costs that the electricity consumer will have to pay. Again on a 24/7 basis, a full take-up of the FIT incentive scheme would result in an additional P38.2 billion being paid out.

The original P46.5 billion from the current FIT scheme balloons to P84.7 billion.

We believe that Senator Loren Legarda, who was in San Carlos last Thursday, and her senatorial colleagues should re-visit R.A. 9513 and consider whether it is wise to give the Department of Energy carte blanche to spend, without any upper limit, the money that will have to be paid by the hapless electricity consumer.

Greenpeace is correct.

Green is gold!

Published in the Sun.Star Bacolod newspaper on May 21, 2014.


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