Misplaced enthusiasm
WHEN we look at the economic direction that our current leaders want to take, two challenges stand out above the rest: creating an investment climate attractive to investors and transitioning to clean energy.
But to conquer the first challenge, the second one has to withstand its biggest test, that of ensuring a stable supply of electricity, which is on top of the list of must-haves for investors everywhere.
Stability, however, isn’t the sole requirement for power supply. It also has to have a reasonable cost.
The path to renewable energy appears to be the most logical solution. Its potential to bring down energy costs is apparent. Go solar because energy from the sun is limitless and free. Harness the wind, and it offers the same benefits.
The cost of solar panels is falling. Wind turbines, the giant spinning towers that dot the skyline, are also declining in cost.
But grid stability?
In this aspect, the answer brings us to hydro, particularly pumped storage, which isn’t as vulnerable to the threats posed by weather disturbances to solar and wind.
The push for renewable energy, or RE, is moving ahead with planned green energy auctions (GEA) by the Department of Energy (DoE), which is historic in the sense that it will actually open the grid for renewables.
While it seems to be the correct step, there are issues that lurk around the corner that could make the headlong push for RE a more challenging turn.
First, the extended GEA schedule set in August, with producers of solar, wind and hydropower expected to participate, actually puts into question the availability of these RE solutions. While we certainly hope for its success, given the critical role the DoE plays in the nation’s energy security, the lack of urgency is cause for concern.
The second challenge is to stabilize the supply of power while waiting for all the RE technologies to deliver. Does it mean continued reliance on coal? Will it require a gunshot wedding with coal in the interim?
And once these renewables are fully developed, will the power grid be equipped to handle the load?
Yet another challenge, a third one, is the bureaucratic red tape that appears to hobble the Energy Regulatory Commission (ERC) into complacency.
The ERC has yet to move ahead in setting rates for RE sources, much less act on a regulatory framework for the transition to green energy, including, among others, the pricing determination methodology and cost parameters for the non-feed-in-tariff (nonFIT)-eligible RE technologies. This means there’s zilch, zero policy foundation for RE from the country’s energy regulatory body, a misnomer in an era of deregulation.
As the energy sector heads to a historic third GEA, the DoE appears to be brimming with good intentions but lacking in wisdom.
The DoE projected a 28,000-megawatt demand and supply of 50,000 megawatts with an increasing share from RE.
It wants to raise RE’s share in the total energy supply to 35 percent by the year 2030 and 50 percent by 2040, but while enthusiasm is above the rim on RE, it conveniently forgets, wittingly or unwittingly, the question of grid stability.
A system overhaul is required to walk the tightrope between clean energy and stable supply. And the timetable is a painting of lack of urgency.
Commencement period for impounding hydro and pumped-storage hydro will be from 2028 to 2030. Here, we are simply not being helped by time, as pumped storage facilities need five to six years to build and become operational.
Geothermal will begin in 2024 until 2030, and ROR hydro is targeted from 2026 to 2028.
As we wait for these dates, these numbers stare us in the face in real-time:
1. Dry season night-time peak demand will likely suffer a 21,655 DEfiCIENCY FROM SOLAR AND WIND, which would push base load (those in operation already) to ramp up generation; and,
2. Solar and wind are likely to be unavailable during storms for safety reasons.
The time to act to secure the energy future is now. Let us hope the DoE and ERC can expedite the enabling mechanism, GEA3, to start these projects.
As we watch developments in the energy front with eyes wide open, let’s try to heed one lesson on enthusiasm. Sometimes, it can devour you. Especially if the ERC continues to drag its feet, as it often does, on the one thing needed to fully open RE’s doors — determining pricing and policy.