PH won't achieve RE target (and shouldn't try to)

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THERE were a lot of numbers thrown around at the recent Philippine Electric Power Industry Forum in Iloilo, but the most significant one was probably that shared by James Villaroman, president and chief operating officer of Aboitiz Renewables. Going forward, Villaroman said, the Philippines will need to maintain an annual growth in electric generating capacity of between 6 and 7 percent to match up with the anticipated demand growth of about 6.6 percent.

Granted, that is an informed assumption, but it is a reasonable one because it approximates the country’s anticipated economic growth over the next several years. Energy demand growth over the past several years has been similar to overall economic growth, so it is logical that it would continue. Neither the economy nor generation capacity has actually grown at an annual average of 6 percent over the past five years — those numbers are closer to 3.2 percent and 4.5 percent, respectively — but hope springs eternal. So long as there is no other unplanned economic calamity like the coronavirus pandemic, 6 percent is a justifiable target.

So, if we accept that 6-percent capacity growth is both what should happen and feasible and that growth in renewable energy (RE) will continue to accelerate at the average rate it has since the implementation of the National Renewable Energy Plan in 2017 (the percentage of RE capacity growth is expanding at an average of 0.67 percent a year), can the Philippines meet its goal of having 35 percent of its generation mix served by RE by 2030?

No, it cannot, even under the extremely optimistic parameters described above. And if the Philippines cannot hit the 35-percent target by 2030, it is almost certain to miss the further target of 50 percent RE by 2040.

Starting from 2022, the last full year of generation data available from the Department of Energy (DoE) (the 2023 data will be available around the end of June), at 6-percent generation capacity growth, including both renewable and nonrenewable sources, the country will have to add 16,781 megawatts (MW) in the 2023–2030 period. That is a tall order; in the previous eight-year period — 2015 to 2022 — 10,314 MW of capacity were added, so expansion has to accelerate by roughly 62 percent over the same length of time. Similarly, to maintain the momentum of RE capacity expansion, wherein the annual growth rate averages 0.67 percent higher than the previous year’s growth, the country will have to add 5,951 MW of RE, a rate that is 252 percent faster than in the previous eight-year period.

If those levels of expansion can be maintained — which, frankly, seems unlikely — installed capacity would rise from 28,258 MW (19,994 nonrenewable and 8,264 RE) at the end of 2022 to 45,039 MW (30,405 nonrenewable and 14,634 RE) at the end of 2030. At the end of 2022, the share of RE in the energy mix was 29.2 percent, and that will not change by more than a tenth of a percent one way or the other until 2027, when the share of RE will begin to gradually increase. By 2030, however, it will only reach 32.5 percent — closer to the target than it is now but still short of it.

Again, the above growth scenario is extremely optimistic. The Philippines has never built energy capacity that fast at any time in its history, and there is little to suggest its capabilities have improved by enough to do so in the next eight years. Building RE capacity even faster is also unlikely. RE projects are of much smaller individual capacity, and the way in which RE service contracts are divided up and awarded by the DoE makes it difficult to aggregate them into very large projects on the order of several hundred MW that could be built relatively faster and more economically.

Plus, there’s also the reliability issue. Solar and wind power are intermittent, which gives them a low capacity factor — the ratio of how often it runs at full power versus its theoretical maximum, which is usually the same as the installed capacity. Capacity factors, especially for RE, can vary from place to place, but as a general average, solar has a capacity factor of about 25 percent; wind and hydropower, about 37 percent; natural gas, about 57 percent; and geothermal, the most reliable form of RE but also one of the most expensive to develop, about 74 percent. The implication of all this is that for all practical purposes, the effective capacity of solar or wind, the two preferred RE forms here, is only one-third or one-fourth of what is advertised. Put another way, the 1,957 MW of installed solar and wind capacity at the end of 2022 could only be relied upon to deliver 534 MW consistently.

Rather than constantly referring to a politically derived and unattainable RE “target,” this country’s energy policymakers should focus on building the fundamentals of energy security — accessibility, affordability, reliability, and sustainability — and express RE aspirations in a more realistic way. For example, it be something along the lines of a policy that makes RE the first generation type to be considered for any new application, and requires it to be employed if feasible. Putting that together with other options that help extend the reliability of intermittent RE sources — such as connecting them to battery energy storage systems rather than directly to the grid — a more flexible policy might even result in the old RE targets being exceeded by a substantial amount. Or it might not. But the result either way would be the best possible energy mix available to achieve energy security, which, after all, is the biggest target of all.