Gov’t urged to implement ‘green’ power projects in phases

Despite the conflicts hounding the renewable energy industry, the Aquino administration must implement the law not only to protect the Philippines from international fuel price fluctuations and energy shortages, but to also further strengthen investor confidence as well.

In a speech at the Powertrends 2011 conference Wednesday, European Chamber of Commerce of the Philippines (ECCP) president Hubert D’Aboville noted that implementing the law would show investors “consistency in government policies.”

“There is no doubt that investors are watching closely the potential business opportunities in the Philippines. What the investors ask is consistency in government policies. Lack of consistency from the government will turn away investors. And not just in the power industry,” D’Aboville said.

This uncertainty in the stability of investment policies, according to D’Aboville, was the main reason for the slow pace of investments in the energy sector.

“Basically, we have not seen major changes yet that will drive investors toward putting their money on energy projects in the Philippines,” he said.

In the case of the renewable energy industry, for instance, D’Aboville pointed out that while the pipeline appeared to be full and more investors were looking at opportunities, everything was being held up by administrative issues, particularly on disagreements concerning the feed-in-tariff (FIT).

The feed-in-tariff, which refers to the guaranteed price at which renewable energy developers will be paid for the electricity that they will produce, has raised fears and concerns among groups and consumers as this mechanism was seen to further jack up the cost of power in the country.

However, the issuance of the FIT rates is now being awaited by developers as these rates will determine the viability of their projects. There are now 236 service contracts signed with a projected capacity of 2,822 megawatts. The projects, should these push through, are expected to translate to P88 billion in fresh investments.

Apart from the signed contracts, there are close to 400 applications pending, with the projects expected to generate another 6,000 MW in new and additional capacities.

D’Aboville has proposed a phased implementation of the renewable energy technologies, with the cheaper ones like biomass and hydro being allowed to be commissioned first.

“What appears to be clear is that we can implement RE projects following different tracks or in phases starting with biomass and hydropower projects in 2012, given the workable FIT for these projects, as well as considering that no new technology is expected in these two areas,” he explained.

“Then in 2013, we can push for wind and solar. New technologies in wind and solar are foreseen and these innovations will bring prices down even further. Later, we can then promote the other RE technologies,” D’Aboville added.