Philippines urged to stand firm amid expensive start-up costs
Instead of complaining about an additional burden, the higher power rates that will result from the introduction of new renewable energy (RE) projects into the power mix should be treated as an investment that will generate additional benefits and jobs for the country over the long term.
Hans-Josef Fell, a member of the German Parliament and a key architect of Germany’s feed-in tariff (FIT) scheme, said getting more RE into the power mix would ease the country’s dependence on coal and oil, which were both predicted to become more scarce and, effectively, more expensive in coming years.
In Germany’s case, he said the introduction of FIT rates cost an additional burden of 8.2 billion euros a year on all power users. Having more RE in the mix, however, also allowed Germany to avoid 7.4 billion euros worth of fossil fuel imports, as well as 15.4 billion euros in external costs associated with such imports.
Also, the 26 billion euros worth of new RE projects generated thousands of jobs: from just 30,000 in 1998 to more than 500,000 jobs last year, he said.
“We didn’t really suffer as a country because of the additional costs. The German economy actually became more competitive when it started using more RE,” he said. “We don’t really feel the rising prices in the conventional energy sector because we’re using more RE. If the Philippines goes into RE, it will become more competitive and the country will no longer have to depend too much on expensive oil and coal.”
Businesses, consumers, and even the Department of Trade and Industry, had all expressed apprehension over the impending imposition of an additional charge related to RE.
Unlike traditional power sources, the Renewable Energy Act of 2008 provided that a FIT system be put in place for RE project developers.
This scheme assures RE developers of future cash flows, as electricity end-users will be charged fixed amounts to cover the production of energy from renewable sources. With this in place, utilities can spread the cost of clean power among its customers.
The FIT rules are expected to provide an incentive for investors to go into RE development and production, as the mechanism serves as an assurance of stable pricing for energy from renewable sources.
The applicable FITs are based on installation targets for each technology and the timeframes for such installations to be completed. FITs can also be differentiated by means of plant size and whether the plants’ output is dispatched during peak or off-peak periods.
Payment for the use of clean energy will come from a uniform per-kilowatt-hour charge, dubbed Feed-in Tariff Allowance (FIT-All), which will be collected from all electricity end-users.
