RE use seen to translate into savings worth P130B

A government official on Tuesday hit critics of renewable energy, stressing that the use of these clean resources for power generation could even result in net savings amounting to as much as P130 billion over a 20-year period.

According to National Renewable Energy Board chairman Pedro Maniego Jr., the cost of electricity generated from coal-fired power plants at present is already higher than the proposed feed-in-tariff rates of other renewable energy resources, specifically hydro and biomass power.

Citing the case of Panay Energy Development Corp., which owns and operates a 164-megawatt coal facility in Iloilo, the cost of power stood at P8.30 per kilowatt-hour as of September 2011, while the proposed FIT rate for biomass was only P7 per kWh, while that of hydropower was P6.15 per kWh.

As for other renewable energy sources that have higher FIT rates like wind and solar, their rates are expected to reach grid parity by 2017. This means that the average weighted FIT rate will be much lower than the so-called “avoided cost” from 2018 onwards.

As such, the implementation of FIT rates will then benefit the consumers by reducing the average power rates, Maniego stressed.

“Avoided cost” refers to cost of power generated from fuel and coal-fired facilities that can be replaced by renewable energy sources. The avoided cost used by the NREB was only P4.50 per kWh, but this figure is expected to reach over P12 per kWh, if not higher, over the next 20 years.

While this avoided cost is expected to increase steadily, the FIT rates will be fixed for a 20-year period, thus insulating power consumers from any future hikes in coal prices.

“The cost of electricity generated from coal facilities are expected to further increase over the next 20 years, as experts project coal prices to increase at a higher rate than the historical 25 to 30 percent per year, because of the expected new coal plants in Japan and most developing countries like the Philippines,” Maniego explained.

Also, the NREB chief challenged critics when they claimed that additional costs, amounting to about P8 billion, would be passed on to consumers, and that this burden would further balloon to P160 billion over the next 20 years.

“The P8 billion is wrong [when] computed using the 12.50 centavo-per-kWh FIT-allowance, as based on the old installation target of 830 MW. The latest correct figure is 10.50 centavos per kWh, based on the Department of Energy’s approved target of 760 MW,” Maniego said.