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Solar Philippines CROSSING OVER The energy transition to renewable electricity Second Edition Roberto S. Verzola i Crossing Over: The Energy Transition to Renewable Electricity Copyright © 2015, 2016 By Roberto S. Verzola and the Friedrich-Ebert-Stiftung – Philippine Office. Published by the Friedrich Ebert Stiftung – Philippine Office 2601 Discovery Centre, #25 ADB Avenue Ortigas Center, Pasig City, 1600 Philippines Tel Nos.: +63 2 6346919, 637786 to 87 Fax No.: +63 2 6320697 Email: [email protected] Website: www.fes.org.ph The views and opinions expressed in this publication are those of the author and do not necessarily reflect that of the Friedrich-Ebert-Stiftung. The author is responsible for the accuracy of facts and figures presented in this publication, which is supported in good faith by the Friedrich-Ebert-Stiftung. Some rights reserved. This work is protected under the Creative Commons License BY-NC. It may be reproduced freely in part or in whole for non-commercial use as long as the reproduced work is properly attributed to the author and copyright holders. Photo and cover design by Aildrene Tan Layout by Nando Jamolin ISBN: ISBN: 978-971-535-040-2 ii To Antonio Nepomuceno, whose vision of a solar-powered society is a continuing inspiration iii iv v Table of Contents Table of Contents ........................................................................................................................................ vi Foreword .......................................................................................................................................................... viii Preface ................................................................................................................................................................ ix Acknowledgments ...................................................................................................................................... xi List of Abbreviations ................................................................................................................................ xiii Chapter 1. Electricity: Solar is now cheaper than coal! .................................................... 15 Chapter 2. Decreasing costs are inherent in solar panels ................................................ 24 Chapter 3. Renewable electricity: is there enough? .............................................................. 30 Chapter 4. 100% renewable: how soon? ....................................................................................... 37 Chapter 5. Unevenly distributed renewable potential ........................................................ 45 Chapter 6. Financially viable RE projects ................................................................................... 53 Chapter 7. Helping renewables grow: Policy options .......................................................... 67 Chapter 8. Uni-directional meters keep out the poor .......................................................... 73 Chapter 9. Net metering: origin and short history ................................................................ 76 Chapter 10. Net metering is an exchange, not a sale .......................................................... 85 Chapter 11. Electric utility arguments against net metering ........................................ 91 Chapter 12. The Philippines today has net billing, not net metering ....................... 99 Chapter 13. Feed-in-Tariffs: Germany and Spain .................................................................. 110 Chapter 14. It's more FIT in the Philippines? ........................................................................... 113 Chapter 15. Other RE policy options in the Philippines .................................................. 121 Chapter 16. The special role of solar rooftops ......................................................................... 123 Chapter 17. Utilities and self-generation .................................................................................... 126 Chapter 18. Energy transition: Why is it taking too long? ............................................... 130 Chapter 19. Energy planning needs a conceptual overhaul ............................................ 134 Chapter 20. Dealing with variable output: energy storage .............................................. 140 Chapter 21. Can microrenewables lead to an energy revolution? ................................ 148 vi Chapter 22. Energy efficiency: a new way of providing electricity .............................. 162 Chapter 23. Dealing with the recurring summer shortfall ............................................... 168 Chapter 24. Urgent recommendations .......................................................................................... 172 Chapter 25. Should you try solar now? .......................................................................................... 174 Chapter 26. Who wants to be a showcase? ................................................................................... 184 Chapter 27. The electric grid of the future ................................................................................. 186 Chapter 28. Coping with oil insecurity, global warming ................................................... 189 Appendix. Adjusting for the escalation of electricity prices ............................................ 192 Bibliography ................................................................................................................................................... 193 Index ................................................................................................................................................................... 198 vii Foreword The Philippines is not foreign to the effects of global warming. Year after year, the country is beset by typhoons that only get stronger and more devastating. This year saw one of the most severe episodes of El Niño that caused a drought in Mindanao. As the Philippines is one of the countries most affected by climate change, Filipinos understand that taking preventive action against global warming is already urgent. However, the Philippines faces another dilemma: that of the inaccessibility of energy in the country. Local electricity rates remain the highest in Asia. Scheduled brownouts still are the norm in regions outside Manila. This lack of energy security, coupled with high energy costs, serve as the greatest barrier for the country to fulfil its dream of becoming industrialized. Given this situation, the quick-fix but ultimately unsustainable solution of building more fossil fuel plants remains tempting for policymakers. Through the efforts of Filipino thought leaders, the Philippine society is now slowly realizing that choosing renewable energy sources is not only good for the planet, but also is the most economically rational choice in the long term. Both in the West and the East, new technologies in solar, wind, and energy storage are being developed to bring the cost of renewable energy down. Locally, pioneering local government units are already working with civil society and industry to add more renewable energy sources to the mix. We already have the proof of concept that a full transition to renewables is possible – we just have to make the political and social environment favourable for the transition. The Friedrich-Ebert-Stiftung is happy to be part of this emerging energy revolution. Since 2012, Friedrich-Ebert-Stiftung has been working with local partners to pursue an urgent and sustained shift towards an energy mix that avoids the use of coal and nuclear power sources, which are highly-dangerous and environmentally-degrading, and maximizes the Philippines' vast resources of renewable energy. One of these projects, through the effort of Engineer Roberto Verzola, was the publication of the first edition of Crossing Over, a landmark study that details the steps that we must take towards an energy transition. Due to the positive reviews on the first edition of Crossing Over, and the rapid changes that happened in the Philippine energy sector since then, we saw the need to publish a second edition. Once again, Friedrich-Ebert-Stiftung would like to thank Engr. Verzola for his tireless pursuit towards a fully clean and renewable energy future for the Philippines. We also thank his colleagues in his organization, the Center for Renewable Electricity Strategies, for their immeasurable contribution to the energy transition through the implementation of some of the ideas that Engr. Verzola emphasized in the first edition of this book. We encourage the readers to join us in making the recommendations in this study a reality. Berthold Leimbach Resident Representative Friedrich-Ebert-Stiftung – Philippine Office viii Preface Many studies on renewable energy (RE) in the Philippines have already been done. This particular study on RE is focused on strategies that can lead to a full transition of electricity generation in the country from non-renewable to renewable energy. This study paints in broad strokes a picture of the RE situation in the country's electricity sector. It includes enough highlights to give potential adopters and investors a sense of the terrain in terms of the physical, economic and institutional contexts within which they would be working. This study also provides some criteria that can help local officials assess their locality's endowments in renewable electricity generation. If they find that they are well-endowed,
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