CLIMATE change, carbon neutral and net zero are the buzzwords making waves amid the pandemic. This global movement has prompted power firms to transition from fossil fuels to clean energy.
In recent years, more and more countries shift to more environmentally sustainable energy sources, and the Philippines is one of them.
Aboitiz Power Corp.’s journey towards a decarbonized portfolio starts by setting aside the development of new coal-fired power plants to shifting its focus to gas, exploring offshore wind, hydrogen and carbon
capture.
The country’s largest power generator is setting aside P190 billion in the next 10 years to build an additional 3,700 megawatts (MW) of capacity under its clean energy portfolio. So far, it has new projects with a total of 2,364 MW of renewable energy assets—mostly solar but also wind and hydro—which are in varying stages of development and located mainly in Luzon.
“It is a fact that climate change is a key driver of the global movement towards decarbonization. We hope to build on our 10-year plan where we aim to reduce the carbon intensity of our business. We intend to explore pathways toward decarbonization that will complement our renewable energy growth plan and our nature-based carbon sequestration program,” said Aboitiz Power President Emmanuel Rubio in an interview.
Aboitiz Power’s attributable capacity is expected to hit 9,200MW by 2030, half of which would come from renewables.
Luzon’s leading power producer SMC Global Power Holdings Corp. announced this year that it would drop coal power projects from its portfolio to focus on renewables. It would also discontinue coal expansion projects in various parts of the country.
“We’re executing on our plans to move away from building new coal facilities, despite new technologies that make them cleaner. It’s a company direction that is in line with all the major sustainability initiatives we have undertaken these past couple of years,” SMC president Ramon Ang said.
Included in this transition is a $1-billion fleet of 31 Battery Energy Storage System (BESS) facilities across the country with total capacity of 1,000 MW set for completion between this year and 2022.
SMC Global Power is also preparing to build a 1,300MW LNG combined cycle plant in Batangas City, small-scale LNG plants and hydro-power projects.
“For several years now, we have been articulating our plans to move into cleaner and renewable power, and now, these plans have not only taken shape but we have actually started implementing them,” said Ang.
The combination of BESS and RE projects forms part of its objective to operate in an environmentally-responsible manner while considering energy security and affordability.
This as the company announced plans of developing 10,000 MW of new RE capacity in the next 10 years. As of last year, SMC had an installed capacity of approximately 20.7 percent of the national grid and 28 percent of the Luzon grid.
Lopez’s First Gen
Lopez-led First Gen Power Corp. announced as early as 2016 that it would abandon coal power projects even if this meant walking away from profit opportunity, chairman Federico Lopez said. Years after, Lopez commented: “We never wavered and never once regretted the decision.”
First Gen primarily generates power through renewable energy (RE) and indigenous fuel sources such as natural gas, geothermal, hydro, wind, and solar power. It has 3,495MW of installed capacity in its portfolio, which accounts for 19 percent of the Philippines’s gross power generation.
Lopez is confident that the declining cost of renewable energy and battery storage will bring down carbon emissions. “As RE and battery storage costs drop further in the coming years, their penetration into our grids, rooftops, and our lives will increase.
However, if we want to encourage a deeper penetration and deep decarbonization, we must effectively plan for the intermittency issues that arise with RE,” he said.
First Gen’s unit, Energy Development Corp. (EDC), is spearheading the movement for the country to become carbon neutral, in line with the Department of Energy’s (DOE) goal to reduce carbon emissions by as much as 75 percent.
The Net Zero Carbon Alliance is led by EDC. The members— ArthaLand;
First Balfour; Drink Sustainability Communications; Silliman University; Analog Devices, Coca-Cola, Knowles Electronics, and Unilever—vowed to be an enabler for each other and be the “prime movers” in decarbonizing their respective industries.
With EDC’s established decarbonization mechanisms, EDC President Richard Tantoco said partners can adopt these practices and leverage them toward carbon offsetting and sequestration.
‘Clean energy can be cheap’
He noted that about 55 percent of the energy in the Philippines is produced from coal-fired power plants. Businesses, he said, can elect to buy their energy from clean sources at about the same cost.
“It doesn’t have to be expensive. There’s a regulation already that allows businesses that have a demand of P350,000 or more per month to buy clean energy. If businesses band together to create the demand side for clean energy, other businesses will create the supply side for clean energy. I think it’s possible and not necessarily going to hurt the bottomline,” said Tantoco.
EDC is the country’s biggest 100-percent RE company which accounts for over 40 percent of the Philippines’s RE output and serves about 10 percent of the country’s overall electricity demand with its installed capacity of almost 1,500MW. Its 1,181MW geothermal portfolio accounts for 62 percent of the country’s total installed geothermal capacity and has put the country on the map as the world’s third largest geothermal power producer.
More than half of the world’s nations and several corporates have committed to Net Zero by 2050 and AC Energy Corp. is at the forefront of this energy transition.
The power arm of conglomerate Ayala Corp. currently has about 2,100MW of renewables capacity, and is on track to attain its goal of 5,000MW of renewables capacity by 2025, and become the largest renewables platform in Southeast Asia.
AC Energy President Eric Francia noted that significant capital is flowing into sustainability oriented investments led by renewables.
“For instance, green bond issuance has increased 11-fold in the last five years globally. AC Energy is one of the largest issuers of green bonds in Southeast Asia with over $1.5 billion of green bonds issued in the last two years,” he said in an interview.
While the Philippines is blessed with abundant sources of renewable energy, Francia stressed the importance for government to come up with a comprehensive roadmap in order to attain the country’s goal—a 75-percent reduction in carbon emissions by 2030.
To help attain this ambitious goal, the DOE has targeted renewables share of energy output to increase from 21 percent today to 35 percent by 2030.
The DOE, National Renewable Energy Board (NREB) and the Energy Regulatory Commission (ERC) issued policies to help hit this target. These include the moratorium on new coal plants, Green Energy Option Program, Net Metering, Renewable Portfolio Standards—which will all complement the move towards more RE.
“We will get to that 35-percent RE share by 2030 and, in fact, exceed the 40 percent and get all the way up to 50 percent by 2040 if there are certain policies that will be adopted to make sure that we get there,” said NREB Chairman Monalisa Dimalanta.
The target RE share by 2030 is expected to hit 36.96 percent and even higher by 2040 at 55.87 percent, the DOE data showed. The current mix is still dominated by fossil fuels at 54.6 percent, natural gas at 21.2 percent, RE at 20.8 percent and oil-based fuel at 3.5 percent.
Francia noted that while these are significant steps to help pursue our climate ambitions, current policies are not enough to meet these ambitious targets, and will require a more comprehensive roadmap.
“Furthermore, several complementary policies and actions need to be enforced to ensure the viability of renewable markets, such as the implementation of the renewable energy market and the reserve market.
It will also be critical to upgrade and strengthen the national grid, and incorporate storage technology to ensure grid stability especially with the increase in variable renewable capacity,” he said.
Clear policy support
At the end of the day, government needs to declare that we prefer renewables, said Developers of Renewable Energy for AdvanceMent, Inc. (DREAM) President Jose Layug, Jr. in a recent forum.
“The government should adopt a pro-clean energy stance instead of a technology-neutral one, which the DOE has been pursuing. After all, renewables are now cheaper than coal and natural gas, and faster to build,” he said.
For instance, solar power facilities can be built in nine months, wind plant for 18 months, biomass plant for two years, and so on.
“The question here is what would be the fundamental policy of the next administration? Is it still to push for technology neutral or for more renewables? Because if the answer is the latter, then we have seen already the trend. Prices have gone down, so why don’t we add more to the system?” Layug pointed out.