Sunday, July 31, 2011

PCCI hits focus on renewable energy

Says PH needs baseload plants, lower power rates


The government should find ways to drive current electricity prices down before introducing another burden to consumers and industries through the feed-in tariff (FIT) rates for renewable energy projects, the influential Philippine Chamber of Commerce and Industry said.

PCCI energy committee chairman Jose Alejandro said power rates were expected to increase even more next year due to the expiration of the transition supply contracts (TSCs) attached to the privatized plants and independent power producer (IPP) contracts of National Power Corp.
“Can we expect that the new contracts that will be negotiated will have lower rates than the old TSCs? Of course not. We expect the new rates to be higher,” Alejandro said in an interview Friday.
These would be further exacerbated by petitions by Power Sector Assets and Liabilities Management Corp. for the universal charge, as well as the generation rate adjustment mechanism (GRAM) and the incremental currency exchange rate adjustment (Icera), automatic adjustments that could move rates either up or down.
The introduction of the FIT rates for renewable energy projects would add another burden to consumers and businesses, Alejandro said, making the country even less competitive on the global stage.
“We’re already charging too high for power. It would have been okay if we were just one or two centavos higher than our neighbors, but our rates are double or even triple those of other countries in the region. We can’t have any more increases,” Alejandro said, referring mainly to the FIT rates.
The FIT scheme assures renewable energy developers of future cash flow as electricity end-users will be charged fixed amounts to cover the production of energy from renewable sources.
Payment for the use of clean energy will come from a uniform per-kilowatt-hour charge, dubbed FIT Allowance (FIT-All), which will be collected from all electricity end-users.
The National Renewable Energy Board recently approved a FIT rate of 12.75 centavos a kWh for renewable energy projects. This universal levy would be borne by all power users by 2014, when all expected renewable energy projects would have already gone on line.
Instead of pushing to get renewable energy projects on line, Alejandro said the government should focus on getting more commitments for additional baseload generation capacity.
At this point, Alejandro said, the country already had enough renewable energy capacity from its numerous hydro and geothermal installations. Some projects such as biomass and mini-hydro could be installed in off-grid areas. Solar and wind, however, should take a backseat—at least for the next three to five years.
“Our priority should be building baseload and reserve capacity and bringing power rates down. We need sustainable, reliable power supply. We don’t need [renewable energy] now. It’s not reliable, it’s not controllable, and it’s very costly,” Alejandro said.
“It will be counterproductive for the country to focus on [renewable energy]. Let the technologies mature first, but in other countries, not here. We can still catch up, especially when the technologies become much cheaper to install,” Alejandro added.

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