Shift to clean energy entails high prices

The country's renewable energy transition is likely to entail high prices that may have to be initially borne by power consumers as well as developers before they can fully reap benefits in the long run.
No less than Energy Secretary Raphael Perpetuo Lotilla admitted that high prices are part of the birthing pains of transitioning into a clean energy regime.

"All ASEAN countries are going to work towards addressing the climate transition from the energy sector. We are all committed to doing that but one of the concerns is that transition is going to entail costs. And this means therefore additional cost not only for the developed countries but even for developing countries like the Philippines," Lotilla said at a recent press briefing.

Transition
"The transition is not going to be overnight, and therefore we have to prepare for a longer period of transition and on the cost, therefore, if there are to be additional costs, there should be no transfer of burden and I have emphasized this in the past," he added.

Nonetheless, Lotilla assured that the DoE and the Energy Regulatory Commission will ensure that any spike in prices due to the transition will be just for the consumers.

Lotilla also conveyed that in the region, Indonesia and Vietnam, which are both leaders in energy transition, are still struggling to meet their targets.

"In the case of Indonesia, if you will recall, they got a pledge for $20 billion under their just energy transition partnership agreement, and in the case of Vietnam, it is $15.5 billion," Lotilla explained.

"Unfortunately, even with these two countries who have been ahead in coming up with agreements, the progress has been slow and there remain changes, and that is why the realization that the transition is going to be slower than expected," he said.

Exploring ways
The government had been exploring ways to lower power prices, especially in provinces controlled by electric cooperatives.

One of the solutions on the table is the development of nuclear power, particularly the potential deployment of small modular reactors or SMRs in small islands not yet connected to the main grid.

Along with this, the DoE is also carefully studying the Republic Act 9136 or the Electric Power Industry Reform Act of 2001 or EPIRA to ensure that the more than two-decades-old law can keep up with the changing energy landscape while upholding the interest of the consumers.

The EPIRA, passed during the time of former President Gloria Macapagal Arroyo, mandates ERC and PCC to promote competition, encourage market development, ensure consumer choice, and penalize abuse of market power in the restructured electricity industry.

The law also promotes competition by creating a level playing field, among others, in the competitive retail electricity market.