The country can’t rush headlong into the renewable energy (RE) trend because of the still high production cost of solar and wind power. Placing a massive bet on RE will defeat the primary goals of energy security — the availability of cheap electricity that can support the rapid expansion of the economy.
The shift away from coal could further hike power tariffs, and the Philippines already has the second-highest electricity rates in the region, behind Singapore. Investors have often complained about high power bills as one of the key deterrents to setting up businesses.
While the economy is projected to grow above 5 percent and the aspiration for upper-middle-income status — expected to further propel growth — is within reach, a surge in power demand looms.
The Philippines expects a 6.6 percent growth in power demand over the next two years, based on Department of Energy (DoE) projections.
A slow transition to RE will avoid the astronomical costs associated with it while allowing time to lay down the infrastructure needed to make it sustainable and affordable. Even industrialized nations that embraced RE too quickly are now abandoning their ambitious plans for zero carbon emissions.
DoE Secretary Sharon Garin, in an interview with a foreign news service on the sidelines of a recent Association of Southeast Asian Nations meeting, said the country will continue to boost gas use for power generation and plans to add more gas-fired capacity to address rising demand. However, coal will remain a key source of electricity due to the availability of the fuel.
Her insight about energy security supports a slow adoption of RE, giving priority to meeting the needs of economic expansion.
“Transition is expensive. If you want cleaner power, you have to sacrifice on prices. We need to find the balance, and hopefully there will be,” Garin said.
While she indicated the country’s commitment to reducing coal dependency, she acknowledged that the fuel remains indispensable.
“If it’s really worst case, coal is always there... The most expensive electricity is no electricity at all. We can’t afford to have that in our country,” Garin said.
The country has the most coal-dependent grid in the region, but Garin expects the fuel mix to register a decline in coal-fired generation for the first time in 17 years in 2025, due mainly to rising gas and hydro output.
A report, Financing the Offshore Wind Revolution: Risk-Sharing Mechanisms for a Sustainable Energy Future in the Philippines, showed that tariffs for early projects could range from P9.1 to P16.4 per kilowatt-hour (kWh) against the current Meralco average rate of about P11 per kWh.
The paper said that without concessional financing or guarantees from multilateral development banks, development finance institutions, and export credit agencies, tariffs are likely to remain prohibitively high.
Of course, the way members of Congress have waylaid foreign-assisted projects is another factor, since additional costs — particularly from delays in crucial projects — come into play.
Yet the country does not have to go through all the difficulties of complying with an international pact that some of the most progressive nations, which are also the biggest sources of global pollution, do not even honor.
The country’s development interests must prevail over all other considerations.