With the Department of Energy’s (DOE) moratorium on coal-fired power projects, there’s no doubt that the Philippine energy sector will be in for dramatic shifts and existential twists – not just in technology deployments but in the overall goal of greening the power mix.
The emerging story of the country’s energy transformation is not just about bid for cleaner energy future, but it’s also about the Philippines’ grand strategy of resilience – especially so as it is an economy smacked with endless provocation of natural disasters; and that’s on top of the forbidding economic impact of the Covid-19 pandemic.
On the technology sphere of transition, renewable energy (RE) will lead the way. Yet in the core of it all, the country’s offshore wind potential is a frontier yet to get the right push and attention for the warranted investment-dollars to flow.
Pioneering offshore wind: a risk worth taking
RE project developments in the country, if truth be told, is still generally “a game of the big boys” – as corporate giants still dominate the roll of project sponsors.
But in offshore wind, newcomer Triconti Windkraft Group (Triconti), a Filipino-Swiss-German joint venture, is trailblazing targeted installations – as the traditional ‘industry captains’ are still not setting their sights into it. On reflection, that somehow came as a ‘compelling revelation’ to project proponent Triconti.
“To be perfectly candid, it was a surprise for us to find out that we’re ‘trailblazing’ offshore wind development in the country,” Theo C. Sunico, vice president for operations of Triconti, has noted.
“This was in 2019, and to find out from the DOE that none of the large RE developers was even looking into offshore wind, it initially caused us to double-check our initial data and no end of asking ourselves if we were missing something,” he recounted.
Nevertheless, Sunico qualified “that initial doubt was a good thing because it forced us to re-evaluate our data and when the results still validate our initial assumptions, it made us even more convinced that this was a risk worth taking.”
He stressed “as the first offshore wind developer in the country, we realized that Triconti Windkraft has, by default, taken on the responsibility to educate people on the advantages of the technology,” with him emphasizing that “it is challenging, but a responsibility that we are willing and eager to take on.”
The Triconti Windkraft Group is targeting to bring into commercial stream 1,200 megawatts of offshore wind capacity — that it will be developing and harnessing from two key sites in the country – Guimaras Strait in the Visayas; and Aparri Bay in Cagayan Valley in Northern Luzon.
One goalpost the company had leaned on was a World Bank study, which laid down the scale for 178,000 megawatts potential of the Philippines for offshore wind capacity.
Triconti Windkaft is aware of the gigantic challenges heading its way on advancing its targeted projects, but the company clings on to optimism that making ‘big bets’ on new technologies will be well worth it especially if the industry will eventually be steered into these kinds of RE installations – simply because the pathway has already been whittled by a first mover. Offshore wind is a territory the company is still navigating judiciously – and it is pursuing these ventures while also advancing its onshore wind projects.
“On the challenges of development, the cost and scale are very, very different for onshore and offshore,” Sunico explained, emphasizing that “for onshore, development costs average between US$1.0-US$2.0 million; for offshore, these will be around US$30-US$50 million,” he said.
On the technical realm of development, he said the company has already been able “to build an in-house team that is fully capable of developing an onshore wind farm from site identification all the way to the ready-to-build status.”
Conversely for offshore wind, Sunico acknowledged that “this is something new and we will have to partner with a more experienced international offshore developer to ensure our current pipeline projects are developed correctly.”
The Triconti executive added the company is now focusing on near-shore projects, or those that are within 15-kilometer prospects from the coast for the offshore wind installations.
“Due to the travel restrictions because of the Covid-19 quarantine conditions, we’ve had to adjust our timelines, but we believe that we can commission our first offshore wind project by 2025,” Sunico said.
He further narrated that “navigating through the Covid-19 travel restrictions can vary from province-to-province and, in some cases, from area to area. However, we view these challenges to be temporary, albeit, open-ended one, and we are currently working with local partners to ensure least amount of slippage on our work program.”
Permitting is a major concern because there are no specific ‘rulebook approaches’ that can be followed in dealing with various stakeholders, but he indicated that with the passage of the Energy Virtual One-Stop Shop (EVOSS) Act last year, “we’ve found that the government agencies are much more time-conscious when they process your permits than before, for which we are thankful.”
Beyond the physical challenges of technology installations, Sunico similarly cited the market risks that a project developer would have to contend with.
“We believe that the biggest challenge that remains for developers is the off-take market (capacity purchaser of generated electricity).” But what comes as a succor to RE investments are the underpinning policies in the RE sector that the government has been enforcing – including the Renewable Portfolio Standards (RPS) that requires distribution utilities to procure prescribed percentage of their supply portfolio from RE capacities, the Renewable Energy Market, and the Green Energy Option Program (GEOP) that extends ‘power of choice’ to consumers to plump for RE as their energy source.
With the market ‘sweet spots’ being opened up through RE-enshrined policies, Sunico noted that Triconti “looks at a combination of bilateral contracts, green energy rate auctions and GEOP/retail electricity markets for the off-take.”
And through all the complex terrain of project developments, Triconti is confident that offshore wind is a venture that can be won as a challenge for the Philippines.