The shift of state-run National Power Corporation (NPC) to renewable energy (RE) technologies in powering the off-grid areas could yield savings of up to P13.5 billion annually with consumers enjoy cheaper electricity cost.
A study by the Institute for Energy Economics and Financial Analysis (IEEFA) noted that other than the savings that could be generated by NPC on its installation of power generating facilities, the electric cooperatives (ECs) can also whip up savings of about P1.4 billion to P1.7 billion over the next decade.
Sara Jane Ahmed, IEEFA energy finance analyst, said the savings that will be generated by NPC in particular could be realized if it will shift away from diesel-fired plants in the provision of electricity to areas that are on island-mode or those that are not connected to the main power grids.
These off-grid domains are extended with electricity service via the Small Power Utilities Group (SPUG) of NPC; and the rates to end-users in these areas are subsidized via the universal charge for missionary electrification (UCME), a separate line item being passed on in the electric bills of all Filipino consumers.
Hence, if the RE shift will be cheaper, the subsidy cost to SPUG areas will also end up lower. This will subsequently redound to a reduction in pass-on rates to consumers, the study said.
“The isolated and island-grids are dominated by diesel power, resulting in expensive unreliable power despite the fact that diesel-fired power units cost more than new high performance renewable units,” the IEEFA study stipulated.
As an option, Ahmed emphasized that “solar PV (photovoltaic) plus lithium-ion batteries can now reliably deliver power at a significant discount to the price-performance potential of the current diesel power fleet.”
She noted though while renewable energy is now up to 60-percent cheaper than diesel-fired power, the isolated and island-grids are still dominated by diesel power. “Diesel technology deployment is unsustainable from a financial viability and energy security standpoint,” she added.
In Ahmed’s assessment, the NPC’s case for diesel generation “rests on a growth agenda presented on unsupported arguments that diesel is the only way to reach the off-grid market.”
“This is simply not the case,” she said emphasizing that “our study shows that renewables can effectively supply off-grid markets, realizing significant savings for electric cooperatives burdened by a lack of financial reserves.”
In the case of electric cooperatives, the IEEFA indicated that “with less transport costs due to importing diesel, electric cooperatives could see savings from a shift to decentralized, modular renewables ranging from P1.38 billion to P1.7 billion.”
Renewables, according to IEEFA, are solutions that could be “tailor-fitted to local grid characteristics.”
The range of technology deployments for off-grid jurisdictions could include solar and storage, wind, run-of-river hydro and biomass from coconut husks and fronds.