This early, the Department of Energy (DOE) is keeping consumers up to speed that the country’s transition to renewable energy (RE) will not only be a long journey, but there’s also high probability that it will add up costs into the electric bills of consumers.

“Nobody is going to tell you that the transition is not going to be costly, it will be costly,” Energy Secretary Raphael P.M. Lotilla asserted.

Nevertheless, he qualified that the burden of government leaders as well as investors is to work on a policy structure and investment landscape that will not only scale up the country’s energy security leaning on clean energy technologies, but will likewise bring down the pass-on cost to the ratepayers.

“The expectation is: if we have to introduce renewables or cleaner technologies, then we have to find low-cost financing in order to make that affordable to our people,” the energy chief stressed.

In the short term, however, DOE officials caution that “there will be price to pay’ within the stretch of the transition phase being cast for the Philippine energy sector – or that period when the country will be transforming its energy mix from fossil fuel-dominated regime to one that is anchored on higher integration of renewables.

“We don’t know how fast the transition can unfold. There are a lot of uncertainties beyond our control. But as much as possible, we are going to pursue the basic policy which is diversify our sources of power and rely on domestic or indigenous sources of energy,” Lotilla stated.

He added “those are important elements that we have to put together – because in the long run, it’s going to ensure more affordable power or energy for our people.”

Currently, the tariffs being offered under the Green Energy Auction Program (GEAP) being administered by the DOE range from P4.00 to P6.00 per kilowatt hour (kWh), but that does not cover yet the cost of back-up power as well as targeted energy storage coupling to manage the grid imbalances triggered by intermittent renewables.

“Our GEAP price of P4 to P6 (per kWh), that’s cheap relative to conventional energy, but it does not factor in the back-up power that is needed,” Lotilla expounded.

He further explained that “the battery and energy storage systems and the transmission lines that are also needed – all of these have to be taken into account by us in determining the cost, but it will not distract us from the goal of going for cleaner technologies.”

In the next RE auction planned by the DOE next year, Energy Undersecretary Rowena L. Guevara indicated that energy storage will already be integrated into the RE capacity offers that will be placed on tender.

“We need to stabilize the grid – because if we have to integrate that much variable RE capacities, then there will be strain on the grid,” she emphasized.

It is for that reason, Guevara qualified, that the department is seriously contemplating that the ‘RE plus energy storage’ package will be considered in the bidding covering the unsubscribed capacity in the last auction.

She echoed that with the proposed technology combination, the tendency will be escalation in tariffs for the long-term power supply agreements (PSA) to be awarded from the RE capacity auction.