Philippines fails to maximize full potential in renewable energy

Find out the reason behind why Filipinos pay as much as $0.17 per kilowatt-hour for electricity.

Philippines and Singapore are the only two countries in the region that have no energy subsidies which are in economic principle effective in improving energy efficiency as it avoids market distortions, says ReEx Capital Asia associate Shiva Susarla during the Singapore International Energy Week.

Unfortunately, it yielded contrasting outcome as while Singapore’s lack of energy subsidies resulted in more efficient and low cost energy, it did not in the Philippines.

Currently, Philippines according to Mr. Susarla is one of the highest in the region at $0.17/kwh and this is partly because of the Philippines’ lack of financing and policy constraints on tapping renewable energy.

“Financing of renewable energy is mainly through equity investments by large companies. Only 8-12% comes from the internal revenue. Loans for financing clean investments are usually 10-12 years tenor and are typically difficult to obtain,” he said adding that it lacks sufficient financing from the private sector.

In terms of policies, Mr. Susarla noted that legislations like indigenous People’s Right Act prevents foreigners from acquiring land, and thereby resulted in lack of investments. The country’s policy according to him is also characterized with uncertainty and delays.

“The country has announced feed-in-tariff mechanism sometime ago but there is nothing happening,” he said.
Philippines, according to the expert, remain heavily dependent on fossil fuel even as it has huge potential in renewable energy.

“Fossil fuels account for 67% share in electricity consumption, 21% comes from hydro and 12% geothermal,” Mr. Susarla said.

“The geothermal sector is stagnant among others as only 43% of its potential geothermal sources are currently tapped,” he added.

Wind energy meanwhile according to him has massive potential but nothing is happening because of policy constraints.Biomass, on the other hand, is the only renewable energy that is really growing fast.