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PH Renewable Energy, the Energy Trilemma and Sustainable Development
Julius M. Lo+lla, Esq., LL.M.
2014‑2024 as the “Decade of Sustainable Energy for All” by the UN • 1.2 billion people worldwide lack access to electricity • 2.8 billion people do not have clean and safe cooking facili+es • more than 95% of people in energy poverty either in sub-‐Saharan African or developing Asia, and around 80% are in rural areas (according to the Interna+onal Energy Agency)
• More than 700 million people in the Asia and the Pacific have no access to electricity and almost 2 billion people burn wood and crop waste to cook and to heat their homes (according to ADB)
Goal 7 of the sustainable development goals of the United Nations • aims to ensure “access to affordable, reliable, modern and sustainable energy for all”
• increase substan+ally the share of renewable energy in the global energy mix
• the specific targets of Goal 7 by year 2030 is to, (a) ensure universal access to modern energy services, (b) double the rate of improvement in energy efficiency, and (c) double the share of renewable energy in the global energy mix
RE Global Report in 2015
• the global investment in new renewable power capacity, at USD 265.8 billion
• more than double the USD 130 billion allocated to new coal-‐ and natural gas-‐fired power genera+on capacity
• nearly all countries worldwide now have renewable energy support policies in place and as of year-‐end
• renewable energy policies could be found in 146 countries
PH RE Law of 2008
• to promote and accelerate the explora+on and development of renewable energy resources -‐ biomass, solar, wind, hydro, geothermal and ocean energy sources, including hybrid systems
• to achieve energy self-‐reliance, through the adop+on of sustainable energy development strategies to reduce the country's dependence on fossil fuels and
• to minimize the country's exposure to price fluctua+ons in the interna+onal markets
• to promote the efficient and cost-‐effec+ve commercial applica+on by providing fiscal and non-‐fiscal incen+ves
RE Law Fiscal Regime
• government share on exis+ng and new RE development projects is equal to 1% of the gross income resul+ng from the sale renewable energy sources
• 1.5% of gross income from the sale of indigenous geothermal resources
• Host Communi+es or local government units (LGUs) are en+tled to 80% of the share from royalty and/or government share
-‐ to be used directly to subsidize the electricity consump+on of end users in the RE host communi+es/LGUs
Fiscal Incentives for RE Developers • (a) income tax holiday for 7 years, • (b) duty-‐free importa+on of RE machinery, equipment and materials • (c) special realty tax rates on equipment and machinery not exceeding 1.5% of their original cost less accumulated normal deprecia+on or net book value
• (d) net opera+ng loss during the first 3 years from the start of commercial opera+ons and can be carried over as deduc+on from gross income for the next 7 consecu+ve taxable years
• (e) corporate tax rate of 10% on its net taxable income ader the tax holidays
• (f) accelerated deprecia+on of plant, machinery and equipment may be applied if the project fails to receive an Income tax holiday before full opera+on
Fiscal Incentives – contd.
• (g) 0% Value Added Tax Rate on the sale of fuel or power generated and zero-‐rated VAT on purchases of local supply of goods, proper+es and services related to RE development
• (h) tax exemp+on from carbon credits • (i) cash incen+ve of renewable energy developers for missionary electrifica+on
• (j) tax credit on domes+c capital equipment and services • (k) exemp+on from universal charge • (l) and op+on to pay transmission and wheeling charges of on a per kilowag-‐hour basis.
Non-fiscal Incentives
• employment of foreign na+onals • simplifica+on of customs procedures • importa+on of consigned equipment • privilege to operate a bonded manufacturing/trading warehouse
RE Mechanisms
• Feed In Tariff • Net Metering • Renewable Porjolio Standards • Green Energy Op+on
2015 Energy Report of the DOE • 2015 total installed capacity of power plants in is 18,675 MW and out which is a dependable capacity of 16,432 MW.
• Growth of by 4.6% from 17,944 MW in 2014 to 18,675 MW in 2015, equivalent to 821 MW increase
• Coal fired power plants cons+tute the largest share in the installed and dependable capacity in 2015 at 32% and 34% in 2014.
• Among renewable energy, hydro sources’ share remained the highest at 19%, majority of which comes from the Mindanao grid.
• Variable Renewable Energy (VRE) such as wind and solar grew remarkably by 50.9% (144 MW)
• Increase and 616.0% (142 MW) increase, respec+vely from 2014 to 2015. • Electricity sales and consump+on increased remarkably by 6.7% from 77,261 GWh in 2014 to 82,413 GWh in 2015.19
2015
Coal, 31.78%
Oil Based, 19.24%
Natural Gas,
15.25%
Renewables, 33.73%
Coal Oil Based Natural Gas Renewables
Coal, 31.82%
Oil Based, 19.37%
Natural Gas,
15.95%
Renewables, 32.86%
Coal Oil Based Natural Gas Renewables
2014
PH Energy Mix
2015 PH Energy Mix
Coal, 31.78%
Oil Based, 19.24%
Natural Gas,
15.25%
Renewables, 33.73%
Coal Oil Based Natural Gas Renewables
2015 Renewables (capacity in MW)
1917
2600
427
220 165
0
500
1000
1500
2000
2500
3000
Geothermal Hydro Wind Biomass Solar
New RE Projects Operated in 2015 • Total 265 MW in the second half of 2015 • 54 MW Alternergy Wind Farm in Pililia, Rizal • 20 MW Isabela Biomass Energy Corpora+on (IBEC) Bagasse-‐Fired Power Plant, • 13 MW Bataan 2020 Rice Husk-‐Fired Power Plant. • Solar photovoltaic (PV) farms which have been opera+onal such as the 10 MW Phase 1 and 13.1 MW Phase 2 of Raslag Corpora+on Solar Farm in Pampanga
• 41.3 MW Majes+c Solar Roodop in Cavite • 4 MW Burgos Solar Farm in Ilocos Norte • 1.5 MW roodop-‐installed solar • panels of Solar Philippines which is located at SM North EDSA
5261 5273 5283 5308
5439 5391
5522 5542
5886
6186
5000
5250
5500
5750
6000
6250
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
InternaOonal Renewable Energy Agency (IRENA) StaOsOcs 2016 PH RE Installed Capacity(in MW)
The Energy Reform Agenda and the Future Outlook for Renewable Energy • Philippine Energy Plan 2012-‐2030 • The Na+onal Renewable Energy Program (NREP) • Framework Strategy on Climate Change • Na+onal Climate Change Ac+on Plan 2011-‐2028
Philippine Energy Plan 2012-2030 Projected potential RE sources in MW
Sector 2012-‐2015 2016-‐2020 2021-‐2030 Total
Geothermal 50 940 175 1,165
Hydro 310 3,125 1,892 5,326
Biomass 81 -‐ -‐ 81
Wind 678 865 432 1,975
solar 269 5 10 284
Ocean -‐ 36 35 71
Total 1,388 4,970 2,544 8,902
The National Renewable Energy Program (NREP) • The target of the NREP is to triple the 2010 installed capacity by 2030 • From 5,369MW in 2010 to 15,236.3 MW by 2030 • Target is 35% RE of the Energy Mix by 2030 • Target Capacity by 2015 is 2,157MW • From 5,369 MW in 2010 to only 6,329 MW in 2015 • Actual increase is 960MW (not half of the 2,157 MW target)
Framework Strategy on Climate Change 2010-2022 and The National Climate Change Action Plan 2011-2028
• Result of the Climate Change Act of 2009 • Creates for opportuni+es for the country to capitalize on its emission mi+ga+on poten+al for cleaner, indigenous and op+mized energy
• Leveraging on its policies like the RE Law • Expanding the RE agenda and develop and implement a renewable energy roadmap
• Roadmap includes adop+on of off-‐grid, decentralized, community-‐based, renewable energy system to generate affordable electricity
• Intended Na+onally Determined Contribu+on (INDC) submiged in COP21 is to undertake GHG (CO2e) emissions reduc+on of about 70% by 2030
The Energy Trilemma
• Energy Security • Environment Sustainability • Energy Equity
Energy Sustainability as the end result of the three tensions driving energy law and policy
Supply Security
Equity Environmental Sustainability
Law & Policy
World Energy Council’s Energy Trilemma
• 2015 Energy Trilemma Index of the WEC measures the overall performance on how well a country manages the trade-‐offs between the three compe+ng dimensions – Energy Security, Environment Sustainability, Energy Equity
• Philippines ranked 50 overall among 130 countries • Ranked 52 on Energy Security • Ranked 35 on Environmental Sustainability • Ranked 92 on Energy Equity
Energy Security
• includes the geo-‐poli+cs of energy • the key and primary objec+ve of most governments in ensuring that energy supply is adequate to present and future economic demands
• includes the goal of againing energy independence of a country, without relying to imported sources
• RE as an infinite source of energy, despite the issue on intermigence • development of new RE technology for energy supply
Environmental Sustainability
• looming threat of climate change • cupng down of emissions by limi+ng the use of fossil fuels and shiding to cleaner alterna+ves such as RE
• eradica+on of health hazards from fossil fuel technology
Energy Equity
• accessibility to energy • affordability of price • eradica+on of energy poverty
Energy Equity Challenges in the Philippines • increase in terms of access in the past couple of decades according to World Bank data
• 65.4% of the Philippine popula+on has access to energy in 1990 and such tremendously increased to 87.5% in 2012 according to WB
• this translates to about 13 Million people in the Philippines that have no access to energy
• 13 million people s+ll use firewood or gas lamps for their electricity and charcoal and firewood for their cooking
• indicates the existence of energy poverty
Energy Equity Challenges in the Philippines • only country in South-‐East Asia that does not subsidize electricity companies
• genera+ng capacity per capita is also rela+vely low – roughly 5 +mes lower than Malaysia and Thailand
• electricity prices at cost of 18.2 USc/kWh for industrial supply in 2012 are some of the highest in Asia
• the FIT system is viewed as causing addi+onal increase in electricity prices despite the decreasing cost of RE technologies
• net-‐metering policy as limi+ng and not encouraging
Energy Justice • a rela+vely new concept in the study of energy law and policy • an energy just world is one that equitably shares both the benefits and burdens involved in the produc+on and consump+on of energy services, as well as one that is fair in how it treats its people and communi+es in energy decision making – both in the substan+ve outcomes and decisional procedures
• Involves the right of all to access energy services, regardless whether they are ci+zens of more or less greatly developed economies
• ensures that energy permipng does not infringe on basic civil liber+es and that communi+es are meaningfully informed and represented in energy decisions.
Energy Justice
• a global energy system that fairly disseminates both the benefits and costs of energy services, and one that has representa+ve and impar+al decision-‐making
• as a principle for improving Energy Equity to balance the Energy Trilemma
• can be achieved through community-‐based RE systems as community par+cipa+on in decision making is important
Small Scale RE
• small, decentralized energy supply systems that are established through mul+-‐stakeholder efforts with the major par+cipa+on of organized communi+es in projects development
• fast growing part of the energy system even for developed countries like Germany, Denmark and the United Kingdom
• requires government support for legisla+on, policies and programs • programs can start on a few principles for small scale RE through the integra+on of current situa+on and community cultures, such as (1) educa+on on clean energy and conserva+on, (2) promo+on of social enterprise and coopera+ve programs and (3) social pricing and subsidy
Supply Security
Equity Environmental Sustainability
Law & Policy
Energy Sustainability
• End result of a balanced policy on energy security, environment sustainability, and energy equity
• Law and policy reforms are the key factors in balancing the three tensions of the energy trilemma
• Energy jus+ce to be included in energy governance and policy • Best achieved through the development and use of RE resources
RE and Energy Sustainability
• RE technology can be improved to ensure security of global supply • RE as most environment friendly source of energy that can combat climate change
• Energy equity issues may s+ll be improved through reforms in laws and policies
• Government support needed for community based RE systems to encourage people par+cipa+on
End
Thank You
