QUICK READ: Renewable energy companies in the Philippines and the government have helped the country get a better rank than Singapore, Malaysia, Indonesia, and Thailand.
By Angelica Y. Yang | BusinessWorld
The Philippines is the second best investment destination for renewable energy (RE) in Southeast Asia with resources that can generate up to 3,000 gigawatts (GW), and a “highly-liberalized” active spot market, according to a report from HSBC Global Research.
In deciding the rankings, the independent research house considered the entry barriers and regulatory environments of six Southeast Asian countries. The two parameters were believed to have effects on RE investments.
HSBC Global Research said the Philippines had a relative score of 2.5, second only to Vietnam which got 2.8, but better than Singapore, Malaysia, Indonesia, and Thailand.
It said the Philippines has a medium range of solar or wind resource availability of up to 3,000 GW, but had a “fragmented market” with local players such as Aboitiz Power, Manila Electric Co., and AC Energy Corp.
Aside from policies that support renewables, the country’s active wholesale electricity spot market is said to be “highly liberalized with partial retail competition.” The spot market is a venue where electricity can be traded as a commodity.
In its report, HSBC Global named the Philippines as one of the three countries that led the first wave of the RE capacity growth in the Association of Southeast Asian Nations (ASEAN) region last year due to its “attractive regulatory environment.”
This time, the next growth wave of renewable energy will be more evenly spread out across the Southeast Asian region, but improved regulations and declining equipment costs are the two major forces that will drive more inclusive development in the region.
“Our analysis shows that governments are either in the process of defining policies or have already stated clear regulatory policies related to renewables to attract further investments,” HSBC Global Research said, highlighting the renewable portfolio standards (RPS) program in the Philippines.
The RPS program requires distribution utilities to get an agreed portion of their supply from eligible RE facilities.
HSBC Global Research also noted the “spectacular” fall in the cost of equipment used in building renewable energy projects. “Solar module prices in 2020 were 89% lower than a decade ago, and are forecast to drop another 27% by 2025. The price of wind turbines in 2020 was down 41% (in) 2010, and is expected to fall another 18% by 2025,” it said.
Renewables in four Southeast Asian countries, including the Philippines, will be the cheapest source of power as levelized costs of energy for solar and onshore wind are projected to decrease by 2025, HSBC Global Research said.
Based on Bloomberg and HSBC estimates, utility scale solar projects have a levelized cost of energy of $62 per megawatt-hour (MWh) in the Philippines and this will go down by 16% to $52 per MWh by 2025. Meanwhile, the cost of onshore wind projects in the country is at $93 per MWh, and the level will decrease by 22% to $72 per MWh.
HSBC Global added that other costs in renewable projects are likely to “marginally come down.”
Green financing may help bring down borrowing costs, while technology advancements in solar and wind farms can help firms trim labor costs and reduce outage periods, it added.
Energy Secretary Alfonso G. Cusi last week invited US firms to invest in the Philippine energy sector, particularly in renewables. During a virtual economic briefing on bilateral relations with the US, he urged American firms to take part in the department’s green energy option program (GEOP) and the green energy auction program (GEAP).
The GEOP allows users consuming at least 100 kilowatts of power to source their supply from retail energy suppliers that generate electricity from renewables, while the GEAP allows qualified RE developers to offer their output to the rest of the power industry.
The Energy Development Corporation (EDC) is a pioneer in generating 100% clean, renewable, and reliable power as an electricity supplier in the Philippines for over 40 years. With power plants all over Visayas and Mindanao, the company is one of the biggest producers of geothermal energy in Asia and is expanding its reach in the international market, allowing it to offer customers affordable energy rates. EDC also strives to provide the best customer service it can to all its clients by having helpful salespeople and easy to understand contracts. Because of all of this, it is poised to become the premier supplier of electricity for the Philippines’ Green Energy Option Program. EDC takes its mission as a renewable energy provider seriously and goes beyond sustainability by investing in programs that enhance the environment and empower its partner communities, thereby fostering regenerative development. The company has also been working toward being carbon-neutral by improving its energy efficiency, as well as implementing various greening projects to ensure that its mission to provide future generations with a better life remains intact.