The Philippines Key Issue in Developing Alternative Energy Resources

In Partial Fulfillment of the Requirements for

Science, Technology, and Society

Submitted to:
HICBAN, CIRLO ALBERT
Instructor, Science, Technology, and Society

Submitted by:
Arandia, Rhea Jaenica A.
Bannister, Niña Grace Delos R.
Canete, Blessie
Dalusong, Charyl Anne M.
Fernandez, Cristal S.
Molina, Monica Jane J.
Pimping, Susan Denise B.

JANUARY 2022
 Abstract

Despite the Philippines having a rich natural resources in any corner of the land’s

country, yet the Philippines lag behind the countries in the world who uses alternative energy

resources instead still relies on fossil fuels and coal to produce energy.

This study focuses on the Key Issues of Developing Alternative Energy Resources in the

Philippines. This study aimed to learn the advantages and opportunity that the country has that

may have once given a chance to establish an alternative energy resources

To conclude this study, Philippines is a rich natural energy resources country. It can

easily produce energy just from natural resources there is in every region of the country, the only

problem that it has, was to make those resources as an official natural energy resources in our

country. Yet that would take time and cost for the country to adjust once replacing the non-

renewable energy sources.

Approach
Introduction
The Philippine’s energy portfolio is quite unique in the region in that domestically, it has

few of its own fossil fuel resources, it’s energy mix already includes a high capacity of renewable

energy and, in terms of pricing, the Philippines has the 2nd highest electricity rates in Asia and the

4th highest in the world. The high cost of electricity is partly attributed to high costs related to

importing fossil fuels. As far as renewable energy sources, the Department of Energy reported that

40.6% of the primary energy mix was contributed by renewable energy sources in 2011, primarily

composed of geothermal at 21.7%, followed by biomass at 12.4%and hydro at 6%. (REEEP, 2013)

Reliance on fossil fuels is detrimental to the energy security of the Philippines. The

Philippines is a net importer of fossil fuels. In 2012, the Philippines imported 20 million tons of

coal. Eight million tons were produced domestically. In 2010, the Philippines imported 54 million

barrels of oil and produced 33,000 barrels. Given this dependence on imported coal and oil, the

Philippines is vulnerable to price fluctuations and supply constraints. (Reynolds, 2021)

Renewable energy implementation is important to the Philippines for several reasons. The

geographic characteristics of the country make it vulnerable to the adverse effects of climate

change. Rising sea levels are a threat because the Philippines is an archipelago with many cities

located in coastal areas. As the coastline recedes due to rising seas, coastal cities become

vulnerable to flooding. Climate change has also been linked to changing weather patterns and

extreme weather events. (Reynolds, 2021)

The electricity sector is fully privatized, with one major utility, Meralco, holding 80% of

the market. The remaining 20% is made up of a few regional players, and 100+ electric

cooperatives. The need for energy solutions and new equipment exists, but larger players make
purely commercial decisions that favor lower cost, and the smaller players often cannot purchase

U.S. solutions long-term. The Government is seeking investors for offshore exploration but is

struggling as current foreign investors face contract sanctity and back tax issues, making new

investors extremely hesitant to consider the market. This shows in the lack of offshore exploration

in comparison to other ASEAN neighbors. (ITA, 2020)

The Philippine Government has stated that it envisions the Philippines being energy self-

sufficient, utilizing a combination of fossil fuels and renewable energy as solutions. About 43 GW

of additional capacity will be required by 2040, and the country is clearly behind schedule in

developing solutions. The current energy mix is composed of coal (47%), natural gas (22%),

renewable energy (hydro, geothermal, wind, solar) (24%), and oil-based (6.2%) with current

energy capacity at 23GW. While the country indicated interest in clean energy, this clearly will

not come at the expense of development, and no penalties or incentives are in place for utilizing

different types of energy sources. The current grid also cannot accommodate any additional input.

(ITA,2020)

The Government has put out a call for applications for entities to compete to build the

nation`s first integrated LNG import terminal with capacity of 5 MTPA. The private sector entities

managing the terminal will also need to procure gas. Power Generation: Firms are in different

stages of power plant rehabilitation, upgrading, and/or regular maintenance work. This presents a

range of opportunities for supplying various types of equipment and services. (ITA,2020)

Solutions are needed for the main grid and new projects, such as $2 billion Visayas-

Mindanao Interconnection Project. Smaller utilities will need to enhance their capabilities. The

need for electricity and solutions outside the main islands is critical, but often not commercially
profitable. USAID funded projects allow for opportunities in consulting and pilot projects.

(ITA,2020)

Question Problem

• What would happen if Philippines developed to Alternative Energy Resources?

• What is the Philippines main issue on developing Alternative Energy Resources?

• Is there a significant solution in the issue that the Philippines is facing about Alternative

Energy Resources?

• What are the factors in developing the Philippines into the use of Alternative Energy

Resources?

On issues concerning energy production, the Philippines, like other countries, has

recognized the impact of high reliance on fossil fuels and price volatility, as well as the

importance of balancing sustainable economic growth with the protection of public health,

natural ecosystems, and the environment. While laws and policies on the implementation of

renewable energy technologies are being implemented around the world due to the

advantages/benefits, there are still issues regarding the promotion of renewable resources as a

source of energy.

Renewable energy sources (wind, solar, hydro, geothermal, ocean, biomass, and biofuel)

have the inherent quality of not running out (replenishable) and having a low environmental

impact (National Association of Regulatory Utility Commissioners (NARUC), 2011).

Conventional energy sources, on the other hand (e.g., coal, fossil fuel), can quickly deplete

because natural replenishment/replacement is slow, and their carbon and greenhouse emission

levels have been criticized. However, renewable energy sources can be variable or intermittent,
depending on the weather (e.g., rain, wind, and sunlight), whereas conventional energy sources

can provide baseload power, particularly for large industries/demand.

While macroeconomic conditions are favorable, investors may face a number of

challenges when developing renewable energy projects in the Philippines, such as cost, political

pressures, government policies, age-old infrastructure, and a lack of a proper battery storage

system.

Costs

The cost is a significant factor influencing its adoption. The high initial cost of

installation is one of the roadblocks to its development.

Solar and wind energy are the most affordable of all energy sources. The upfront

installation costs of a solar power system and a gas-fired plant, on the other hand, are vastly

different. The wide margin in installation costs is undeniably important. Because of the high

upfront installation costs, investors and lenders consider renewables to be high risk, whereas they

consider fossil fuel plants to be more acceptable due to their low installation costs.

Government Policies

Permits

Investors frequently discover a mismatch between policy and reality, particularly during

the early development and permitting stages. Permitting procedures for renewable energy

projects are complex and time-consuming, according to a common complaint. Approvals are

needed from a slew of government agencies, each with its own set of deadlines and milestones.

Permits are required from all levels of government (i.e., barangay, municipal, provincial,
regional, and departmental authorities), which can lead to variations in timing and application

requirements and make the process appear to be repetitive.

Given this, investors may want to reconsider their internal and external staffing

arrangements to ensure they have enough manpower to deal with multiple permit applications.

Foreign Ownership

While thermal power projects like coal or gas aren't subject to foreign ownership

restrictions, renewable projects like solar and wind are because they use a national resource.

In the Philippines, foreign ownership of a corporation developing a renewable energy

project is restricted to 40%. Foreign ownership of land is additionally subject to similar

restrictions. Foreign investors can resolve this issue by implementing appropriate structuring

arrangements with local partners; however, they have to be mindful of compliance with the

country's anti-dummy laws relevant to foreign holdings that concentrate on artificial ownership.

The absence of policies, subsidies, incentives, and regulations encouraging the use of

renewable energy technologies impedes their widespread adoption. To attract investors, the

renewable energy market requires clear policies and legal procedures. To put it another way, the

government must develop and implement policies to support the renewable energy market.

Lack of Infrastructure

When lifespan costs are considered, wind and solar energy can be better investments. The

lack of infrastructure is a barrier to the development of renewable energy. The current

infrastructure is primarily designed for fossil fuel and nuclear power plants.
 The current energy infrastructure requires immediate reform because it is incapable of

handling large amounts of renewable energy. Most importantly, some of its most important

sources have no infrastructure at all.

The primary issue with the power grid is its age. The majority of electric transmission

and distribution lines were built in the 1950s and 1960s. It has outlived its 50-year lifespan. As a

result, they are unable to meet the demands of the hour and the severe climatic changes.

Choosing the size of the solar system is a difficult task. Energy generation will be

difficult to build if the system is too small. If the solar energy system is too large, a large energy

storage system is required. The energy generated will be wasted unless a high-capacity storage

system is installed.

Power Storage

Most importantly, another disadvantage is the lack of affordable power storage.

Renewable energy sources produce the majority of their energy at specific times of the day. Its

electricity generation is not in sync with peak demand hours. The intermittent nature of sunlight

and wind cannot provide an on-demand power source 24 hours a day, seven days a week. Wind

and solar energy are both unpredictable. Volatility exists in both generation and loads.

The production of energy from the combustion of fossil fuels is more consistent. In

contrast, intermittent power generation from renewable energy sources necessitates the use of an

efficient battery storage system. A battery storage system aids in the storage of excess energy for

later use. It can aid in grid instability, preventing blackouts. Technological advancement has

increased the storage system's longevity and battery capacity. Its high cost prevents it from being
widely installed. Battery prices must fall in order to make solar energy storage more cost-

effective.

Assumptions

As the developing Philippines into an Alternative Energy Resources, in isolated rural

areas developing the Alternative Energy Resources in Philippines and invests in solar, wind, and

geothermal energy resources its dependence on oil and natural gas, it will be reducing.

Renewable energy resources such as the use of kerosene lamps, together with the Alternative

Energy Resources such a wood and with the expense of fossil fuels energy systems and grid

electricity which may be limited. Many developing countries have a manpower necessary as well

as communities, who will be stimulate by the employment opportunities of a power system.

The Philippines has a renewable energy implementation for several reasons as an

essential part of the country’s low emission development strategy and inscription challenges of

energy sustainability, security, and equity. In 2013 Philippines renewable energy provided

26.44% of the total electricity in the Philippines and 19,903 gigawatt-hours of electrical energy

out of a total demand of 75, 266 gigawatt-hours, the Philippines has been generating energy from

renewable resources for a long while now and it has only been the recent history that more of the

Filipino people are recognizing the benefits of renewable energies as an Alternative Energy

Resources.

The Philippines has some natural advantages for the development of renewables. Like

Iceland, the Philippines is in a geologically active part of the world and they have developed

geothermal energy since the late 1970s. The rivers and mountains are perfect for hydropower,
and the country is also a feasible place for solar and wind generation. Most importantly, there is

a strong focus on renewables from decision-makers.

The Philippines offers fiscal and non-fiscal incentives to promote renewables, such as

feed-in tariffs during early days and net-metering, most recently a mandatory requirement for

producers to carry a minimum share of renewables and the option for customers to purchase

renewable energy. (Cord, 2019)

The renewable energy potential of the Philippines is relatively high and could contribute

to the supply of modern reliable energy services and improved overall energy security. The

government's energy reform agenda highlights the importance of access to a more reliable energy

supply, using indigenous energy resources while minimizing imported fossil fuels in an optimal

and cost-effective way. The government's energy reform agenda focuses on (1) ensuring energy

security, (2) achieving optimal energy pricing, (3) diversifying sources of fuel, and (4)

developing a sustainable energy system.

This can provide important insights into the implications of prospective technologies that

can be pursued by the Philippine government to improve energy security and develop a low-

carbon society in a cost-efficient and effective way. Energy planning using a comprehensive

modeling tool helps national governments anticipate and respond to the rapid changes occurring

in the energy sector, including changes in technology learning curves in lowering costs for clean

energy technologies and introduction of innovative technologies. However, comprehensive

energy assessment, designed to support long-term energy policy development, is currently

lacking in the Philippines.

Conclusion

With the country’s heavy reliance in fossil fuel and coal for the energy resources of the

Philippines, despite having a natural resources advantages compare to other countries.

Nevertheless, a sudden switch of the energy source to a renewable energy would take time and

cost. Time, to understand and developed the renewable energy, to its extend that would be able

to use it effectively. Cost, just like what have mentioned developing alternative energy resources

takes time which would have a cost just from the development. Including the infrastructure that

is used for Fossil Fuel needs to be renovated or completely changed to be able to use it for

renewable energy source or power storage.

The Researchers study would only focus on the key issues that most of the developers of the

renewable energy resources faces to be able to implement this change on the country’s energy

sources, leading to a much eco-friendly energy use.

References:

REEEP (2014) Retrieved from: https://www.reeep.org/republic-philippines-2014

Reynold (2021) The Philippines’ 2030 Clean Energy Target Is Still Within Reach

Retrieved from: https://ieefa.org/wp-content/uploads/2021/06/The-Philippines-2030-Clean-

Energy-Target-Is-Still-Within-Reach_June-2021.pdf

ITA (2020) PHILIPPINES ENERGY MARKET

Retrieved from: https://www.trade.gov/market-intelligence/philippines-energy-market

Farley & Williams (2018) Key Issues developing renewable energy Projects

Retrieved from:
https://www.wfw.com/wp-content/uploads/2018/08/WFWBriefing-Renewable-energy-
Philippines.pdf

Regen Power (2021) What are the problems faced by renewable energy?

Retrieved from:
https://regenpower.com/articles/what-are-the-problems-faced-by-renewable-energy/

ITA (2021) Energy Resource Guide - Philippines - Renewable Energy

Retrieved from: https://www.trade.gov/market-intelligence/philippines-energy-market

Mondal & Rosegrant (2018) The Philippines energy future and low-carbon development

strategies

Retrieved from: https://www.sciencedirect.com/science/article/pii/S0360544218300458