Why renewable energy has gained more support from power generators

By Ashley Erika O. Jose, Reporter

TWO recent events — the pandemic and the Russia-Ukraine war — have forced the energy sector to look at renewables not just as a clean power source but as an indigenous resource less susceptible to logistical disruptions.

For decades, conventional energy sources such as coal and natural gas have dominated the country’s energy mix. But after the two disruptive events, the government had to reshape its strategy for the country’s energy security.

The Philippines’ energy sector is now looking at renewable energy (RE) and new green technologies not just for power supply sufficiency but also to accelerate the country’s target of a just energy transformation.

“While the pandemic brought about a drop in demand for power, the Russia-Ukraine conflict, on the other hand, reminded us of the volatility of the commodities market that underpins our current energy system,” said Joseph Lacson, chief investment officer of Aboitiz Power Corp. (AboitizPower).

“The spike in global prices on coal, as one example, compelled AboitizPower to seek means to run our plants at even greater efficiency so that we could continue delivering on our mandate of a secure, affordable energy supply,” he added.

The listed energy company of the Aboitiz group has set a goal of 50:50 renewable energy and thermal capacities by 2030. It has set a target of building an additional 3,700 megawatts (MW) of renewable energy that will grow its capacities to 4,600 MW by 2030.

“AboitizPower is the largest, diversified RE platform in the Philippines and we have ambitious plans to invest even more in RE in the coming years. New technologies such as offshore wind, floating storage, battery systems, provide new means in which to achieve those activities but they come with corresponding risks and unknowns,” Mr. Lacson said. 

To date, AboitizPower has around 3,962.25 MW of attributable net sellable capacity. The company placed its renewable attributable net sellable capacity at 928.42 MW.

INDIGENOUS RESOURCES
The country’s energy sector is seen to have abundant potential in the renewable energy field considering the vast untapped indigenous resources.

As of end-2022, renewable energy accounted for 22.13% of the country’s power mix, with coal still dominating the power generation with a 59.57% share.

Since the pandemic, the government has set a target to increase the share of renewables to 35% by 2030 and 50% by 2040, which forces companies to rethink their strategies.   

The strategy includes looking for energy sources and technologies to complement the fuel powering their plants. Those with ambitious RE targets are seeing the need to include battery energy storage systems.

“We have to ensure that renewable energy is complemented by energy storage systems as well as other sources of power and technology,” Energy Secretary Raphael P.M. Lotilla said during the BusinessWorld Insights forum on July 26 at the Shangri-La hotel in Bonifacio Global City.

Mr. Lotilla said the government is placing renewable energy as the key to attaining security, sustainability, and affordability of electricity prices.

For clean energy provider First Gen Corp., other technologies are needed to support the intermittency of renewable energy.

“Their variable and intermittent nature though necessitates that we match them with more grid capacity and storage to account for the fact that they’re not there when night falls or on cloudy and windless days,” Federico R. Lopez, chief executive officer of First Gen, said.

First Gen is aiming for 13,000 MW by 2030, of which about 9,000 MW will be the share of renewables.

He said renewable energy will not only help deliver the country’s energy requirements but will also accelerate the country’s sustainability goals by helping reduce greenhouse gas emissions.

First Gen, through its subsidiary FGEN LNG Corp. is one of the seven proponents of liquefied natural gas (LNG) terminals in the Philippines.

LNG, despite the volatility of prices in the market, is being put forward as a key to addressing the country’s energy needs due to the expected depletion of the Malampaya gas field.

“Our efforts remain focused largely on helping to reduce the carbon intensity of the electricity grid and then ultimately to decarbonize it.  We’re making it our mission to shepherd the energy transition to Net Zero,”  Mr. Lopez said.

The Malampaya gas field is the Philippines’ only indigenous source of natural gas. Its supply is expected to decrease next year. Currently, Malampaya gas is fully contracted to First Gen’s natural gas power plants with a combined capacity of 2,011 MW or 20% of Luzon’s energy requirements. 

Aside from LNG and renewable energy, First Gen is also looking at other emerging technologies that can also offer baseload energy supply.

“Of course, over time, we must look toward repowering our natural gas facilities with green fuels like hydrogen as these become more feasible, or they can be decommissioned outright before 2050,” Mr. Lopez said.

“As such, there is a need for a low carbon emission fuel like natural gas to act as the bridge fuel that’s technically more suited for complementing the variable nature of renewable energy,” he said, adding that the company will also focus on setting a net-zero emissions target.

AboitizPower’s Mr. Lacson said the company acknowledges that RE needed to be complemented by other technologies and traditional sources of power.

“AboitizPower’s overall targets remain the same. To deliver energy security, affordability and reliability in a sustainable manner, we aim to expand and have a 50-50 mix in our generation portfolio between thermal and renewable energy in the next 10 years,” he added. 

Meanwhile, Manila Electric Co. (Meralco) said that it is looking at “long-term” solutions in reshaping the company’s strategy from the impacts of the pandemic.

Manuel V. Pangilinan, the company’s chief executive officer and chairman, said the power distributor is eyeing nuclear power and gas to meet the country’s energy demands.

He said that while the company is also rolling out its plan to venture into other emerging green technologies, Meralco is setting its plan on nuclear power and conventional sources like gas because it can provide the country’s needed supply.