On 14 June, Nordic Business Council of the Philippines, NBCP, held a Renewable Energy Seminar at the New World Hotel to discuss the current outlook and future prospects of the sector in the country.
NBCP gathered some of the most influential players of the local renewable energy industry for a seminar at the New World Makati Hotel on June 14, 2016. Mr. Petri Haataja, Head of Energy Consulting of Pöyry provided an overview on the sector, followed by Mr. Knud Hedeager, COO of Alternergy; Mr. Leandro Legarda Leviste, Founder of Solar Philippines; Mr. Tor Stokke, Country Director of SN Power Philippines, who discussed recent developments and challenges in the wind, solar, and hydro power sector, respectively. Capping the presentations was Mr. Walter Wassmer, Senior Executive Vice President of BDO Unibank, who gave a primer on BDO’s financing process for RE projects.
Mr. Haataja discussed the role of RE in alleviating some of the power issues of the country. He acknowledged the importance of the Feed-in-Tariff (FIT) system in increasing intermittent generation capacity. The FIT system is a national policy that offers guaranteed payments on a fixed rate per kilowatt-hour (kWh) for emerging RE sources. He noted Visayas’ high reliance on coal and geothermal energy and mentioned Cebu’s heavy dependence on coal. Mr. Haataja also cited the case of Negros, where solar generation capacity has outpaced the region’s peak demand. He pointed out the opportunities in Mindanao, which he expects to be much like Luzon in terms of demand but will not be as reliant on coal-fired power plants.
Mr. Hedeager provided a backdrop on the success of Alternergy’s Pililla Rizal Wind Farm project. Aside from providing clean energy, the 54MW wind farm has evolved into a tourist destination that averages 1,000 tourists a day. He also disclosed that their company intends to put up a US$180 million 72MW wind project under Alternergy Sembrano Wind Corp. The Sembrano project will arch over Pililla up to the towns of Mabitac and Pakil in Laguna. The company currently is waiting for the new FIT incentives scheme to kick in before they start development. Further, Mr. Hedeager expressed Alternergy’s willingness to partner with local investors, confirming that they are in early talks with Lucio Tan’s LT Group. When asked about the FIT, Mr. Hedeager shared that the system has allowed RE projects to phase out diesel power producers, resulting in lower spot market prices for electricity.
Meanwhile, Mr. Leviste gave a spirited presentation on the growing potential of the solar power sector and how RE can solve the power woes of the country. He stressed that the production of solar power has become less expensive than coal thanks to the development of new RE technologies.
Moreover, he highlighted the generation capacity of large-scale solar farms can compete with coal power plants, if distribution utilities conduct competitive bidding for their power supply. Mr. Leviste also noted the growing number of conglomerates shifting to RE. Speaking about the FIT, Mr. Leviste recognized the importance of FIT to jumpstart the industry but he preferred incentivizing the Renewable Portfolio Standards (RPS). RPS is a market driven policy that requires electricity suppliers to source an agreed portion of their energy supply (in on-grid systems) from renewable sources.
Mr. Stokke provided an overview on the current hydropower operations of SN Power. He also shared his views on the country’s cumbersome process of getting a permit and issues on land acquisition and grid connection. Despite these challenges, he still finds the local RE market has become more competitive and the willingness of local banks to finance RE projects. In terms of FIT, Mr. Stokke was clear to communicate his dislike of the scheme.
Delving into the funding side of RE, Mr. Wassmer emphasized on the continued commitment of BDO in the development of renewable energy in the country. He highlighted the bank’s current P33 billion outstanding investments in hydro, wind, solar, geothermal, and biomass projects across the country. However, Mr. Wassmer reminded that the bank is not a subject-matter expert in terms of RE and just takes cue from RE developers. As such, the bank uses profitability or eligibility for the FIT incentives scheme as a measuring stick for funding an RE project. At present, the Bank offers short-, medium-, and long-term funding either through syndicated or bilateral term loan.
Following the presentations, an open forum was held in which the speakers further elaborated on the immense potential of renewable energy in the Philippines, particularly in Visayas and Mindanao. They commended the incoming administration’s pronouncement of increasing the competitiveness of the energy market. In terms of land use, the speakers had different views. Mr. Hedeager stated that their wind turbines do not take up much space and areas in-between the machines can still used. Mr. Leviste, likewise, does not see land use as a long term issue as solar panels may be attached on to structures like building and roofs. Mr. Stokke also shares the view of the other speakers but see typhoons as a major concern for their plants. Mr. Hedeager highlighted the need to improve on the power infrastructure of country, particularly in the Visayan region where lack of interconnectivity is still a big issue.
The renewable energy seminar was done in partnership with BDO Unibank and Pöyry.