Rx for Global Competitiveness – How Solar Power Can Curb Normin’s Rising Power Rates

Sep 14, 2018

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Solar power may now appear to be more expensive per kilowatt hour. However, when used properly, it is much cheaper than electricity from coal fired power plants and can be used to reduce rising electricity rates in Northern Mindanao.

 

The Mindanao Coalition of Power Consumers (MCPC) and their allies have been advocating the construction of solar PV plants in Mindanao since 2011 but so far the power industry has failed to exploit this resource to curb the rising costs of electricity in the island.

Kirahon Two Energy Corp. 10MW solar Farm in VIllanueva, Misamis Oriental (courtesy of CDO.Dev.Com)

 

“DOE and MinDA could not reconcile how solar PV could reduce the costs of power supply when the price of coal power when Almendras was DOE secretary (at P4.00/kWh) was relatively lower than the price of solar power (P9.00/kWh),” said David A.Tauli, president and spokesman of the MCPC advocacy group.

 

“What these government officials could not understand is that the price of P4.00/ kWh for coal is true only when it is used to supply base load requirements, that is operated 24/7,” Tauli explained.

 

“When coal is used to supply intermediate (from 7:00 a.m. to 5:00 p.m.) and peaking loads (from 5:00 p.m. to 9 p.m. the price is two to three time greater than when used as base load power supply (i.e., P10-20 pesos per kWh, and not P4),” he added.  

 

“That reality has now resulted in the present high rates of power supply in Mindanao.”

 

Instead of using electricity from coal fired power plants for intermediate and peaking loads, MCPC is advocating that rural electric cooperatives and privately owned power utilities use solar power to reduce the average cost of electricity across Mindanao.

 

“Hybrid solar PV power plants will reduce the costs of electricity in all grids in the Philippines, particularly in Mindanao where the coal plants are now being used to supply intermediate and peaking load requirements,” Tauli noted.

 

Since there is now an excess of base load power plants (the large hydro power plants and the coal plants) in Mindanao, the privately owned generation companies (or Gencos) are now supplying intermediate and peak power requirements for DUs from their surplus coal power, Tauli said.

 

Because the P14.5-Billion Minergy coal fired power plant supplies electricity exclusively to CEPALCO, its consumers are burdened with the highest generation component among DUs in Region X (ELEX photo)

 

As a result, , the generation components of rates of power supply in Mindanao have soared from an average of P3.00/ kWh in 2013, to an average of P7.00/ kWh or more at present.

 

Through “Hybridization”, the average cost of power in Mindanao would drop drastically since solar PV costs at most P8.00/kWh from solar farms in remote rural areas in Mindanao, compared to P10.00 for the coal-fired power when used for intermediate loads, and P20.00 when the latter is used for peaking loads.

 

“The reduction in the rates of power supply from the use of solar PV power plants will be demonstrated when the private sector will be able to complete the construction of solar PV power plants that will supply electric cooperatives through power purchase contracts,” Tauli said.

 

“We expect start construction of two initial hybrid renewable energy power plants (in Lanao del Sur and South Cotabato) by the first half of 2019. That will prove to the DOE and to MinDA that it is true what is being stated in the DOE news release about hybrid solar PV power plants reducing the price of power supply,” he added.

 

In fact, the government through the National Power Corporation (NAPOCOR) has already jumped aboard the hybridization bandwagon following one of the major findings of a study conducted by experts of the European Union (EU)-funded – Access to Sustainable Energy Programme (ASEP).

 

DOE defines “Hybridization” as the combination of properly maintained generator sets (gensets), with renewable energy sources, which is estimated to result in some P2.25 billion (B) annual savings for NAPOCOR annually.

 

ASEP is a joint undertaking of the European Union and the Philippine Department of Energy (DOE). Through ASEP, the EU has allocated a grant of over P3-B to assist the Philippine Government in meeting its rural electrification targets through renewable energy (RE) and energy efficiency.

 

“Our study shows that there will be an estimated P1/kWh cost reduction if NAPOCOR adopts a solar hybridization of its large-scale power plants, which will result in at least P500M savings,” said ASEP Strategic Advisor Dr. Christoph Menke as he addressed energy stakeholders in Powertrends 2018.

 

Menke said another study shows that the hybridization of NAPOCOR’S mini-grids and ensuring diesel gensets are running at optimal levels would result in a further cost reduction of around P4.5/kWh, or some P2.25 billion annual savings.

 

Dr. Menke says these cost reductions would help bring down the electricity bills of consumers.

 

A hybrid mini-grid combines at least two different kinds of technologies for power generation and distributes the electricity to several consumers through an independent grid. The mini-grid is supplied by a mix of RE sources and a backup genset which is powered by diesel fuel.

 

In his presentation, Dr. Menke said the study shows that the huge savings will be realized if the RE share in power generation is at least 23% of the energy mix. On top of this, hybridization will result in better reliability and improved service hours of power plants.

 

“A hybrid mini-grid will increase the resilience and efficiency of our power generation assets, reduce fuel consumptions and dependence on diesel, which in turn reduce emissions that are harmful to the environment,” Dr. Menke stressed.

 

Furthermore, the study also found that the hybridization of the fuel source of power plants would result in the reduction of DOE’s Universal Charge on Missionary Electrification (UCME) subsidies and attract the private sector to invest in hybridized power generation. (with a report from DOE)

 

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