A steady energy-green transition for the Philippines

By Angela Kiara S. Brillantes, Special features and content writer

In a country facing serious risks from climate change, the shift to clean and renewable electricity is more important than ever, forcing the energy sector to place greater emphasis on sustainability.

The clean energy transition is gaining momentum, and the Philippines is keeping pace. According to the Bloomberg New Energy Finance (BNEF) Climatescope 2023 report, the Philippines ranks fourth among the top emerging renewable energy markets.

“Over the past two years, the Philippines’ significant progress in transitioning to renewable energy has placed the market in Climatescope’s top five,” the report said.

The Philippines was recognized as one of the countries with initiatives with strong renewable energy targets. One of these initiatives is the country’s second green energy auction, where 3.4 gigawatts (GW) of renewable energy capacity was awarded, with 1.2 GW allocated to ground-based and solar projects in 2024-2025, while 2.2 GW for 2026.

“The Philippines has moved up six places to fourth, behind India, China and Chile, following the country’s significant progress in its renewable energy transition over the past two years,” the Department of Energy (DoE) said in a statement declaration.

Moreover, investments in clean energy have increased by 41% to 1.34 billion euros in 2022. There was also clear growth in offshore wind investments, with a 29% increase in installed capacity and 22% gross energy generation from renewable energy sources observed over the year.

Although we are on the right track, renewable energy adoption is still a work in progress, especially with electricity demand changing over the years and the consistent use of coal as a primary energy source.

Currently, renewable energy generation is at 22%, based on DoE data. In 2022, installed coal capacity will increase by 14% to 12,428 megawatts (MW).

In 2023, fossil fuel will remain the main source of energy in the Philippines; and dependence on coal has gradually increased, from 39% in 2012 to 64% in 2023. Thus, the high dependence on coal-fired electricity generation is hampering the country’s decarbonization efforts.

Nevertheless, the clean energy transition is an important answer to the climate puzzle, and major industry players are stepping up their efforts to accelerate this transition.

Driven by technology and expansion goals

Marissa P. Cerezo, director of the Renewable Energy Management Bureau, noted that the increase in the shift to renewable energy sources has led the sector to diversify its energy sources, increasingly using renewable energy sources, including solar energy, wind energy, hydropower, geothermal energy and biomass, reducing dependence on energy sources. fossil fuels.

“The move to renewable energy not only meets the country’s energy needs; it is also one of the most important solutions in mitigating the effects of climate change. Renewable energy sources produce little to no greenhouse gases during operation, significantly reducing the country’s overall carbon footprint and contributing to global climate goals,” Ms. Cerezo shared. Business in an email.

With continued technological advancements, the industry is seeing a notable shift towards cleaner and greener energy technologies. Of these technologies, green hydrogen and nuclear energy appear to be at the forefront of the green energy transition, playing a crucial role in driving long-term sustainability.

Some of the emerging technologies, such as solar energy, wind turbines and batteries, have become more accessible and affordable, leading to widespread use.

Aboitiz Power Corp. (AboitizPower) shared with Business that wind and solar energy are now widely used for the roofs of homes and businesses. These renewable energy sources are currently more efficient, cost-effective and have higher capacity factors, which means they generate cleaner electricity.

For them, advancing the energy green transition means expanding renewable energy capacity to 4,600 MW by 2030. This expansion includes solar, wind, geothermal, hydroelectric and battery energy systems that will continuously strengthen and will increase their share in the energy supply. the country’s energy generation mix.

Additionally, this expansion will include 1,200 MW of new capacity, while the next phase will include 1,700 MW of new solar and wind energy.

“Our decision is to move forward and develop a balanced approach to our capacity expansion so that baseload, intermediate and peak needs, as well as the regulation of reserve requirements, are met at the lowest possible cost and with less risk to the environment and surrounding communities. said AboitizPower.

It is also seen that natural gas will become the next alternative energy source as coal gradually disappears. Natural gas is less carbon intensive, meaning it emits fewer greenhouse gases and is more flexible, gradually contributing to a more sustainable energy trajectory for the country.

AboitizPower recently acquired a stake in Chromite Gas Holdings, allowing them to invest in two gas-fired power stations, which have a combined capacity of more than 2,500 MW, and a terminal for the import of liquefied natural gas (LNG).

“We welcome the development of natural gas facilities, which emit less carbon and can circulate more quickly to absorb the interruptions associated with more variable renewable energy,” AboitizPoh shared. “With a more diverse energy supply mix that relies less on coal and more on renewable energy with LNG, overall energy generation will become less carbon intensive, contributing to a more sustainable energy trajectory for a developing, energy-hungry country like the Philippines.”

Financing the transition

On the financing front, it may be further recalled that the Bank of the Philippine Islands (BPI) spearheaded the Energy Transition Mechanism (ETM) in 2022, which consisted of an investment of P7.2 billion in renewable technologies and P17 . 4 billion investment to enable early retirement and complete divestment of South Luzon Thermal Energy Corp.’s 246-megawatt coal-fired power plant. (SLTEC). This coal-fired power plant is the first to ever use ETM, meaning the plant will switch to cleaner technology by 2040.

“We are committed to pursuing greener energy sources, while at the same time linking this to reducing energy demand and consumption,” said Jo Ann Eala, vice president at BPI and head of its sustainability office, in a statement . . “We need to educate both companies and households, which are responsible for a significant part of the energy consumed. At the same time, we must support companies in improving the energy efficiency of their operations and help them switch to more efficient equipment and technologies.”

Making the transition seamless

To ensure a seamless transition to clean energy and security, key policy mechanisms and programs were put in place, DoE’s Ms. Cerezo added.

These efforts and initiatives include sustainable portfolio standards, a renewable energy market, a green energy options program with feed-in tariffs, a net metering program, a comprehensive rooftop solar program, and a green energy auction program.

These initiatives are DoE’s way of building and promoting cleaner electricity in the country. Furthermore, it aims to accelerate renewable energy targets of achieving a 35% renewable energy share and a 75% reduction in greenhouse gas emissions by 2030, and a 50% renewable energy share by 2040.

“The DoE is embarking on initiatives that would boost energy sector investments in various technologies and required capabilities in the power generation mix between 2030 and 2050, underscoring its commitment to the global energy transition,” the ministry said in another statement.

Transforming the Philippines into both an energy secure and energy sustainable country significantly requires leveraging opportunities and investments, especially in technology, innovation, and competent and skilled individuals.

The energy green transition, AboitizPower pointed out, requires both the expansion of energy capacity, as well as increasing the amount of renewable energy sources and energy transmission used in the country, which are said to minimize environmental impacts and risks within communities and guarantee energy security.