From sun to socket: The Philippines solar story

Thanks to an abundance of sunshine, affordable technology and investor interest, prospects for the solar energy industry in the Philippines have never been brighter. Swiss power and automation giant ABB is one company set on helping the nation embrace this opportunity.

The global solar industry is booming: A new report in January this year by clean energy consulting firm Mercom Capital noted that total private sector investment in the sector hit US$25.3 billion last year, maintaining a similar level of investment seen in 2014, when it hit US$26.5 billion.

In Asia, nowhere is this growth story more evident than in the Philippines, where a combination of abundant sunshine, favourable government policies and private money is fuelling a burgeoning solar industry.

The archipelago nation, whose sources of energy have traditionally been coal and crude oil, in 2011 set an ambitious target to generate half of its electricity - roughly 15,400 megwatts (MW) - from renewable sources by 2030, up from 5,400 MW today.

The government initially expected only 285 MW would come from the solar sector by 2030, but the dramatic surge in interest in recent years from private developers prompted the government to raise its target in 2014 to 500 MW - a goal that has been met last year.

Industry groups like the Philippine Solar Power Alliance are currently lobbying the government to further raise its solar capacity ambitions to as much as 2000 MW starting this year as more energy developers look to set up plants and supply power to the grid.

If realised, this could mean that in a few years, solar power could account for about 12 per cent of the country’s total power generating capacity, which stood at 15,633 MW  in December 2014. 

One company that is hoping to tap into the Phillippines solar growth story is power and automation giant ABB, which has been involved in the country’s power sector since 1968.

ABB managing director John Fyfe told Eco-Business in a recent interview that the firm views solar energy as an immense opportunity to plug the gaps in the country’s energy demand, while helping it fulfill its national commitment to reduce carbon emissions from fossil fuels.

At the United Nations climate talks in Paris in December, nearly 200 nations adopted a historic agreement to reduce greenhouse gas emissions in energy, transport, waste and forestry, among others to limit the rise in global temperatures under 2 degrees. The Philippines has committed to reduce 70 per cent of its emissions by 2030.

In 2011, ABB made its first foray into the country’s solar sector and by 2015, it had won what it calls its “breakthrough order” for the supplying, testing, and commissioning of photovoltaic (PV) power plants totalling 200 MW for solar developer Solar Philippines, said Fyfe.

Solar Philippines is one of the country’s leading solar companies and Southeast Asia’s largest developer of rooftop solar.

Led by young Filipino entrepreneur Leandro Leviste, an undergraduate student at Yale University in the United States, the firm has installed solar plants on rooftops for major shopping malls across the country and is now venturing into building commercial solar farms around the country.

“Solar is becoming increasingly competitive with fossil fuel, enabling it to supply a growing share of our country’s energy needs,” noted Leviste. 

Its latest power plant projects will be built in three provinces - Batangas, Tarlac and Misamis Oriental - and will be ready for operations this year. In Batangas, Solar Philippines hopes to mount more than 150,000 solar panels, covering about 75 hectares of land it owns. Over the next three decades, this project would offset about one million tonne of carbon dioxide emissions, the same amount absorbed by about five million trees.

“These projects mark a turning point for solar in the Philippines, and we are proud to partner with ABB, whose advanced technology and expertise have been critical in turning these projects into a reality,” said Leviste in a statement.

From sun to socket

ABB’s solar business has been expanding worldwide on the back of a strategy to provide various products and services “from the sun to the socket”.

It doubled its solar inverter capacity - the technology that converts the electric current from PVs to the grid - in India to 2 gigawatts (GW), and also secured solar orders in Japan, Honduras, Costa Rica and in the United Arab Emirates last year. 

As ABB has been supplying solar power solutions since the early 1990s, it can leverage its expertise in power electronics, smart grids, distributed control systems, and many other parts of the energy chain, Fyfe explained. It helps that ABB also has deep knowledge about grid codes and utility practices in the Philippines.

“A solar power plant’s efficiency in feeding energy into the grid relies mainly on the concentration of solar power it receives….With a comprehensive solar solutions portfolio, ABB carries everything needed to ensure power installations of all sizes are efficient, reliable, and well-managed as possible – all while maximising return on investment,” he added.

The engineering giant provides a wide range of solar inverters, low-voltage products, energy storage and tracking systems to enable both residential and commercial solar plant owners to optimise energy consumption and comply fully with local grids. 

It also offers a plant-level automation platform which maximises revenues for power producers by optimising performance, efficiency, and up-time of PV plants. 

“We are a one-stop shop, whether companies require specific products, or wish to source the entire electrical balance of plant (EBoP) for a solar project,” noted Fyfe.

It would be ideal if in the future, a system can be developed wherein a network of renewable energy plants can be created to address the lack of electricity in remote areas.

John Fyfe, managing director, ABB Philippines

Sunny outlook for small islands

An archipelago of 7,107 islands, the Philippines has many rural communities that are still not connected to the grid. Electric cooperatives in many such island provinces typically generate electricity using fossil fuels and supply this through local grids, and this power is more expensive than the power supplied from the national grid.

Rene Fajilagutan, president of the Association of Isolated Electric Cooperatives (AIEC), said at an energy forum in October that this is why there is huge potential for renewables to be deployed in these locations.

He said the AIEC is increasingly looking at renewable energy as a replacement for diesel fuel, as it can bring down the cost of power for these communities while also reducing pollution and carbon emissions.

Some islands in the Philippines where solar is becoming popular include tourism regions such as Negros and Palawan.  

Fyfe suggested that the next logical step would be to connect these solar networks to each other.

For instance, he noted that most renewable energy plants in the Luzon and Visayas regions operate independently from one another. “It would be ideal if in the future, a system can be developed wherein a network of renewable energy plants can be created to address the lack of electricity in remote areas, including the Mindanao region, where rolling blackouts have come to be expected,” he added.

Fyfe said that these island grids can also benefit from existing solutions such as microgrids, which offer a more efficient way to manage renewable energy generation.

Cloudy policies

Despite the massive potential for solar energy, however, the industry still faces tough regulatory challenges ahead.

Fyfe pointed out that glitches remain in the government’s existing policy framework on renewable energy, outlined in the country’s 2008 Renewable Energy Act, which discourages some potential developers.

Some industry observers note that there is absence of clear directives on who will be responsible for developing or implementing solutions that will stabilise the power transmission grids once more solar installations come online. 

Fyfe added: “We have observed that there is no existing system as of yet on how power from solar plants, or other renewable energy sources, can be seamlessly integrated into the grid.”

In response to these concerns, the country’s Department of Energy said in December it has set up a working committee, including industry stakeholders, to address this issue and study the grid reliability concerns of scaling renewable energy.

Fyfe also noted that the lack of an attractive feed-in-tariff (FIT) rate is a concern for solar developers. Initially, the solar FIT rate was set at Php9.68 per kilowatt-hour (kWh) for projects approved under the 50 MW- targets in 2012 and it was guaranteed for 20 years.

Now, solar producers will be paid a lower rate of Php8.69 per kWh for new projects which were approved in 2014. Because of this development, solar developers with pending installation applications are pushing to extend the FIT rate scheme to include up to 2,000MW of projects to ensure them better returns on their investments. 

Some investors have gone further to urge the government to restructure the market and set annual targets for the solar sector.

Despite these obstacles, developers like Leviste are optimistic about solar’s future in the country and has called on landowners to take up the challenge and convert unproductive lands into solar farms.

“What we have done to the rooftops of malls and factories, we shall do for solar farms, and we welcome all willing partners to join us in finally turning this vision into a reality,” said Leviste.

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