Tariff issues stall Philippine ocean energy project

Policy bottlenecks are getting in the way of the archipelago's bid to be the first country in the world to have commercialised ocean thermal energy conversion.

child in the shoreline
The Philippines’ ocean thermal energy conversion project is lodged in policy bottlenecks. Image: Cristian Bortes, CC BY-NC-ND 2.0

Has the Philippines lost the opportunity to be the first country in the world to commercialise ocean thermal energy conversion (OTEC)?

In 2011, the Department of Energy (DOE) announced that the first OTEC plant in Zambales province will be operational in 2018. That would have made the Philippines the first country to scale up OTEC technology.

OTEC generates power by converting the temperature differential between the warm surface waters and the deep cold ocean into vapour that expands under moderate pressure, turning a turbine connected to a generator that produces electricity.

Due to the delay in granting the feed-in tariff (FIT) rate, the opening has been moved back to 2022, says Desiree Latimer, president of Bell Pirie Power (Philippines), which holds a 1,200-hectare service contract in Zambales to generate 10 megawatts of electricity using OTEC.

“The project has been overtaken by another proposed 10-megawatt plant in Martinique island in the Caribbean, which is expected to go live before Zambales,” Latimer tells SciDev.Net, adding the Philippines might still be the first to commercialise OTEC technology in Asia unless China’s proposed 10-megawatt project in Hainan Island opens first.

“OTEC is a proven technology,” she tells Scidev.Net. “OTEC power plants now operate in Japan, South Korea and Hawaii at low kilowatt capacity because the owners are technology suppliers not interested in selling electricity but in selling their proprietary technology for OTEC, mainly heat exchangers.”

Latimer says the risk is on the investor’s side and the technology supplier who will have to provide performance and availability guarantees to the power plant. This is why the FIT rate is important to lenders and investors.

The project has been overtaken by another proposed 10-megawatt plant in Martinique island in the Caribbean, which is expected to go live before Zambales.

Desiree Latimer, president, Bell Pirie Power Philippines

In 2012, the Energy Regulatory Commission (ERC) granted FIT rates to four renewable technologies: biomass, hydro, wind and solar. It deferred the FIT for ocean energy until more data are in, upon which the ERC said it will base the FIT.

But Latimer says that will be “a stumbling block to ocean energy development because it will be difficult for lenders and investors to invest in ocean energy without the guarantee of a FIT rate”. The FIT rate petition for ocean is 17.65 pesos (US$0.38) per kilowatt hour.

The 2011 National Renewable Energy Program (NREP) targets 70.5 megawatts of ocean power from 2016 to 2030.

The figures anticipated the FIT decision in 2012 but since the FIT rate is delayed, the forecast “is no longer valid and has been superseded with one still unpublished,” Latimer says, adding that the 2016 NREP draft no longer expects an ocean energy project to happen in 2016-2020.

Another bottleneck is the lack of comprehensive data, plus social acceptance and environment issues, adds Mario Marasigan, director of the DOE’s renewable energy management bureau.

While ocean energy projects may be out of sight because it is underwater, they still impact on the marine environment. “The immediate vicinity of potential sites are fishing grounds, most are navigation routes, and if suddenly an infrastructure is up, then food security issues may arise,” Marasigan tells SciDev.Net.

Security concerns are valid as well since some Philippine waters are threatened by pirates and bandits, he adds.

This piece was produced by SciDev.Net’s South-East Asia & Pacific desk.

This article was originally published on SciDev.Net.

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