(Published in Business World, under the View from Taft column, April 7, 2011)
The Fukushima nuclear disaster and the rising oil prices have highlighted the huge and promising potential of renewable energy (RE) around the world and in the region. A raft of news reports on companies investing in RE fill the national dailies almost every day since the start of the year. Since the signing of the Renewable Energy Act of 2008, we have seen a deluge of investments in hydropower, wind, biomass, ocean energy, and solar power.
The latter deserves special attention as we see massive deployments of it this year. According to the Philippine Solar Power Association (PSPA), solar power producers are expected to generate a combined 125 MW this year, 130 MW in 2012, and another 95 MW by 2013.
One major player is Lopez-led First Philec Solar Solutions (FPSS), which plans to build a solar power plant in Cavite that is projected to deliver 2 megawatts and is scalable to 5-MW in the coming years. The first FPSS installation was at sister company First Philec Solar Corp. in Sto. Tomas, Batangas, which now supplies 75 kilowatt-peaks (kWp) of electricity and will expand to 200 kWp.
Another major player is Cagayan Electric Power and Light Co. (Cepalco) Inc., which is investing P2.24 billion to build four more solar power plants in Misamis Oriental to augment its power sources for the next 20 years. This is on top of its existing 1-MW solar facility.
Other investors that have started preparing for their respective facilities include Dutch-based SunConnex, which plans to invest $100 million for solar projects with 10-MW initial capacity, then eventually expand to 50-MW in future; South Korean-listed firm Youil Ensys, which plans to invest $160 million to put up two solar power plants with a combined capacity of 40-MW in the Visayas; and Filipino-Japanese venture Eco-Merge Philippines, which plans to invest $150 million in the construction of 41-MW of solar power projects in the next three years starting with a 11-MW solar farm in Camarines Sur this year.
These investments signal the optimism in the long-term viability of solar energy. One reason of such confidence is the strong government support. The Renewable Energy Act allows the players to enjoy non-fiscal and fiscal incentives. A key non-fiscal incentive is the institution of the feed-in tariff (FIT) rules in May this year. FIT is a structured rate to be charged by RE developers that will guarantee their returns over 15 years. According to industry sources, the FIT would likely range from P10 to P19 per kilowatt-hour, but costs may go down once more players come in, which will ultimately benefit the national government and consumers. Fiscal incentives include a 10-year duty-free importation, income tax holiday, and tax exemptions.
Moreover, there are available financing mechanisms to support investments in RE. In fact, First Metro Investment Corporation and Global Business Power Corp. have signed an agreement to encourage and help develop prospective RE projects in the Philippines. Solar energy projects can likewise be a part of the Public-Private Partnership (PPP) program of the government.
In addition, there are opportunities for driving down costs by developing downstream manufacturing and application areas in the value chain. Solar panels, a major component of solar power producers, are already manufactured in the country by US-based SunPower and Solaria. The wafers supplied to SunPower are cut from silicon ingots by its joint venture with local Lopez Group’s First Philippine Solar. The latter has recently signed a joint venture with Nexolon of Korea to put up a 400-megawatt solar wafer facility in Laguna, a strong sign of the vibrant solar energy sector.
Lastly, there are opportunities for solar power companies to gain operational efficiencies at the onset. This can be achieved through the implementation of technologies such as distributed monitoring and control systems, plant optimization and performance monitoring, string combiner boxes, temperature transmitters, inverters, and high efficiency uninterrupted power supply (UPS) and cooling solutions for control rooms that allow solar power producers to balance regulatory compliance with cost and risk mitigation.
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Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA Program of De La Salle University. He is the country manager of Emerson Network Power Philippines. He may be e-mailed at rlugtu2002@yahoo.com, or visit his blog at http://rlugtu.blogspot.com.
The Fukushima nuclear disaster and the rising oil prices have highlighted the huge and promising potential of renewable energy (RE) around the world and in the region. A raft of news reports on companies investing in RE fill the national dailies almost every day since the start of the year. Since the signing of the Renewable Energy Act of 2008, we have seen a deluge of investments in hydropower, wind, biomass, ocean energy, and solar power.
The latter deserves special attention as we see massive deployments of it this year. According to the Philippine Solar Power Association (PSPA), solar power producers are expected to generate a combined 125 MW this year, 130 MW in 2012, and another 95 MW by 2013.
One major player is Lopez-led First Philec Solar Solutions (FPSS), which plans to build a solar power plant in Cavite that is projected to deliver 2 megawatts and is scalable to 5-MW in the coming years. The first FPSS installation was at sister company First Philec Solar Corp. in Sto. Tomas, Batangas, which now supplies 75 kilowatt-peaks (kWp) of electricity and will expand to 200 kWp.
Another major player is Cagayan Electric Power and Light Co. (Cepalco) Inc., which is investing P2.24 billion to build four more solar power plants in Misamis Oriental to augment its power sources for the next 20 years. This is on top of its existing 1-MW solar facility.
Other investors that have started preparing for their respective facilities include Dutch-based SunConnex, which plans to invest $100 million for solar projects with 10-MW initial capacity, then eventually expand to 50-MW in future; South Korean-listed firm Youil Ensys, which plans to invest $160 million to put up two solar power plants with a combined capacity of 40-MW in the Visayas; and Filipino-Japanese venture Eco-Merge Philippines, which plans to invest $150 million in the construction of 41-MW of solar power projects in the next three years starting with a 11-MW solar farm in Camarines Sur this year.
These investments signal the optimism in the long-term viability of solar energy. One reason of such confidence is the strong government support. The Renewable Energy Act allows the players to enjoy non-fiscal and fiscal incentives. A key non-fiscal incentive is the institution of the feed-in tariff (FIT) rules in May this year. FIT is a structured rate to be charged by RE developers that will guarantee their returns over 15 years. According to industry sources, the FIT would likely range from P10 to P19 per kilowatt-hour, but costs may go down once more players come in, which will ultimately benefit the national government and consumers. Fiscal incentives include a 10-year duty-free importation, income tax holiday, and tax exemptions.
Moreover, there are available financing mechanisms to support investments in RE. In fact, First Metro Investment Corporation and Global Business Power Corp. have signed an agreement to encourage and help develop prospective RE projects in the Philippines. Solar energy projects can likewise be a part of the Public-Private Partnership (PPP) program of the government.
In addition, there are opportunities for driving down costs by developing downstream manufacturing and application areas in the value chain. Solar panels, a major component of solar power producers, are already manufactured in the country by US-based SunPower and Solaria. The wafers supplied to SunPower are cut from silicon ingots by its joint venture with local Lopez Group’s First Philippine Solar. The latter has recently signed a joint venture with Nexolon of Korea to put up a 400-megawatt solar wafer facility in Laguna, a strong sign of the vibrant solar energy sector.
Lastly, there are opportunities for solar power companies to gain operational efficiencies at the onset. This can be achieved through the implementation of technologies such as distributed monitoring and control systems, plant optimization and performance monitoring, string combiner boxes, temperature transmitters, inverters, and high efficiency uninterrupted power supply (UPS) and cooling solutions for control rooms that allow solar power producers to balance regulatory compliance with cost and risk mitigation.
===================
Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA Program of De La Salle University. He is the country manager of Emerson Network Power Philippines. He may be e-mailed at rlugtu2002@yahoo.com, or visit his blog at http://rlugtu.blogspot.com.
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