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Business

Blessed with wind

BIZLINKS - Rey Gamboa - The Philippine Star

The weather has turned rainy, putting an end to a relatively short summer of high humidity and heat and surprisingly, very few brownouts or water supply disruptions. Summer months, by our books, is usually from March to October, while the monsoon period is from November to February. It does not seem so lately.

Climate change may be behind the weather aberrations we are seeing, and while a division between the two distinct seasons of wet and dry still holds true, data about when they occur, and how mild or intense they are will be is something that environmental scientists and weathermen will, for some time, be observing with vigor.

While weather is something that most people check on a daily basis in the course of planning their day, my more than cursory interest in it would be its impact on renewable energies, particularly solar and wind. Lately, it has been on wind farms – both on land and offshore.

Thankfully, climate change has not significantly changed the outlook for wind energy in the Philippines, one of the handful of countries in Asia that multilateral agencies like the Asian Development Bank and the World Bank see as having a breezy future when considering wind power as a replacement to fossil fuel used for electricity generation.

Two decades ago, the Philippines was assessed on its onshore wind power capabilities, and passed with flying honors. The viable technology available at that time was only for land-based wind turbines, and yet a report prepared by the US Department of Energy’s National Renewable Energy Laboratory yielded a potential of 76 gigawatt (GW) of power.

Paring down non-renewables

A recent comprehensive study by the World Bank, on the other hand, focused solely on offshore wind (OSW) energy in the Philippines, not just because of the growing number of projects involving floating wind turbines in other parts of the world, but also because of the country’s need to pare down its fossil fuel use for power generation.

From an environment perspective, the Philippines’ high dependence on oil and coal for power plants already accounts for 87 percent of carbon emissions. A bigger concern, though, is the risk from global supply and pricing, the country being wholly dependent on oil imports.

The World Bank favorably sees OSW projects as potentially more manageable given the competing character of onshore wind farms for land use in the Philippines where 22 percent of the population rely on it for agriculture and food production.

Offshore wind turbine location sites in the Philippines are likewise generally close to shore even if in deep waters, and some are near population centers. These are plus factors that lend support to giving it more prominence in the country’s National Renewable Energy Program.

While OSW technologies currently are still not competitive to fossil-fired power generation, at least in the Philippines and many parts of Asia, the World Bank is optimistic that parity is not far off in the near future, especially now that Europe is bankrolling a big shift to renewables to replace oil and natural gas.

Renewable energy generation’s share in the country’s total electricity mix had decreased substantially from 34 percent in 2008 to just around 21 percent in 2021. OSW could contribute significantly to new generation capability from renewables by 2030, according to the World Bank study.

Under a high growth scenario, should the Philippine government seriously support a comprehensive OSW program, offshore wind alone could contribute as much as 14 percent of the country’s electricity requirements by 2040, with over 20 GW of installed capacity.

A high growth scenario, understandably, is favored since it would create more jobs, a lower net cumulative cost, faster payback, and contribute to lower carbon emissions. The World Bank study, however, notes that this requires a greater commitment and more urgent action from the government.

Challenges

Whether the government pursues a low or high scenario to support OSW, it will need to put in place the regulatory support to encourage the entry of capital to build such projects to completion with the least bureaucratic delays.

Another challenge would be in the transmission phase, where some OSW projects will need grid upgrades and strengthening to be able to deliver power to the market. Investments in new long transmission lines will have to be factored in and negotiated with the National Grid Corp. of the Philippines.

Another concern deals with the environmental and social impacts, thus the need to get concerned stakeholders involved early on in the project planning. Construction sites of fixed OSW projects should consider underwater ecologies, as well as fishing patterns of local communities.

Most of the components for OSW projects will need to be imported, and this will require prior understanding by and eventual cooperation from the national and local port authorities. Risk management and mitigation measures will also have to be adopted given the scale of investments for each project.

Financing will be a challenge too, and with this, the Department of Energy (DOE) must find a way to resolve the restrictions of a 40 percent foreign ownership requirement enshrined in the Public Service Act. A growing number of local and international companies have already shown high interest in developing offshore wind energy facilities in the Philippines, as long as the associated risks are adequately answered.

Wind offers one of the brightest options for strengthening the country’s renewable energy sources, and the government should give it more importance.

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We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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