By Ram Christian S. Agustin
THE low-cost argument for using coal-fired power does not consider hidden costs as well as price volatility in times of crisis, such as the present time, the Institute for Climate and Sustainable Cities (ICSC) said.
In an e-mail interview, ICSC Executive Director Renato Redentor Constantino said the “coal-is-cheapest” argument is undermined by the higher-than-expected cost of coal-fired power generation and the power industry’s ability to pass on the cost of more expensive coal to the end user.
“A quick look at actual coal generation costs of major distribution utilities shows that these costs range from over P4.00 per kilowatt-hour (kWh) to approaching P9.00 pesos per kWh. Not only are these costs much higher than expected but they are also volatile as they reflect the ‘Pasaload’ of fuel costs to the consumer,” he added.
Pasaload is the telecommunications industry practice of allowing users to share prepaid credits with others.
Fitch Solutions Country Risk and Industry Research found in a recent report that coal-fired power remains the dominant source for electricity in the Philippines.
According to Mr. Constantino, the ability to pass on coal costs has allowed power project proponents to understate the initial all-in cost of power when developing their projects. Their lack of exposure to volatile fuel prices makes coal-fired power generation a “virtually risk-free business.”
Fitch Solutions also issued a positive outlook for renewable energy (RE) development in the Philippines, providing support for ICSC’s contention that RE will bring substantial economic benefits in the form of affordable and reliable power.
“The economy is easier to manage and is more productive when one is energy secure. The opposite of this is our current setting, where the Philippine economy is subjected to the intense financial storms brought about by volatility risks associated with fossil fuels,” Mr. Constantino said.
The Philippine Energy Plan and the National Renewable Energy Program has a target of at least a 35% share of RE in the power generation mix by 2030, and greater than 50% by 2040.