VRE will bring rates up

Variable renewable energy (VRE) such as solar and wind will bring up electricity rates. This was the warning of the ASEAN Center for Energy (ACE) in a report released last month. The extensive study cautions ASEAN countries not to blindly follow the International Energy Agency’s Net Zero Pathway, which it said makes assumptions and assertions of questionable viability in ASEAN.

“The most important aspect of transitioning away from coal toward wind and solar is that they increase the cost of power exponentially because the more wind and solar that are in the system, the lower the overall reliability of electricity supply. This basic fact has deleterious effects on industrial and social development in ASEAN.”

The ACE report pointed out that we must not overlook “the hidden cost of the considerable transmission and equipment upgrades needed to bring intermittent RE sources online. Moreover, replacing the stable generation of baseload electricity will need massive amounts of RE and battery storage to be immediately made available according to the timeline of the coal retirements. In fact, coal currently outperforms other energy sources in terms of supply security, reliability, affordability and—to some extent—sustainability in ASEAN’s power generation.”

ACE, in its report, urged that “the transition away from coal should be done gradually when economically and environmentally viable alternatives are available at grid scale…It has to be underscored that energy transition efforts should not sacrifice energy affordability…”

“As the cost of energy increases and reliability decreases, industrial activities look elsewhere for more supportive energy policies. The real concern is that the poorer half of the population may no longer be able to afford electricity, causing thousands of people to slide deeper into poverty…”

Those points reinforce my fear that our energy officials from at least two administrations, including this one, did not carefully study the economic impact of a fast transition to VRE. We have such a small carbon footprint (0.41 percent of global greenhouse gas emissions) we really do not have to imitate the West in trying to be woke about decarbonizing. Sure, let us do it too, but carefully paced to not put our household budgets and economic growth in peril.

Last week, Energy Undersecretary Rowena Guevara announced that the Philippines is eyeing a P31 trillion clean energy investment by 2040. She told an ADB forum that we need P20 trillion to P31 trillion to achieve a 50 percent share for RE in the power generation mix by 2040. The target, she said, is to have a capacity of over 52 GW of RE, with 27 GW of solar, 16.6 GW of wind, six GW of hydro, 2.5 GW of geothermal and 360 MW of biomass.

One wonders if these are all academic pencil-pushing with little regard to ground realities.

“We should learn from Vietnam,” the report said.

“It can be seen from Vietnam’s experiences that variable solar power could lead to grid overload. Consequently, the actual dispatch from the VRE power to the grid saw significant curtailments due to limited transmission capacity. Some technical challenges were also observed, such as grid congestion, renewable generation surplus and imprecise RE forecasts.”

The study pointed out that “installed capacity from RE (e.g., wind, solar) produces neither the same amount nor the same quality of dispatchable energy, compared to coal capacity…Overriding dispatchable energy sources in the grid system and overlooking the storage requirements could impact stable energy supply as the deployment of VRE is not able to completely replace the dispatchable energy sources.”

The study noted that in 2021, “wind and solar energy in ASEAN accounted for approximately nine percent of the total installed capacity. However, their contribution to total electricity generation was only 1.6 percent – far below their portion of the total installed power capacity.”

This is why I was worried about DOE’s program. More than half of the 4000 MW of new power supply this year is VRE, largely solar. The numbers may suggest a replacement for our old coal plants on a megawatt-per-megawatt basis. But on the ground, VRE’s contribution will be much less, not enough to prevent us from having more yellow and red alerts or even brownouts. As I wrote last week, a megawatt of solar and wind is not the same as a megawatt of coal, natgas or geothermal.

The report acknowledges “the coal-to-gas initiative seems to be a low-hanging fruit for decarbonising ASEAN’s power sector, but as some ASEAN member states are lacking liquefied natural gas (LNG) terminals and pipelines for gas transportation, it requires huge investments in gas infrastructure… As the region is predicted to become a net importer of natural gas by 2025, increasing the dependence on gas will expose the region to the volatile global natural gas markets even deeper.”

Coal, abundantly available in ASEAN, “also serves as a reliable baseload generation source that can provide a stable and continuous supply of electricity—one feature that VRE is lacking unless it is coupled with storage technology, which may inflate the costs further to achieve comparable stability.”

“It is important to note,” ACE observes, “that the ASEAN region is becoming increasingly susceptible to extreme weather events, necessitating a flexible energy system. When faced with disruptive occurrences, power generators must rapidly adjust by either increasing electricity supply, decreasing demand, or employing both strategies.

“Modern, flexible coal plants possess the capability to adjust power output swiftly to meet demand variations. In addition, they offer crucial grid stabilization functions such as maintaining inertia, controlling frequency and regulating voltage…”

For those eager to ape the West, the study points out too, that “given the costly consequences, many EU countries do not plan to completely phase out coal. After all, electricity generated from fossil fuels remains the cheapest option, even for developed countries...”

Take it from Kermit the Frog: It isn’t easy being green.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco