Editor's PickFinanceInvestingCoal ban seen to lure $30-B RE projects

2 years ago256 min

THE Energy department’s moratorium on new coal-fired projects is projected to bring in P1.45 trillion or $30 billion worth of investments in renewable energy by 2030, said an organization that examines energy markets, trends, and policies.

In its report, the Institute for Energy Economics and Financial Analysis (IEEFA) said the agency’s ban and the subsequent transition to renewables could potentially cut the share of coal in the energy supply mix to 16% from its current 41.5%, while increasing the contribution of solar and wind to a combined 43.8% from 5.4%.

“[This presents] a conservatively valued investment opportunity for both domestic and international investors and developers of over USD 30 billion over the next decade,” said the IEEFA in a commentary shared with BusinessWorld on Monday.

The figure was calculated based on the committed and indicative pipeline projects collated by the Department of Energy (DoE) for variable renewable energy (wind and solar) up to 2030, minus coal project plans affected by the moratorium, said the institute’s energy finance analyst Sara Jane Ahmed via e-mail.

Committed power projects are those that have secured financing from investors or banks. Indicative power projects are those that have applied for DoE endorsement and have yet to secure financial closing.

Based on the organization’s projections, the “deflationary price trajectory of domestic renewable electricity generation and storage triumphs over the cost of generating when the market is dominated by large fossil fuelled power plants.”

With the decision to halt new coal projects in place, a committed capacity of 2,215 megawatts (MW) and indicative capacity of 8,603 MW from coal-fired plants stand to be affected, based on this year’s DoE data.

“The impact of the coal moratorium will fall most heavily on the Luzon grid and the project development aspirations of San Miguel [Corp.] and Meralco (Manila Electric Co.),” said the IEEFA.

It added that the two companies most affected by the ban have already “positioned themselves to be part of the energy modernization,” with San Miguel and Meralco taking part in the investment and development of renewables.

According to the IEEFA, the moratorium reflects on the Energy department’s efforts to “save investors from unprofitable coal projects.”

It said that the market’s ability to benefit fully from the coal ban and the shift to renewables will depend in part on the new policy measures implemented by the Energy Regulatory Commission.

It further recommended two steps that could give the moratorium “real teeth.” These include the removal of fuel cost pass-throughs for end users, and the issuance of a “carve-out clause” that would allow the market operator to curtail baseload coal independent power producers.

In a separate report, the IEEFA noted that coal-fired plants were responsible for 60% of outages in May this year.

Last Tuesday, Energy Secretary Alfonso G. Cusi announced the agency’s decision to stop the endorsements of greenfield coal-fired plants, while allowing foreign investors to fully own large-scale geothermal projects. — Angelica Y. Yang

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