Unlocking rooftop solar in the Philippines

Even with the global rise of affordable renewable energy options and companion storage technology, the Philippines continues to be hobbled by some of the highest electricity prices in the 10-member Association of Southeast Asian Nations (ASEAN).

Rooftop solar—which remains largely undeveloped nationally—has the potential now to lower these high prices while simultaneously enhancing power supply contributing to meeting new generation-capacity requirements.

Yet the Philippines continues to lag global trends toward power-sector modernization, in no small part because of its history and geography: the Philippines consists of more than 7,000 islands that rely for electricity generation largely on imported diesel and coal. This dependency is supported by regulation that perpetuates moral hazard, market distortions, and an uneven playing field. In effect, the current Philippine government has inherited policies that ensure costs and risks associated with outdated models are transferred to Philippine industry and the public.

That said, the government is in a position to change the longstanding status quo, which disproportionally puts fuel-price and foreign-exchange risk on consumers, while utilities and power generators remain insulated from market changes. As a result, power suppliers have no incentive to transition away from coal and diesel or to hedge against price-change and currency risks.

Markets are moving rapidly toward new models, however.

Rapidly-declining costs and technological advances in renewable energy, energy efficiency and distributed storage present an enormous opportunity to replace imported-coal and imported-diesel models with indigenous alternatives. Solar, wind, run-of-river hydro, geothermal, biogas, and storage are competitive, viable domestic options that can be combined to create a cheaper, more diverse and secure energy system.

A recent report by Lazard, a leading global financial advisory and asset management firm, concluded that building new wind and solar farms costs less than running existing coal or nuclear plants. Meantime, the levelized cost of energy for both solar and onshore wind technologies globally has gone down by 6% over the past year, and there is no indication that this deflationary trend will slow anytime soon, as economies of scale and technology advances continue to push prices down.

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