PV in the Philippines beginning to pay off18. February 2013 | Top News, Applications & Installations, Global PV markets, Industry & Suppliers, Investor news, Markets & Trends | By: Hans-Christoph Neidlein
The photovoltaic market in the Philippines may be small, but it is increasingly gaining momentum, with cumulative capacity totaling over 5 MW. An important driver is the high cost of conventional electricity which, coupled with the country’s FIT program, means the technology is starting to pay off.
While electricity blackouts make headlines daily, photovoltaics is seldom the subject of discussion in the sun-drenched island nation, where the focus is largely on new coal and diesel power plants.
According to Tetchi Cruz-Capellan, founder of the Philippine Solar Power Alliance Inc., the total output of photovoltaic systems connected to the mains last year amounted to just 2.2 MW, in addition to around 3 to 3.5 MW of output from off-grid systems.
Nevertheless, the Philippine photovoltaic market is gaining momentum. Indeed, while just 280 kW were installed in the form of grid-connected plants in 2011, in 2012, according to Cruz-Capellan, the figure reached 1.2 MW. Furthermore, the project pipeline for grid-connected systems already amounts to more than 800 MW.
Cruz-Capellan has refrained from issuing any concrete forecasts regarding market expectations for 2013. Hendrik R. Bohne, director of sales and business development in South East Asia for Conergy AG, however, expects to see 30 to 40 MW of new capacity added this year.
Meanwhile, looking ahead, the Solar Power Alliance is preparing a 10-year roadmap for expansion of installed PV output to 2 GW by the year 2023. The roadmap is expected to be presented by the end of June at the latest.
Crucial factors for the accelerated development of photovoltaics in the economically booming country are the high electricity prices, reduced system prices for PV systems and a FIT program that started last summer, which pays PHP9.68/kWh (US$0.24/kWh).
In other words, PV is beginning to pay off. The current average retail electricity price for final consumers is approximately PHP11.35/kWh (US$0.28/kWh) according to Cruz-Capellan, while on remote islands a kilowatt-hour of electricity from a diesel generator can cost as much as PHP28.39 (US$$0.70).
"In Manila we see costs of up to US$0.34 per kilowatt-hour, PHP13.79, for conventional current," added Conergy’s Bohne. "Thus with costs of less than US$0.24/kwh (PHP9.73) solar electricity has already reached grid parity for the final consumer in many cases and, in part, generation parity for industrial customers."
FITs and PPAs
German companies such as Conergy and mp-tec GmbH, both of which have been present in the Philippine market for years, are staking their bets on both FITs, and PPAs.
According to Patrik Fischer, head of international sales at mp-tec, the company has around 30 MW of larger rooftop systems through local partners, as well as outdoor projects, in development, two-thirds of which are supported by PPAs and a third by FITs.
Conergy, meanwhile, has several outdoor projects "on a scale of 10 to 20 MW" in the pipeline, also through local developers, says Bohne – in each case half of them within the scope of the FIT program and PPAs.
"At the moment the feed-in tariff is the primary instrument, but the cost of electricity is so high that plants can be operated on attractive terms without the FIT," said Bohne. In the case of PPAs, profit margins of 15 to 16% are said to be possible.
High entry threshold
One obstacle both for PPA and FIT projects, however, are the dozens of certificates and approvals required to enter the business in the area of grid-connected energy production and mini-grids, pointed out Fischer. Approval costs of approximately US$300,000 could result for each project, he said.
In addition, PPA projects present the added challenge of having to find reliable electricity customers, which is why a number of developers prefer FIT agreements, noted Cruz-Capellan.
A crucial success factor for international companies that want to gain a foothold on the Philippine PV market is said to be close cooperation with local partners, whether via maintaining contacts and negotiations with local authorities and customers, or fulfillment of the statutory conditions stipulating a maximum share of 40% in foreign equity for the respective projects.
The fact that the Philippine solar market is beginning to take off is also due to increasing political and social support, stressed Cruz-Capellan. The influence of the coal and oil lobby is declining and increasing numbers of companies, consumers and municipalities are coming to recognize the "economic advantages of photovoltaic technology," she said.
She also sees progress when it comes to acceptance on the part of the banks as far as financing photovoltaic technology is concerned.
Read the full article in the March edition of pv magazine, out on March 1.
Edited by Becky Beetz.
Ariel Bennu Solar | http://bennu-solar.com
Tuesday, 19.02.2013 01:41
There are still millions in the Philippines without access to electricity, though the solar solutions they could use are a bit different. I compiled relevant resources here:
Hope this helps,
Choose between a digital and print subscription from pv magazine publisher Solarpraxis AG’s online shop!
- 6327 views
- 5959 views
- 4333 views
- 2491 views
- 2442 views
Want to publish your press releases for free? Simply log in or register, enter the information you want to appear and we'll publish it for you!