Manila, Sept 23: “The Philippines should make full use of its solar irradiation to launch utility-scale solar power to tackle the nation’s energy deficit,” said Terje Osmundsen, Senior Vice President of the Norwegian Scatec Solar ASA, a prominent solar Integrated Power Producer (IPP) that has a footprint in five continents. He was addressing the Business Forum at the PowerTrends event in Manila.
“The Philippines has huge potential for generating unsubsidized solar power as the cost of producing solar power has fallen by 60% since 2009, when the current Power Development Plan was approved. This has made solar power increasingly price competitive with fossil-fuel based power plants,” Mr.Osmundsen pointed out.
Solar power also generates a whole range of environmental and socio economic benefits. Unlike existing sources of power, solar power is safe, clean, noiseless, non-polluting, accident-free, avoids carbon emissions, reduces transmission losses and generates jobs.“Construction and production of solar power is exceptionally fast compared to nuclear or fossil-fuel based plants, he said.
Solar energy is rapidly upping its share in the energy mix in both developed and developing economies across the world. In the developed countries, photovoltaic (PV) solar power is fast becoming a significant source of electricity. Already 7% of the electricity generated in Germany is from Photovoltaic (PV) solar power; it is as high as 10% in California and Italy. In Germany, 31% of electricity is already generated by renewable energy. “Solar and wind power could be increased to 25% of the Philippines’energy mix by 2030. Utility scale solar PV can produce more than 3 GW by 2030,” Mr.Osmundsen said.
For the Philippines, increasing solar power in the energy mix would entail substantial foreign exchange savings because currently as much as half of the energy mix comes from power plants that use imported oil and coal. Peak power is often generated from diesel, which is not only imported, but expensive and polluting. Globally, citizens are concerned about the use of fossil fuel in power and transport sectors because it aggravates climate change and pollution-induced health risks, he said. Quoting from a recent study by the Paris-based International Energy Agency, Mr Osmunden said future variable renewable energy generation costs are likely to be lower and the cost of emitting CO2 higher.
Mr Osmundsen elaborated on the lessons Scatec Solar ( SSO) learnt as a first mover in solar power production in Africa. SSO’s 75 MW kalkbult solar plant was the first project in South Africa’s new renewable energy regime. It was also the first utility scale PV project in the African continent. SSO constructed and connected this plant in 9 months- three months ahead of schedule! It was built with local labor in a greenfield setting. As part of SSO’s corporate philosophy to generate local jobs, unskilled people in the area were employed and trained to build and operate the plant. There were zero accidents. The subsequent Linde and Dreunberg solar projects that generate another 115 MW were executed simultaneously, on time and on budget. Innovation in solar module technology, reduction of risk, securing project finance and reasonable rates has considerably reduced costs. “The South Africa success story shows that new PV projects are much cheaper than the first ones,” Mr.Osmundsen said. In April this year, SSO was awarded new projects to produce an additional 258 MW of solar power in South Africa.
Based on a recent study by South Africa’s Council for Scientific and Industrial Research (CSIR), the nation gained USD 30 million dollars from solar power generated by SSO in the first six months of this year alone. The gains came from saving fossil fuel costs and avoiding power outages that cause production losses, imposing a big burden on South African economy.
A leading IPP in Africa, SSO’s solar projects avoided emissions of nearly half a million tons of CO2 per year in the continent. “SSO has successfully registered a CDM program of Activities (PoA) related to the reduced CO2 emissions as a result of our projects. It is currently being extended to select Asian countries,“ he said. Carbon financing is gaining international importance in view of the COP 21 in Paris in December this year.
Project finance is a key component for solar power production. Apart from its own equity stake, SSO partners with World Bank’s IFC, Norway-based Norfund and London-based EBRD among others for project financing. SSO’s experience in Africa and Latin America shows that utility scale solar power can be deployed effectively and quickly, provided the authorities give importance to bankable contractual documents that are vital for project financing, carefully evaluate the procurement strategy, have a clear understanding of the grid requirements, adopt long term planning, ensure stability and continuity in its renewable energy policy. SSO finances, develops, operates and owns solar power projects for 20 years in the countries it operates.
With reference to the upcoming climate summit in Paris in December, Mr Osmundsen said:“The Philippines should proactively identify low carbon opportunities that can be co-financed as part of OECD country commitments through CDM or other mechanisms“.
About Scatec Solar
Scatec Solar is an integrated independent power producer, aiming to make solar a sustainable and affordable source of energy worldwide. Scatec Solar develops, builds, owns and operates solar power plants and delivers power from 219 MW in the Czech Republic, South Africa and Rwanda. The company is in strong growth and has 207 MW under construction in the US, Honduras and Jordan as well as a solid pipeline of projects under development in Africa, Middle East, Americas and Asia.