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PV Demand Analysis of The Belt and Road Initiative: Philippines of Southeast Asia

1. Basic Information of  Philippines

The Philippines is one of the ASEAN member states with a population of 105 million. The annual GDP growth rate reached 6.685% in 2017. Most people are positive about the economic outlook of the Philippines.

The Philippines is located in the Pacific Ring of Fire, which has abundant geothermal resources. The nation is also located in Southeast Asia with sufficient sunshine. It has an average daily solar radiation of 4.5-5.5/kWh per square meter. The nation also has abundant water resources with an average annual rainfall of 2,000-3,000mm. However, limited by its archipelago geography, some regions have power shortage problem for many years. The Philippines is in a state of economic growth, and energy problems must be faced and resolved.

The Philippine’s cumulative PV installation reached 885MW by 2017.

2. Development of Renewable Energy in the Philippines

In 2008, the Philippines passed the Renewable Energy Act No. 9513, initiating the development of renewable energy. By late-2017, the total installation of renewable energy has reached 7GW, of which, hydro took up the highest proportion. The cumulative hydro installation reached 3.6GW by late-2017, representing 50% of the total renewable energy. This is because there are four months of rainy season and two months of typhoon season in the Philippines every year, leading to a lot of rainfall. The next one with the highest installation is geothermal with an installation of 1.9GW. The Philippines is located at the Pacific Ring of Fire and so it has many geothermal resources. The Philippines government is currently conducting exploration and development assessment of geothermal. For PV, the cumulative installation has reached 885MW by 2017. 2016 was a year with the highest newly-added installation of 600MW.

Starting from 2020, the Philippines will officially put into practice the renewable portfolio standard (RPS) that has been put on hold for many years. The policy requires renewable energy share to increase at least 1% in the total power generation every year. When the policy turns effective, it can stimulate demand for the renewable energy market.

Philippines  Cumulative installed capacity of renewable energy

3. PV Policy of Philippines

The Philippines’s PV policy is similar to other renewable energy policies. The nation focused on feed-in tariff (FiT) with the FiT reaching Php 8.69/kWh (US$ 16.4 cents/kWh). The last phase of FiT ended in 2016. But the difference between PV and other renewable energies is that PV relies on bid (PPA) now. The lowest bidding price can reach Php 2.34/kWh (US$ 4.4 cents/kWh). On the other hand, roof-top projects still rely on the Net Metering Scheme.

In 2018, the Philippine Energy Regulatory Commission was reorganized. The new president, Agnes Devanadera, indicated that there are 600 energy projects (including PV and other renewable energy) that haven’t been approved. The amount of PV projects pending reached 6.4GW. In order to solve the project pending problem, Devanadera proposed the Zero Backlog Program, but the program is still at the concept stage.

2018 is the first year for the Energy Regulatory Commission to reorganize. The Commission still needs to undergo a period of change and adjustment. With the Zero Backlog Program still at the concept stage and that the end of 2018 is approaching, demand is likely to remain stable in 2018 and 2019. However, starting from 2020, renewable energy demand (including PV) is likely to grow in the Philippines after going through RPS activation, organizational adjustment of the Energy Regulatory Commission, and the release of new policies.

4. PV Development in the Philippines

The Philippines aims to install 1,528MW of PV capacity by 2030. By late-2017, the cumulative PV installation reached 885MW. 2016 was a year with the highest newly-added installation of 600MW mainly because 2016 was the deadline for projects to complete the grid-connection.

Philippines Cumulative PV Capacity

Currently, the Philippines power grid is built on the three major islands of Luzon, Visayas, and Mindanao. Most of projects are on Luzon and Visayas, taking up 93% of the total installation because the two regions are relatively flat and are suitable for the development of PV plants. There are a lot of volcano and fault formation terrain in Mindanao and therefore it’s not suitable for PV development.

Philippines Region Cumulative PV Capacity

5. Export/Import Analysis of the Philippines

China’s module export to the Philippines reached 115MW in 2017. The total export reached 139MW from January to August 2018. If adding both up, the total amount reached 254MW, which is not high. According to the customs data, module demand peaked in Q2 for the Philippines market.

2018 China Export to Philippines Shipment

For module prices, following the advanced PV technologies and PV trend of lower cost and higher efficiency, module export price has dropped substantially from 2017. According to the customs data, overall module prices have declined from the same period last year: price of 270W multi modules was down 26%, while 280W mono module dropped 47%. Price of 300W mono PERC declined 21%.

2018 Philippines Comparison of Module price

6. Conclusion

The Philippine is going through fast-growing economy. The power shortage problem must be solved. Meanwhile, the electricity demand must be increased in response to the speed of economic growth in the future. In terms of PV development, judging from a goal of 1,528MW by 2030, it does not have much potential every year. However, if the new president of the Energy Regulatory Commission can start process the pending projects smoothly, PV potential may rise. PV installation goal can then be achieved ahead of time.

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