Press Release
June 10, 2011

Solar Tariff Excessive Burden on Consumers
Osmeña cautions DOE to be mindful of costs on consumers

Senator Serge Osmeña, chairman of the Senate Committee on Energy and co-chair of the Joint Congressional Power Commission, today expressed concern over the proposal of the National Renewable Energy Board (NREB) to allocate 100 megawatts (MW) to solar energy at P17.95 per kilowatt-hour (kWh).

On the other hand, the tariff would only be P6.15/kWh for mini-hydro, P7.00/kWh for biomass energy, and P10.37/kWh for wind power. Ocean energy will have a tariff of P17.95/kWh but only 10 MW is allocated because it is an experimental technology.

Osmeña warned the NREB proposal would result in additional charges to the consumers over a period of 20 years. In the first 3 years alone, the additional costs to subsidize solar energy would be around P1.7 billion a year. In the remaining 17 years, additional charges can be as high as P1.4 billion a year.

"The NREB proposal for on-grid solar energy is like buying a Mercedes Benz when there are still Hyundais, Nissans and Toyotas available at less than half the price," Osmeña explained.

Moreover, energy experts indicate that the cost of solar panels could drop by 50% within 5 years. "That would be the proper time to consider using solar energy, a P9/kWh rate for 20 years would certainly be more tolerable," he added.

In addition, if a larger allocation were given to biomass plants, Filipino farmers would earn additional income from selling their rice husk, bagasse, wood chips, and other products as fuel.

Osmeña also said the Renewable Energy Act does not mandate the allocation of the 100 MW to solar energy.

While the senator threw his support for the installation of a 20 MW solar plant in Mindanao, he proposed that the remaining 80 MW solar energy allocation be split between biomass energy, which will augment the income of farmers, and mini-hydros, which could be harnessed for small irrigation projects.

Osmeña said that solar energy can be most effective in off-grid areas, and as much as 200 MW can be awarded to it for these places.

"The DOE should exercise extreme caution in the implementation of the FIT System considering that it imposes additional costs on the consumers particularly in the early years. Solar energy, if introduced in haste, will unnecessarily burden the consumer," Osmeña added.

"Spain and Germany have suddenly cut their solar programs, finding them horrendously expensive. If those rich nations cannot afford solar, how much more a country like the Philippines," the senator also said.

The JCPC chairman said it is the Commission's responsibility to ensure that the Renewable Energy law will not bring about unnecessary sacrifices on the Filipino.

Government representatives, with DOE as lead, constitute the majority of the NREB.

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