The sun rises and falls

Not too long ago, solar power was facilely pooh-poohed as a nonstarter. It was casually dismissed as impractical, space-intensive, inefficient and expensive. In terms of social desirability, it was generally regarded a cellar-dweller among the various renewable sources.

In the Philippines, the costliness of solar energy is reflected in the range of government-approved feed-in tariff (FIT) rates, namely, P8.69 per kilowatt hour for solar, P8.53/kWh for wind, P6.63/kWh for biomass, and P5.90/kWh for hydro. Economists have generally been not too sanguine about renewable energy, solar in particular, owing to its inefficiency in more senses than one.

The Foundation for Economic Freedom (FEF), in a press release issued on June 16, 2014, opposed the Department of Energy’s plan to increase the installation target for solar energy from 50 megawatts to 500 MW, ostensibly due to the need to ramp up reserves for the 2015 and 2016 summer months. The FEF pointed out the added burden imposed on consumers to the great advantage of solar energy developers and foreign equipment providers. Qualifying its opposition, it added: “We … are not against renewable energy per se, but against the obscene prices that must be borne by the Filipino consumers due to the exorbitant [FIT] rates and duration (20 years) given to renewable energy developers.”

The World Wide Fund for Nature (WWF-Philippines) has taken the contrary view, concurring with the DOE’s move to scale up solar energy capacity and arguing that it will make power cheaper in the long run. It says that while the FEF claims new solar projects will add P0.32 per kWh to consumers’ electricity bills, its own energy experts reckon the added cost to be a maximum of P0.05/kWh for the additional 450 MW of solar plants. Which implies that a household with an average monthly bill of 300 kWh will pay only P15 more per month for clean energy.

It appears that the solar power issue remains unsettled, at least in the Philippines. More empirical studies and testimonies seem called for.

The March/April 2015 issue of the Foreign Affairs journal carries a special section on solar power. The section’s lead article titled “Solar Power Comes of Age” discusses how the earlier skepticism about solar energy has begun to reverse. While today solar power accounts for less than one percent of global energy supply, it is growing faster than any other source, averaging 50 percent yearly over the past six years. In the United States alone, annual installations of photovoltaic panels shot up from under 0.3 gigawatts in 2000 to 45 gigawatts in 2014—which can power upward of 7.4 million homes.

The surge in the viability of solar power can be explained by innovations in regulation, industry, technology and financing. It no longer needs public subsidies to be price-competitive vis-à-vis such traditional energy sources as coal, natural gas and nuclear power. The International Energy Agency, which used to be lukewarm, if not altogether skeptical, about solar power, posits a best-case forecast of solar energy becoming the single largest source of power by 2050, accounting for as much as 27 percent of electricity worldwide. Should that happen, the consequences will be profound and the benefits widespread. Electricity will reach areas, such as far-flung off-grid villages in developing countries, which have never tasted what it means to have light or heat on demand.

“It would not be at all surprising,” opine the authors, “for example, if most new housing developments, particularly in the sunnier parts of Europe and the United States, came with solar power, or if most of those 100,000 Indian villages without power were lit up at night thanks to solar energy.”

Another article in the same journal, “Power to the Poor,” reports that roughly two billion people worldwide lack electricity, and nearly three billion rely on such dirty fuels as firewood and animal dung for cooking and heating. Almost 90 percent of those suffering from energy poverty are in South Asia and sub-Saharan Africa. Facing this huge challenge, governments realize that building energy infrastructure such as large power plants and transmission lines takes decades. Fortunately, with the plummeting price of solar panels, companies are working with local banks for financing and servicing arrangements suited for the rural poor, which typically entail small up-front costs, affordable monthly payments, and reliable maintenance agreements.

East Africa, reports World Bank energy consultant Ernesto Terrado from the Philippines, is arguably a global leader in adopting new business models for solar home systems (SHS) commercialization. Being the most practical and least-cost approach to providing basic electricity services (e.g., lighting and mobile-phone charging), SHS can be applied with little difficulty to the Philippines for dispersed off-grid homes in far-flung barrios.

China as well is undergoing a green-energy revolution, and solar power is figuring palpably (Opinion, 5/18/15). In 2014, electricity generated by renewable sources (water, wind and solar) increased 20 percent, with solar power generation alone rising a spectacular 175 percent. Solar power also beat nuclear energy in terms of new power created—an additional 17.43 terawatt-hours versus 14.70 terawatt-hours from nuclear sources.

“Even without a great leap forward in efficiency and batteries,” conclude the first-article authors, “and even with halting and sometimes contradictory government policies, the momentum behind solar power has become unstoppable.”

Empirical research has shown that electrification can be one speedy pathway out of poverty. Luckily, while the price of power from the sun used to be too high, it’s falling sharply.

Ernesto M. Pernia is professor emeritus of economics at the University of the Philippines and former lead economist at the Asian Development Bank.