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Renewables seen as far cheaper than diesel generators for remote, island power grids

REMOTE power grids and those on small islands can be run more cost-effectively on renewable sources like solar and wind, compared with diesel generators, according to the Institute for Energy Economics and Financial Analysis (IEEFA), a US non-profit.

IEEFA energy finance analyst Sara Jane Ahmed released her estimates of peso costs of various energy options in a report issued this week.

“Diesel-powered generation prices range between P10.6 ($0.22) to P117.75 ($2.45) per kilowatt hour (kWh)… Both solar and wind prices can reach as low as P3.5 ($0.07) in the main grids and even if delivered at double or triple the cost in island and isolated grids, solar and wind can still undercut the price of diesel,” Ms. Ahmed said in a report.

“Based on IEEFA’s analysis of the small and isolated grids… solar PV (photovoltaic) plus lithium-ion batteries can now reliably deliver power at a significant discount to the price-performance potential of the current diesel-power fleet,” Ms. Ahmed said.

She said high diesel prices have “undermined the competitiveness of diesel power.”

“At a low price of $0.72 per liter and a high price of $0.9 per liter, not taking into consideration transportation costs, the savings from a shift to renewables can range between $66 million and $82 million,” she said.

She added that increasing the mix of renewables in small grids would translate to cost savings of between 17% and 29% over 20 years.

Ms. Ahmed called the National Power Corp.’s Small Power Utilities Group (NPC-SPUG) a “key player in the small and isolated grid policy dynamic.”

“While NPC-SPUG has been an important player in rural electrification in the Philippines, its ability to meet the government’s aggressive electrification goal is limited considering its current trajectory,” she said.

She noted that the high cost of the diesel lock-in strategy put forward by NPC-SPUG ignores the benefits of renewable energy which included affordability, price stability and improved energy security.

She said NPC-SPUG must freeze new diesel investment and focus on hybridization. — Angelica Y. Yang

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