The Philippines is almost ripe for solar energy

In the Philippines today, solar energy – through photovoltaic (PV) cells – which transform the sun’s rays directly into electricity – is generally a niche product. It is seen mainly as a way of generating electricity for isolated communities e.g. small islands, etc. since these places would cost too much to get physically connected to the electricity grid (through transmission towers or underwater cables). Electricity from PV cells are viewed as too expensive when compared to electricity from the grid.

Electricity from PV cells is almost ripe for widespread installation in Philippine cities.
Some policy and infrastructure need to be put in place, but the underlying technology and economics of solar energy promise to make it ripe for widespread use very soon. Here are some factors:

Lots of sunlight. In contrast to European countries, the Philippines is endowed with a lot of sunlight all year round. And the sun’s rays are more intense, and the sun is nearly overhead at its highest point. This means that the amount of electricity that a PV cell can generate is potentially greater, and that the solar panel does not have to be “aimed” at a certain direction to get enough sunlight (it can simply lay flat on a roof).

Technological advances. Photovoltaic cells have become cheaper than before due to the substitution of expensive materials used (e.g. gallium and indium) with cheaper silicon, carbon and boron; thinner PV cells and easier installation and operation; advances in the efficiency of batteries, etc. Announcements of breakthroughs in the latest “thin film” technology have been made in January, which potentially could reduce the cost of PV cells by half, are a sign of big (and recent) strides in technology.

Rising Cost of Oil, Appreciating Peso. With the present state of PV development and the abundant sunlight in the Philippines, the cost of electricity from PV cells should now be around 12 pesos/KwH. If we compare this to the cost of producing electricity from oil (around 6 pesos/KwH) or coal (less than 4 pesos/kwH), then solar energy from PV cells is still more expensive. In the last two years, the cost of oil has doubled, and the peso has appreciated almost 20% in relation to the dollar. When the cost of oil rises, this would mean an increase in the cost of electricity generated by oil-fired generators. As the peso appreciates, the price of the imported components needed for solar energy generation goes down. If this trend of rising oil prices and appreciating peso is set to continue, the cost difference between solar energy and oil/coal will lessen.

Ripening?
Solar energy may not yet be ripe for widespread use just yet, but the economic and technological changes make it applicable for more and more places in the country. Where before, it may have been cost-effective for very small islands or really remote communities, the changes may mean that it could be cost-effective for less-remote communities. Some islands which are not connected to the national grid may be more dependent on fuel oil generators, which would mean that their retail cost of electricity would be significantly above the national average of 7 pesos/kwH. (assuming full dependence on fuel oil generators, retail prices would be above 9 pesos/KwH]) [in the national grid, about 30% of the electricity is produced from cheap renewable sources like geothermal, wind and hydroelectric]. In these places, solar power achieve grid-parity (which is when the cost of solar power is equivalent to the cost of electricity from the grid) would come earlier than in the main electricity grid.

While electricity from PV cells is still a bit more expensive than that from fuel-oil generators, there are some advantages of using PV cells even now. This would include:
Lesser transmission costs and risk. Solar energy is produced nearer the consumer, which means less cost for transmitting the electricity, and less risk of having power cuts because of problems in the transmission. After all, terrorists, rebels or extortionists could always blow up power lines; or an earthquake or other disaster could happen.

Possibility of having more sunlight, solar cells lasting longer. All the computations re the cost of solar energy are based on the expected amount of sunlight during a 20-year period. If there happen to be lesser cloudy days than the average, the electricity produced by the PV cells would be more, meaning that the cost per KwH would be less. Also, after the 20-year period, the solar cell will most probably still work; any electricity produced after this point is also cheaper.

Funds for projects that reduce CO2 emissions. Under international agreements meant to reduce greenhouse gases, funds are available for projects (especially in the third world) which reduce greenhouse gases. This is only available in cases where they are not (yet) commercially viable. Solar energy projects in the Philippines would qualify for these grants. These payments could easily bridge the gap between the cost of solar power and conventional electricity.

For more on solar energy: Solar Energy Links , Solar Energy in the Philippines