Transcript Renewable Energy on Agri

Renewable Energy
A Boon or Bane to Agri-Business?
Presented by:
Archie B. Amarra
Executive Vice President
Roxas Holdings, Inc
• Relevant policy framework for the Renewable
Energy Program
– Republic Act 9637 (Biofuels Act of 2006)
– Republic Act 9513 (Renewable Act of 2008)
• Both laws seek to promote the accelerated
development and utilization of fuels and
power from renewable sources.
• Agribusiness, being the channel for biofuels
and biopower production, is expected to
benefit from the successful implementation of
the RE Program
Bioethanol Program
• Requirement for mandated 10% blend (w/
gasoline) – 540 million liters p.a.
• Status of projects
– 21 projects initially proposed after passage of law
– 8 out of 21 projects registered with BOI P17.8 B
investments (for the incentives)
– Presently, only 4 projects (133 M liters/yr) have
been completed and operational; only two
projects are currently being pursued
Bioethanol Program
• Production of bioethanol is largely dependent on the
production of feedstock which constitutes about 75%
of the cost of production
• Required feedstock for 540 M li. bioethanol
– @ 90% sugarcane and 10% molasses as feedstock
• 7.0 million tonnes cane from 115,000 has.
• 200,000 mt molasses
– @ 80% sugarcane and 20% molasses as feedstock
• 6.0 million tonnes cane from 100,000 has.
• 410,000 mt molasses
• The Philippine Agriculture Development Corporation
has identified greenfield/currently unproductive areas
available for the development of new ethanol projects
Bioethanol Program
• Contribution to the economy:
• Investments in the countryside in the establishment of
distilleries
• ~ P25 billion in value added from production of
feedstock up to sale of bioethanol (@P45/li x 540 M li)
• Availability of organic fertilizer from the distillation
process
• ~ 87,000 jobs in the construction, operation of
distilleries and downstream industries
• ~ 120,000 additional employment in feedstock
production
Renewable Energy Program
• Installation target for biomass RE – 250 MW
(under Feed-in Tariff mechanism)
– 2,693 Giga Watt hours p.a
– Equivalent to 5 billion tonnes of biomass
• Initially proposed projects - 433 MW installed
worth US$ 1.3 Billion investment
• Most of the proposed projects are designed to
use agriculture residues as fuel
Renewable Energy Program
• Estimated volume of biomass from major crops
Planted/
Estimated
Production , Million
Crop
Harvested Area,
Volume of Biomass,
Tonnes p.a.
Million Tonnes p.a.
Million Ha.
Hull = 4.06
Rice
4.270
16.24
Straw= 4.27
Husk = 7.00
Coconut
3.359
14.85
Fronds = 6.95
Bagasse = 6.00
Sugarcane
0.400
22.00
Field Trash = 6.00
Source: Basic crop data, Bureau of Agricultural Statistics (www.bas.gov.ph)
• Volume of biomass required for 250 MW
installation target – 5.4 Million mt/yr
Renewable Energy Program
• Benefits to agri-business:
• Increased investments in the countryside biomass RE facilities will be installed where
the fuel is
• Estimated value added to agriculture from
utilization of agri residues ~ P7 billion/year
• Additional income to rural folks > results in
increased purchasing power
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Renewable Energy Program
• Benefits to agri-business:
• Incentivized food production due to higher
returns from farming
• Sustainable employment
• 78,000 Jobs to construct the power plants
• 4,000 jobs for plant operation (professionals, skilled and semiskilled workers)
• 7,000 jobs from the feedstock supply chain
• 6,000 jobs from cultivation of energy crop
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Reality Check
• Bioethanol program - 7 years from enactment
of Biofuels Law in 2006
– Only four bioethanol plants are operational,
supplying 12% of annual bioethanol requirement
– 87 percent or 479 million li. – still imported
• RE program – 4 years from enactment of RE
Law
– About four biomass RE plants have been
established but still cannot avail of incentives,
primarily the feed-in tariff
Barriers to Development of Bioethanol
and Biomass RE Projects
• Delayed development and implementation of enabling
mechanisms for the incentives under the laws, e.g.:
– allocation/withdrawal of locally produced bioethanol
– Establishment of feed-in tariff for RE-derived electricity;
mechanisms for renewable portfolio standards,
interconnection and wheeling
• Stringent regulatory requirements that scare off
developers
– DOE registration/contract
– DOE plan to implement occupational health, safety and
environmental requirements even if these are already
being done by other government agencies
Barriers to Development of Bioethanol
and Biomass RE Projects
• Mixed signals with respect to the commitment of
government to push for the development of renewable
energy projects
• Approval of higher rates/returns for coal-fired power
projects compared to biomass
• Recent approval for a coal project equates to around P8/kwh rate (@
18.3% IRR) while the approved FiT for biomass is only 6.63 (@17%
IRR)
• Proposal to bid out FiT after ERC has already issued the FiT
Rules
• Limiting installation targets (for availment of FiT) of
technologies, particularly run-off river and biomass, which
have shown to be competitive with newly approved coal
projects
Approved
Rates
Difference
6.15
5.90
0.25
Biomass 7.00
6.63
0.37
Wind
10.37
8.93
1.44
Solar
17.95
9.68
8.27
Proposed Rates
Hydro
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