The Future of Cebu’s Energy: Distributed MicroGrids

Cebu’s ever-booming economy has become more evident each day but with every construction of a building, a home, or a road, and for each expansion of business comes a corresponding demand for energy which Cebu is struggling with. This will surely force all the affected parties towards energy security and energy independence.

The growth in energy consumption will be fueled by Cebu’s good economic prospects, big-ticket infrastructure projects, vigorous tourism industry, vibrant business process management (BPM), expanding real estate sector and a young tech-savvy population. All this requires some form of collective energy explorations to meet the future energy demand.

In order to fulfill projected demands in the coming years, the Department of Energy (DOE) has called for more investments in the power generation sector. Republic Act No. 9513 or the Renewable Energy Act of 2008 was passed 10 years ago, aimed to encourage the development and use of renewable energy resources as tools to prevent or reduce harmful emissions; thereby balancing the goals of economic growth and development with the protection of health and the environment.

But despite all the benefits of the tax holiday, duty-free importation of renewable machinery, 0% VAT rate, tax exemption on carbon credits and other incentives, non-competitiveness among market players; and the lack of social acceptability hound industry players, regulators, and other stakeholders.

The way I see it, the law targets the “BIG” players and practically ignores the role of the little guy - the consumers. But what if there was a way for small players to participate? This requires innovation, and a new perspective and perhaps even a new approach to enable Cebu to have a strategic power source? What if we made our own collective energy exploration towards energy independence?

A quick history of Centralized Energy Distribution

In the 1880s, people started getting tired of using the gas lamps and started opting for an improved lighting source: electricity. The popularity of the electric lightbulb rose quickly, and electric utility companies swiftly took advantage of the economies of scale and created a centralized system of power generation, distribution, and overall management.

This meant large-scale generation of electricity at a smaller number of facilities, located a long distance away from customers. Power was then sent through a network of high-voltage transmission lines referred to as the “power grid.”

Since then, our electrical grid has remained largely unchanged except for new policies that have come into play regarding ownership and competition, but the structure of the network itself has held steady. However, this system is not necessarily the only option… or the best option.

Check out 7 ways to conserve electricity to save money!

Plugging into the SUN

Cebu is where most of the load is located in the Visayas region because it is where there are increasing investments and industries. In Cebu, only two types of renewable energy technologies are operated by power firms – solar and hydropower. Other renewable options are also being explored.

But among the several types of renewable energy sources I’ve mentioned, solar power is the fastest to set-up. The Philippines which is near the equator is very conducive for solar power projects. Solar power plants are built on open-to-the-path-of-sunlight spaces at approximately one hectare for every one megawatt of solar power.

Among the advantages of solar is its maintenance. With solar power plants, there are no moving parts that need to be lubricated and checked, unlike diesel and hydropower plants that have motor parts and turbines which require regular check-ups to prevent wear and tear.

They only need to be sprayed with water four times a year to remove dust and other debris that may settle on the panels; or even lesser with frequent rains. Solar also doesn’t produce hazardous wastes. Burning of fossil fuels produces carbon monoxide. Aside from air pollution, there is also noise pollution. With solar, there is hardly any sound.

Drawbacks of Standalone Renewable Energy Sources

Hydropower is location dependent but has one of the most reliable plant factor or capacity factor at 85 to 95 percent and also very expensive to set-up. (Capacity factor refers to the plant’s availability to deliver its rated power capacity) While solar power plants have a much lower capacity factor of only 20 percent due to conditions like rains and cloudy skies.

Similarly, Wind turbines can’t operate safely in high wind speeds, and low wind speeds produce little power. Biomass plants collapse at low temperatures. A mixture of non-renewable (Oil and Natural Gas sources) must still be considered and explored at some point for practicality.

Distributed Energy Systems

So if multiple energy sources (non-/renewable solutions) are combined into one hybrid power generating system, the drawbacks can be avoided partially/completely depending on the control units. This new approach is what I believe to be the Distributed Micro Grids or Energy Systems which can be composed of oil & natural gas plus the renewable energy such as solar, wind, biomass and the like.

The response to the aging, inefficient electricity network has been a rise in distributed energy. It is the utilization of smaller power generation and storage systems used to power homes, businesses and communities. Imagine living on a paradise island (Cebu), but without electricity, the dream could quickly become a nightmare.

Most distributed energy generation systems take advantage of renewable energy sources such as solar, wind, hydropower, and others. Energy storage systems, like batteries, play an important part of the system by storing the energy generated by intermittent renewable power sources to ensure energy reliability, and to ease the demand on the power grid.

As an Industrial Engineer, I tend to look at the bigger picture of systems and this is what I see as the best feasible approach to move Cebu one step closer to not only energy security but also energy independence!

Net Metering Program

The program is open to residential and commercial customers who have existing solar facilities with a capacity of not more than 100 kilowatts (kW). Under the Renewable Energy Act of 2008, net metering is an incentive scheme carried out by the Energy Regulatory Commission (ERC) that aims to encourage users to participate in the generation of renewable energy for their own use while selling the excess electricity to a distribution utility.

In Cebu, VECO’s net metering program allows customers to acquire the correct metering system that is intended for those using solar technology. The distribution utility (DU) gives a peso credit for excess electricity received equivalent to the DU’s blended generation cost. The cost excludes other generation adjustments and deducts the credits earned to the customer’s electric bill.

Check out VECO's Mountain Electrification Program!

One size does not fit all

The government has initiated multiple programs already such as DOE’s Household Electrification Program (HEP), National Electrification Administration’s Sitio Electrification Program (SEP), while non-government organizations like MyShelter Foundation’s Liter of Light program are also doing their part, but these are not enough to supply the growing energy demand of a location if they want to grow.

Industries, commercial establishments, and residential users are beginning to look to solar energy as a means to save on their electricity bills and to promote the use of clean energy as well.

But the size and cost of a distributed energy system depend on the amount of equipment and related activity in that particular system. For a house, it is the number of appliances, electric consumption, and architecture of a house. For a business, it may vary in terms of size, type of operation, industry, and even goal.

The Net Metering program provides the perfect incentive to start building distributed microgrids, with solar energy at the core, especially in Cebu. The “Green” Investment for a residential user will provide savings and pay for itself in 5 years (provided that consumption remains consistent). The solar panels themselves will last for 25 years which can provide more savings or even potential selling of excess electricity for that period.

Distributed Energy & Micro-Grid Opportunities

To facilitate better access to energy, local-scale power generating and consumption systems are able to operate independently from the mains power grid or in synchronization with it, microgrids provide remote and/or rural areas with a secure and reliable supply of green, locally explored & generated energy. They can also be used effectively for industrial and retail operations.

A microgrid is typically made up of:

Renewable energy sources (solar, wind and/or biomass)
Fossil fuel energy sources to ensure grid stability (oil & natural gas)
Energy storage solutions (batteries, hydrogen storage, mechanical storage, etc.)
A low-voltage supply grid regulated by a smart control system

Microgrids have become properly competitive as a result of technological progress and falling prices of certain key components, batteries and control systems.

Who can potentially seize the opportunity?

With net-metering in place, Solar PV suppliers/installers and other micro-grid components accessible in Cebu, almost anyone can potentially set-up their own micro-grid to achieve minimum energy security.

Warehouse operators - Depending on the size, the larger the warehouse facility, the more roof space can be utilized for solar power. The set-up could be like this:

• Energy Storage / Generator - used for backup or excess
• Solar roofs - 1 hectare = 1KW, so depending on the size, this can be your basis for potential energy generation income
• Add other sources: Other sources may be needed for back-up and depending on the type of warehouse that is being operated (Automated, Climate Controlled, and the like)

Agribusinesses - Depending on what type of agribusiness, they can implement this micro-grid set-up:

• Other sources: Bio-mass and Vertical omnidirectional wind turbine (if located in windy highlands) can be dedicated for consumption while solar power is used for income generation via net-metering.
• Solar PV on the ground or on Rooftops - for the storage/office/production facilities.
• Diesel/Oil/Gas generator + Energy storage - the source of backup generation

Manufacturers - Manufacturing plants typically can use this to increase efficiency in their operations by using solar as back-up for short-term blackouts, and energy cost savings.

• Energy Storage - Provides energy arbitrage and reduce peak demand charges
• Solar PV - Since manufacturers are large facilities, you have the option for Solar Roof or ground-mounted PV
• Localized CHP (Cogeneration or Combined Heat & Power) - provides more efficient use of fuel because otherwise-wasted heat from electricity generation is put to some productive use.
• Energy Management System - Smart management systems can schedule loads and generate revenues from the demand of the facility.

Real Estate Developers - Successful micro grids implemented around the world are typically community-based. Real Estate Developers are in the business of building communities. As more and more young people increase their income through the various growing industries of Cebu, having a distributed energy microgrid-enabled community can distinguish the property development from competitors. Here’s the potential set-up:

• Diesel generator, Batteries/Storage - Excess and back-ups
• Solar enabled development - Street lights are mounted with Solar PV, property development shared facilities with Solar Roofs, or a shared ground-mounted mini-Solar Farm for shared use.
• Solar homes - Built-in solar home systems & homeowners can later benefit from net metering.
• Other energy sources - the potential for wind/wave, depending on the location once again.
• Micro-CHP - Customers can choose to also install a micro CHP system to homes or a shared one.

Subdivision / Community Associations - This is for those already living in a subdivision and wants to build their own distributed energy & micro-grid.

Cooperatives - Coops are always looking for areas to save and also invest their money. Let’s say a particular coop owns multiple businesses, they can implement a micro-grid to save on costs. If they have agribusinesses, they can refer to the above. If they are an energy-generation coop, then they are in a better position to build bigger or even better microgrids.

Others - Economic zones, IT parks, business parks, malls, barangays, LGUs or whoever can use the model and build their own distributed energy & microgrids to not only contribute not only for Cebu’s but also the country’s energy reliability & resilience but also gain some revenue opportunities as well.

The Future of Energy for Cebu, Philippines

In the distributed micro-grids, anyone (whoever they are) can become energy-generation players gaining access to other potential revenue streams. These include price arbitrage opportunities — leveraging internal resources against real-time electricity prices to achieve the lowest cost mix of energy resources at any given time.

For the areas far from metro Cebu, to achieve their own energy security, they must consider tapping into local natural energy resources to make their micro-grid work. As an example, the poor town of Alegria was successful in their onshore oil & natural gas exploration giving a boost to the local economy as well as generating local jobs. At current production levels, the natural gas and oil reserve will last for 19 years.

After the success of the gas and oil explorations in the South, the DOE has already begun energy explorations on other parts of the province. More localized energy sources mean the lowering of energy costs which will make energy independence for Cebu one-step closer.

The next era of energy distribution is one that where power companies are not the only players, but one in which customers and utilities work together to create a greener, stronger, and more reliable energy network. The technologies are here, and with a cooperative effort, a new electrical energy structure is very much possible for not just Cebu but also the whole Philippines!

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