The harnessing and utilization of Renewable Energy (RE) comprises a critical component of Philippine government’s strategy to provide energy supply for the country. This is evident in the power sector where increased generation from geothermal and hydro resources has lessened the country's dependency on imported and polluting fuels. In the government's rural electrification efforts, on the other hand, renewable energy sources such as solar, micro-hydro, wind and biomass resources are seeing wide-scale use.
It is the government's policy to facilitate the energy sector's transition to a sustainable system with RE as an increasingly prominent, viable and competitive fuel option. The shift from fossil fuel sources to renewable forms of energy is a key strategy in ensuring the success of this transition. Moreover, current initiatives in the pursuit of this policy are directed towards creating a market-based environment that is conducive to private sector investment and participation and encourages technology transfer and research and development. Thus, current fiscal incentives provide for a preferential bias to RE technologies and projects which are environmentally sound.
Based on current projections of the Department of Energy (DOE), renewable energy is expected to provide up to 40 percent of the country's primary energy requirements over the ten-year period beginning in 2003. Although its share will decline in relation to the total figure, it is estimated to grow at an average annual rate of 2.4 percent in absolute terms. Biomass, micro-hydro, solar and wind will remain to be the largest contributors to the total share of renewable energy in the energy mix with an average share of 27.5 percent. Meanwhile, hydro and geothermal will contribute the balance and continue to be a significant source of electric power.
An alternative scenario has been drawn up which sets higher targets for RE's contribution to the country's installed generating capacity based on the enhancement of existing programs and strategies, realization of higher production targets, establishment of market-based industry and availability of new international financing schemes such as the Clean Development Mechanism (CDM). RE-based capacity is foreseen to reach 9,147 MW by 2013, a dramatic 100-percent increase from its current level of 4,449 MW. This corresponds to a total of 4,698 MW of RE-fueled power plants which need to be commissioned within the ten-year period.
With increased private sector investments as well as the adoption of modern and innovative technologies in exploration and development, the DOE is targeting the installation of an additional 1,200 MW of geothermal capacity within the next ten years, resulting in an increase of about 60 percent from the 2002 level of 1,931 MW. The attainment of this target is being pursued as a strategy to maintain, if not improve, the Philippines' ranking as the second largest geothermal producer in the world. For the hydro sector, the aim is for up to 2,950 MW of additional capacity to be installed within the next ten years on top of the 2002 level of 2,518 MW, reaching a total of 5,468 MW by 2013. Finally, the DOE will push for the installation of up to 548 MW from RE sources by 2013. Of this total, 417 MW will come from wind-based power while the remaining 131 MW will be sourced from solar, ocean and biomass.