The developers behind what could be the first offshore wind projects in the Philippines say their size and scale exceeds that in initial reports and that, in the longer-term, the potential for floating wind in the country is massive.
Speaking exclusively to OWJ, Triconti ECC Renewables Corporation director Björn Rosenberger said the bottom-fixed projects it hopes to develop in the Guimaras Strait, in the central Philippines, and the Aparri Bay area in the north of the country, which were reported to have a combined potential capacity of 1.2 GW, could actually be much larger.
To be developed in phases, the Guimaras Strait project is an 800-1,200 MW project and that in Aparri Bay is a 600-800-MW offshore windfarm.
Mr Rosenberger said the ‘contract’ reported to have been awarded to the company by the Department of Energy (DOE) in the Philippines enables Triconti to ‘stake a claim’ to develop the projects in a manner akin to the process used to develop an offshore oil and gas project. Mr Rosenberger said this is because the contracting model the DOE uses is derived from that used for offshore oil and gas legislation.
“Essentially, what it means is that Triconti is qualified to undertake all of the necessary pre-development work, and to develop and operate the windfarms if we decide to go ahead,” Mr Rosenberger explained.
“It enables us to explore the wind resource in the Guimaras Strait and Aparri Bay in detail and carry out the survey work required. The contract we have provides five years to conduct pre-development work but we anticipate that we could be ready to take a decision about full-scale development in two or three years.
“At the end of that period, if we want to, we can declare commerciality and our intention to press ahead with development. As far as we know, although there has been a lot of interest in the Philippines offshore wind market, we are the only company to have reached this stage with a project. But I think it is only a matter of time before other companies look seriously at other sites.”
Triconti was formed by Stream Invest Holding, a Swiss investment and service company focusing on the international renewable energy sector. The company operates worldwide in what Mr Rosenberger described as niche markets and has a diversified investment portfolio with returns from energy production and project development. The company has been working on onshore wind in the Philippines for some time.
Mr Rosenberger said Triconti believes it has ‘first mover’ advantage in the bottom-fixed offshore wind sector in the country, not least because the topography of the seabed in and around the Philippines means suitable shallow water areas are few and far between.
“The shallow water real estate is really quite limited, “ he told OWJ, “but in contrast, the potential for floating wind, in deeper water of the type that predominates around the country, is absolutely gigantic.
“Even in the areas between the many islands that make up the Philippines, the water depth is considerable. This means that, in the longer term, the Philippines will be mainly a floating wind market,” Mr Rosenberger said.
A World Bank report published in October 2019 found there were ‘reasonable wind resource areas in the northern and central areas of the Philippine archipelago, some of which are in waters shallow enough for fixed foundation offshore wind and that the Guimaras Strait ‘has 7 GW of technical potential for bottom-fixed offshore wind.’
The report cited three main areas suitable for floating offshore wind, north of Luzon and to the north and south of the Mindoro Island. The largest of these areas is off the south coast of Mindoro with a technical potential of 53 GW.
The World Bank said there are also numerous pockets around the archipelago with areas suitable for floating turbines but with comparatively low wind speeds. ‘Perhaps the most promising area for floating wind is to the north of Mindoro which is near the demand center around Manila,’ the report said.
Asked about the transmission infrastructure in the country to bring electricity from offshore wind ashore, to centres of population, and about potential grid connections, Mr Rosenberger said, “the grid situation is not too shaky, and a lot of effort is being made in the country to upgrade it. A lot of work has been done and more is planned.”
The World Bank report noted the Philippines includes more than 7,000 islands, with the bulk of the 100M population located on just eight. The major islands are connected by a transmission grid, but the extremities, for example north of Luzon and the fixed foundation opportunity in the Guimaras Strait, ‘had limited connectivity.’
Mr Rosenberger said the Aparri Bay project in the north of the country is a few kilometres offshore in water depths of 20-30 m, near a new northern transmission backbone. The Guimaras Strait project is being planned in water depths ranging from 10 m to 20 m.
Triconti’s director noted that, although long known as a coal-fired generation market, the Philippines Government intends to act as a market maker for a much higher level of renewable generation and is developing green energy rates that would guarantee prices for qualifying green energy projects.
Electricity prices in the Philippines are among the highest in southeast Asia, due in large part to dependence on imported diesel, oil, and coal. Partly in response to this, the government established a renewable energy target of 50% by 2030, with the majority coming from hydro (8.7 GW) and geothermal (3.5 GW), followed by wind (2.4 GW).
In 2019, the DOE announced it would fast-track implementation of two key renewable energy policies, following a directive from President Rodrigo Duterte to reduce the country’s dependence on coal. The first of the two policies, a Renewable Portfolio Standard, mandates that utilities must source some of their energy from renewables; the second, the Green Energy Option, is designed to empower consumers to demand their energy is from renewable resources.
A report from Institute for Energy Economics and Financial Analysis (IEEFA) said the Philippines could attract US$20Bn in investment in renewable energy over the next decade. That report said a Green Energy Tariff Programme is expected to be introduced later in 2020. As the IEEFA noted, in its New Energy Outlook 2019 report, BNEF forecast the last coal power capacity addition to the Philippine power grid would be in 2023, ‘if it is built at all.’
Asked about the Philippines ability to support the operation and maintenance of large-scale offshore wind projects, Mr Rosenberger said Vestas already has an O&M base in the country and links with domestic renewable energy developers, as do other leading manufacturers. Taiwan, whose offshore wind market is growing rapidly, where the government has expressed an interest in exporting offshore wind expertise, is only 60 minutes away by air.
“Offshore wind in the Philippines is a good fit with other regional offshore wind markets,” Mr Rosenberger concluded, highlighting Taiwan as the leading regional market for offshore wind, and Vietnam and Indonesia showing promise, with many potential synergies in the region.