Solar sa Politika and energy security

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January is always cold, usually the coldest month every year in the tropics north of the equator, and even in the northern hemisphere. Solar as energy source has also been weak in the country this month as it was mostly cloudy and solar dislikes clouds and other shade.

But solar business has been hot this month. See these recent reports in The STAR mostly written by Brix Lelis: “DOE says Solar Philippines’ contract failures cost P24 billion” (Jan. 13), “Leviste’s Solar Para sa Bayan now defunct” (Jan. 16), “Lawmaker slams Leviste for ‘ghost’ solar projects” (Jan. 19), “Garin: Leviste guilty of conflict of interest” (Jan. 22), “SPNEC rebrand sparks buzz over MGreen listing” (Jan. 23), “Leviste exits SPNEC, MTerra Solar boards” (Jan. 24).

Rep. Leandro Leviste is a neophyte congressman from Batangas and son of Sen. Loren Legarda and former Batangas governor Antonio Leviste, and founder-owner of Solar Philippines Power Project Holdings Inc. (SPPPHI or SP for short) and Solar Para sa Bayan Corp. (SPBC). I call his companies as “Solar sa Politika” because of the deep political connections and privileges that he enjoyed, like getting a congressional franchise for SPBC, the only RE company with its own franchise.

His company SP has been slapped by the Department of Energy (DOE) with a P24 billion penalty for its failure to deliver its commitments, to develop some 11,400 MW of solar farms under 42 Service Contracts (SCs) with DOE from 2017-2022.

DOE Secretary Sharon Garin said the DOE consistently reached out to SP regarding its contracts but the company failed to respond. So DOE terminated 24 of the 42 SCs.

Despite these, SP got a second chance, winning one of two bids in the Green Energy Auction (GEA) program of DOE. Then seven existing solar and wind projects awarded to SP under the GEA scheme are currently tagged by the DOE as “non-compliant” since none of the committed construction projects were completed before Dec. 25, 2025.

Instead of recognizing his corporate lapses and non-compliance with DOE, Leviste looked for a scapegoat and pointed to government red tape as a reason why his projects stalled.

I am no fan of intermittent renewable energy (RE) like solar and wind for many economic reasons, especially their higher inflation effect. I made a computation of (Solar+Wind) as percent of total power generation (S+W)/T, 2014 vs 2024. Then I computed the average inflation that covered both years, 2013-2015 vs 2023-2025. The results of (a) (S+W)/T ratio in 2014 to 2024, and (b) average inflation 2013-2025 to 2023-2025, both units in percent, are as follows:

Indonesia: (a) 0 to 0.4, (b) 6.4 to 2.5.

Malaysia: (a) 0.2 to 1.6, (b) 2.5 to 1.9.

Thailand: (a) 1.3 to 4.4, (b) 1.1 to 0.6.

Philippines: (a) 0.2 to 3.9, (b) 2.3 to 3.6.

Vietnam: (a) 0.1 to 12.7, (b) 3.8 to 3.4.

Japan: (a) 2.7 to 10.6, (b) 1.3 to 3.2.

Germany: (a) 15.0 to 42.8, (b) 1.0 to 3.5

Portugal: 24.1 to42.7, (b) 0.3 to 3.4.

UK: (a) 10.7 to 34.7, (b) 1.4 to 4.3.

Belgium: (a) 10.3 to 28.9, (b) 0.8 to 3.1.

The results of the above exercise showed that (i) the higher the increase in (S+W)/T ratio, the higher the increase in inflation, which is the case of all G7 countries and many Europeans; and (ii) the lower the (S+W)/T ratio, inflation declines.

But private energy companies, global and national, have been compromised and tied up with RE laws that made coercive mandates. So the companies must comply with rising share of solar and wind, or pay penalties which can be high. For now we have to comply with the RE law and work for its drastic revisions someday. Some reforms that are still compliant with the RE law below.

Regulatory reforms

One, strengthen and secure investor confidence amidst the SP controversy. New players will come to replace and occupy the vacant SCs left by SP. The DOE should avoid a repeat of this via measures to strengthen the rule of law in the RE sector.

Two, DOE to expedite ongoing procurement bids by capable industry players to replace non-performing developers. While fast-tracking is important, DOE should not compromise the consistent application of its procurement standards, requirements and protocols.

Three, have additional safeguards to ensure that interested players are truly financially and technically capable of delivering their commitments. Capable of complying with the agreed delivery commencement date (DCD).

Four, consider also the track record in terms of execution and operation of new SC bidders. GEA is a 20-year contract and hence, cannot be left to newbies with no track record.

Five, simplified business rules to expedite construction. While procurement, bidding, and auction are administered by the DOE, construction of solar and wind farms require other permits and clearances from other agencies. Like local governments, DENR and NCIP.

Six, NGCP to keep expanding the transmission system especially for large RE projects while ensuring to manage power variability.

Seven, DOE should conduct a parallel baseload energy auction (BEA) along with GEA. The goal is to have energy security and reliability. No blackout even for a minute.

Eight, Rep. Leviste should pay the penalties. He can ask for “discount” on rates of penalties, or ask for recomputation of the basis for penalties, the DOE should assist his intention to pay the penalties.

Nine, if DOE gives a “discount” even f the penalty is proven to be correct, DOE should suspend or disqualify the player in future GEA.

Ten, overall impact on the economy especially on potential GDP growth and inflation should be considered in balancing GEA and BEA.