Monday, July 03, 2017

Energy 97, Solar can replace coal power in the PH?

There is a funny claim by the President of Solar Philippines, also son of Sen. Loren Legarda, Leandro Leviste. Reported in BWorld today.

Look at his claim: solar at P5.39/kWh vs average generation cost from different sources at P8.17/kWh.

These numbers seem like jokes. Here’s why.

1. The average generation charges of Meralco were P4.85/kWh in May and P4.37/kWh in June 2017, which already includes the more expensive peaking plants. These are almost half of Mr. Leviste’s P8.17/kWh data. Where did he get that number, perhaps from one of the inefficient electric cooperatives in the country?

See table below. These power plants are mostly coal and natural gas. #7 “Others” are mostly peaking plants from TMO, Panay, Toledo and 1590 Energy Corp., see their low dispatch rate of 13.3% and low energy share of only 1.4% of total, meaning they run only during peak hours, few hours a day.

2. Mr. Leviste’s P5.39/kWh solar price is cool, if true. Because solar feed in tariff (FIT) or guaranteed price for 20 years is almost double that price. Solar plants that were granted FIT in 2015 would be getting P10.26/kWh this 2017.

3. Solar has low capacity factor, only about 18% (about 36% day time, zero at night time). When it’s day time but cloudy and raining, solar output will be low, capacity factor below 30%. If the solar plant will divert part of this for storage in battery so that it can produce power at night, then the already low solar output will become even lower. Plus the cost of huge batteries, they can quickly raise the price of solar to perhaps 2x of what Mr. Leviste claims.

So to answer the question in the title, the quick answer is NO. Intermittent, expensive solar energy can not replace stable, predictable and cheaper energy like coal and natgas. 

Government should step back from price control in energy via assured, guaranteed high price for solar-wind-biomass-ror hydro. Also step back from priority and mandatory feed of variable renewables like wind-solar in the grid that contributes to grid instability due to intermittent, easy-come-easy-go energy sources.

See also:

Sunday, July 02, 2017

Climate Tricks 62, Climate religionism of Arcy Garcia

Some people have deep faith in the anthropogenic global warming (AGW) or "man-made only" warming and climate change (CC), deep faith like religion. Natural global warming-global cooling cycles, or nature-made warming and CC is taboo for them, no such thing, it violates their religion and will never never accept it even if hard data and graphs are in front of them.

Among such climate religionists is Arcy Garcia. Arcy is a friend way back in the late 80s when I was still a socialist. While we have some similar beliefs like respect for human rights and opposition to Du30's no-due-process, no rule of law and violent drugs war, his socialist and anti-capitalist angsts prevail. A typical anti-capitalist ideologue who super-enjoys facebook capitalism, youtube capitalism, google and internet capitalism, etc.

What he does, he would tag me in fb arguing the usual UN-Al Gore hypothesis that AGW is so scary-alarming-worrying-frankensteining and the only solution is more UN, more governments to control, over-regulate and over-tax and later on kill fossil fuels, and they can "fight CC".

Initially I engaged him, then he would run away when faced with dozens of paleo-climate data dating back to tens of thousands or millions of years ago. Then after a few days or weeks, he would tag me again and argue the same AGW alarmism and so I would show him again lots of hard data, paleo-climate data showing that global warming is not unprecedented, there were many precedents of GW.

I would ask him and other climate alarmists of these simple questions, and they would have zero answer, or the usual sound of silence.

1. Planet Earth is 4.6 billion years old, when was the time, what period, that there was NO climate change?

2. What was it like before this "man-made" warming/CC -- less rain, no rain, more rains? less flood, no flood, more floods? less snow, no snow, more snow?

3. Of the recent global warming from the mid-1800s to roughly the last decade, how much of it was man-made vs nature-made? 100-0? 80-20? 51-49?

Then he would run away. And repeat the process --> tag, argue briefly, run away; tag, argue briefly, run away.

Today, he did the same, posting this.

I advised and reminded him of his lousy style. He can continue his climate religionism and alarmism in his own wall, sure he has many follower-climate religionists who will cheer him. But he puts it again in my wall with the usual plan to run away when confronted with hard data, so I told him of his climate kaduwagan at kabobohan (climate stupidity and cowardice).

I asked him again just one question -- Planet Earth is 4.6 billion years old, when was the time, what period, that there was NO climate change?

His slippery answer, “Masyadong malayo 4b years. Mas kapani paniwala yung unti unting pag atras.”

Palusot pero hindi lusot. There is data for 4+ billion years but he won't accept it because it disproves their religion -- that there was no previous CC, no warming precedents, "this GW and CC is unprecedented" they argue. 

More data here, Zero discussion, just dozens of charts and data and their sources.

After this, I am sure that whenever he finds another alarmist article, he will post it again in my fb wall, then he will run away again.

But then again, AGW is religion, based on faith and belief. People who believe in a God do not ask for charts or graphs or tables or equations, they just have faith, simple. This is AGW religionism, "man-made CC only" religion and cultism. And they use governments, the UN, the foreign aid like WB and ADB, for their religion. And vice versa, governments-UN-foreign aid use the religion to extract more political power, more global ecological central planning, more multi-trillion dollars climate money from taxpayers and energy consumers so they can "save the planet."

See also:
Climate Tricks 59, Trump's climate advisor to reverse US government alarmism, January 20, 2017 
Climate Tricks 60, Alarmism by the socialists and global ecological central planners, January 28, 2017 

Climate Tricks 61, Hysteria and tantrums over Trump's withrawal from Paris Agreement, June 02, 2017

Friday, June 30, 2017

BWorld 141, Reducing system loss, Part 2

* This is my article in BusinessWorld last Wednesday.

This is a follow up to a previous piece entitled, “Rule of law in Distribution system loss cap (June 7).” This sequel is prompted by three recent developments: (a) “NEA seeks expanded authority over electricity distributors (BusinessWorld, June 20),” (b) “DoE official backs NEA control over power distributors (BusinessWorld, June 21),” and (c) public hearing early this month by the Energy Regulatory Commission (ERC) to reduce the system loss cap of all distribution utilities (DUs).

The ERC plans to allow higher cap (maximum rate of system loss) for electric cooperatives (ECs) compared to private DUs.

In particular, the ERC plan is to impose a technical loss cap of 3.25% to 7.0% for three clusters of ECs but only 2.75% cap for private DUs and a non-technical loss cap of 4.5% of energy input for all ECs but only 1.25% cap for private DUs.

The message is that the proposed new ERC regulation is to favor ECs, all under the supervision of the National Electrification Administration (NEA), which has the effect of allowing them to incur higher wastes that can be passed on to electricity consumers while forcing private DUs to spend more on higher capex so that their system losses are reduced to the barest minimum.

The NEA and the various provincial ECs are not exactly doing well in consistently reducing the distribution system loss and raising the overall electrification rate in the country.

As of 2013, only 87.5% of all households in the country have electricity, and not all of them have 24/7 electricity, many still suffer from frequent “Earth Hours” -- that is to say power outages -- daily. (See table.)

The Philippines’ archipelagic geography is a contributor of course for the rather low electrification rate as many households in far away islands are off-grid and rely on generation sets administered by Napocor-SPUG and small private electricity sellers. More off-grid areas are now using solar.

Still, the absence of 24/7 electricity in many areas covered by ECs as administered by NEA is a problem. When there are frequent brownouts, people use two things: candles and generation sets. Candles are among the major causes of fires in houses and communities while gensets are noisy and are running on more expensive fuel, diesel oil.

The Philippines’ low electricity generation compared to its neighbors in the region (column 4 of the table) is a result of combination of many factors, like the huge bureaucracies face by generation companies putting up new power plants, and rigidities in the electricity distribution system.

Protecting the electricity consumers via lower distribution charge, lower system loss charge, and lower incidence of brownouts can be done via the following measures.

One, both the ERC and the NEA should identify which are the most inefficient, lowest-rating ECs or DUs, push them to be corporatized (not exactly “privatized” because ECs are already private entities). These agencies, in turn, should serve notice to these ECs that if they fail to make their operations more efficient, then they will be corporatized. With these measures, these ECs will be forced to improve their systems loss, collection efficiency, employee-customer ratio, etc.

Two, the government should remove differences in caps of systems losses between DUs and ECs. The ERC has to determine the increase in rates so that DUs can comply with their systems loss cap since they need to put up more expensive equipment to decrease technical systems loss. Having a different system loss cap for ECs and DUs means the ERC will not exactly be protecting the consumers but more of protecting ECs so that their inefficient if not outright wasteful operations are tolerated and rewarded with higher profit.

Three, NEA should not aspire to supervise all DUs including private corporations. It is not exactly good at instilling financial discipline on all ECs as a number of them are inefficient and therefore lose money while charging high costs to their consumers (See “NEA offers P1.7-B loan window for distressed power cooperatives,” BusinessWorld, April 12). NEA in fact should step back and give more supervisory functions to the Securities and Exchange Commission (SEC) via ECs that were corporatized. After all, the SEC has more transparent, more universal corporate rules than NEA.

Bienvenido S. Oplas, Jr. is a Fellow of SEANET and President of Minimal Government Thinkers. Both are members of Economic Freedom Network (EFN) Asia.

See also:
BWorld 135, On reducing the distribution system loss, June 9, 2017
BWorld 138, PPP vs ODA, Part 2, June 21, 2017 

BWorld 139, State central planning vs household decentralized planning, June 22, 2017 

BWorld 140, Mineral rent and taxation, June 23, 2017

Drugs war 7, Duterte first year, one year of impunity

Today is the first of the six-years term of President Rodrigo Duterte. His administration is known for drugs-drugs-drugs preoccupation and the series of deaths and murders by the thousands of suspected drug pushers and users. One year of official "drugs war" (unofficial drugs war and lots of murders from mid-May to June 29, 2016 when he was still a "President Elect"). One year of impunity.

A disturbing article from interaksyon today.

"They were already dead... so why take them to hospital? An analysis of crime data from two of Metro Manila’s five police districts and interviews with doctors, law enforcement officials and victims’ families point to one answer: Police were sending corpses to hospitals to destroy evidence at crime scenes and hide the fact that they were executing drug suspects."

It's a long article with details how police murder victims, often killed pointblank, are still brought to hospital ERs, partly to show that the police "care" for victims of violence.

I think this partly or largely explains why the Mautes, Abus and other organized armed groups have consolidated if not strengthened during the Du30 administration -- the police were busy harassing and killing unarmed suspects so the real criminals, armed and organized, were relatively free to move around.

The AFP should be doing external defense, PNP for internal defense. But since the PNP is busy catching motorcycle drivers with no helmets, killing unarmed drug suspects, the real armed criminals are freer to move around, PNP cannot get them so the AFP is deployed.

See also:

Friday, June 23, 2017

Asia stockmarkets the past year

Stockmarkets in Asia the past year until today. PH, ID, TH and MY, respectively. Is PDu30 inspiring to business or not? Data from

CN's Shanghai, Shenzhen, HK, TW, respectively. Stocks sentiment in PH seems similar with CN. Could be one reason why Du30 loves Xi.

SG, JP, KR and IN, respectively. In these 11 economies, PH and CN are the laggards for the past 12 months. 

Investors see political and business instability in both CN and PH. Instability in the leadership of Xi and Du30, distrust in the lack of rule of law in these two countries.

BWorld 140, Mineral rent and taxation

* This is my paper in BusinessWorld last Wednesday.

The Philippines’ mining potential is inversely proportional to government mining policies.

Until about two years ago, the debate was on how much tax hike would be imposed on mining. Then early this year, the debate shifted to outright suspension and cancellation of operations by many mining companies. After the Commission on Appointments rejection of Ms. Gina Lopez as DENR secretary last May 3, the uncertainties have greatly subsided and certain sectors are reviving the old debate -- how much tax increases to impose on big mining companies.

Many of the anti-mining sentiments and groups will be jumping on this issue. Very high taxes on metallic mining companies will produce three results that are all favorable to them: (a) some operating companies will be forced to close down especially when global metallic prices are low; (b) planned projects or expansion of existing mines will be discontinued; and (c) companies that continue to operate will be forced to somehow underdeclare output and these groups will further demonize them and lobby for their closure.

In some developed countries like the US, Canada, and Australia, it seems that even big environmentalist groups do not lobby for mining closure but their counterparts in the Philippines are so adamant in this philosophical nirvana.

Consider some data for member-countries of the Asia-Pacific Economic Cooperation (APEC) below. Two technical terms are used:

1. Mineral rent: the difference between the value of production for a stock of minerals at world prices and their total costs of production. This rent is not the same as value added to GDP. Rent is pure profit (price minus marginal cost multiplied by quantity) while value-added is the sum of earnings from production that are due to residents. Thus, salaries of mine workers are included in GDP value-added but not in rent.

2. Mining Contribution Index (MCI) is calculated based on aspects of mining contribution to national economies, composite for three variables: (a) Mineral export contribution in 2010 as percent of total merchandise exports, (b) Increase/decrease in mineral export contribution 2005 to 2010, and; (c) Mineral production value as a percentage of GDP in 2010.

The numbers show the following:

1. China being a powerhouse producer of copper, silver, zinc, lead, and gold is the world’s biggest mining country despite having a low MCI. Australia comes second and its output is almost twelve times than that of the Philippines.

2. Countries on the “ring side” of the Pacific Rim generally have higher MCI -- Australia, Chile, Papua New Guinea, Peru -- than those a bit far from the Rim.

3. The Philippines is estimated to have $1 trillion-mining potential yet its actual output in a year is low, only $7 billion in 2013, much of it from nickel production as the country is the world’s second biggest producer of nickel, next only to Indonesia.

So a rich and developed Australia allows and optimizes mining while a poor Philippines with big potential for mining discourages it, at least in the minds of many environmentalists and some accidental DENR officials.

Responsible mining is happening here and abroad. So long as local mining companies follow the law in environmental protection and rehabilitation, and doing plenty of community projects as specified by law, they should not be demonized and over-taxed and/or over-bureaucratized.

The Philippine government can improve the mining attractiveness of the country via two important taxation policies:

One, do not further increase taxes as existing taxes, fees, royalties, bonds, fines, mandatory contributions, mandatory community projects, and environmental rehabilitation are already high and plentiful.

Two, the government should also ensure stable tax rates, or reduce demand for ad hoc taxes on excess or windfall profits as there are also no ad hoc tax breaks or subsidies for excess losses when world metal prices are low. Tax stability is more useful for private players than giving them certain fiscal privileges because these policies may later be challenged and reversed.

Having rule of law in mining audit, environmental rehabilitation, and tax stability is the single most important function of any government in economies with proven high mining potential. The Philippine government should take this path.

See also:
BWorld 137, ASEAN trade expansion and RCEP, June 20, 2017 
BWorld 138, PPP vs ODA, Part 2, June 21, 2017 

BWorld 139, State central planning vs household decentralized planning, June 22, 2017

Thursday, June 22, 2017

Oil competition, US vs OPEC

Thank you for competing with OPEC and Russia, US shale oil capitalism. I hope we can go back to below $40/barrel again.

"The resurgence of U.S. shale is already complicating OPEC’s efforts to draw down global stocks in 2017, as well as threatening its market share in 2018.

OPEC now predicts U.S. oil production will increase by 800,000 bpd in 2017, compared with a projected decline of 150,000 bpd at the time of its December forecast (“Monthly Oil Market Report”, OPEC, June 2017)."

"Thanks largely to the domestic hydraulic fracturing revolution, the U.S. has been the world’s top natural gas producer since 2009, passing Russia, and the top producer of oil and petroleum hydrocarbons since 2014, passing Saudi Arabia."

Pol. Ideology 71, Georgism and the geolibertarians

A friend posted in one of my fb groups this question, "Do free markets and privatization encourage monopolies?"

I replied that innovation creates temporary micro monopolies. Government franchising, local and natl govts, create permanent monopolies. From tricycle route monopoly to electric coop area monopoly.

Then a fan of Georgism or geolibertarianism argued that “Privatization of land and natural resources encourages land monopolies.”

(I got this meme from the web, which I think somehow simplifies the definitions.)

These guys dislike land privatization, they want communal or state ownership of all lands in a country. Below are some of the georgists' arguments.

1. “Land sale is never truly a free market because a free market involves the exchange of legitimately owned goods and services.”

My late father owns about 2-3 hectares of land in the province that he bought many decades ago out of his entrepreneurial savings. He has no right to "legitimately own" that land? And give to us later? If no, who should own it, the commune? the state?

2. "He can enjoy the rights of ownership of the land, but land is ultimately common."

Meaning he cannot pass ownership to his children, surrender ownership to the commune? Lousy philosophy. If that is the case, owners of land won't plant long-gestation crops like forest trees, mango and coconut trees, etc. Next round of inheritors who have zero interest in trees will simply cut those mature trees, sell the lumber, enjoy the money in partying and the land is back to being idle. Lousy philosophy, very anti-market.

3. "People lease land and make productive use of it all the time." 

Wrong. Many people have no interest in rural land, they want the money quick and go to the cities or live abroad. It is the inheritance among families that often ensure productive use of the land.

4. "Private landowners can sit on a piece of land without doing anything to it." 

It is fine, it's a gamble that land price will rise quick, or it may not. Instead of higher price, one may get higher cost of protecting an idle land -- from govt politicians, bureaucrats and their friends, from armed extortionists like NPAs and Abus.

Currently local governments collect rent via real property tax (RPT). They can even confiscate private lands with high unpaid RPT. Then local govts enjoy the money even if all they do is play politics.

5. "Land speculation is wrong." 

Speculation, boom and bust, risks and rewards, expansion and bankruptcy, are 100% part of free capitalism's DNA. Remove speculation and business gamble, it's not free capitalism anymore.

The georgists hate privatization of land, that land ownership should be communal, belong to the commons. This is anti-free market philosophy. The essence of market capitalism is private property, not common/communal property.

Speculation is about risks and rewards, it's not all rewards, that they call "rent". Capitalism without bankruptcy is like religion without sin. Likewise speculation without risks is like religion without sin. 

These guys cannot support private property in land capitalism. Sunlight, wind, rainwater we cannot occupy; land, even portions of a river or lake we can occupy, we can establish private prop there. Sunlight, wind, rainwater we cannot create but we can create land (thanks to modern reclamation tech), we can create man-made lakes.

Land speculation is not a problem. Too many people got burned waiting for their land prices to go up fast but failed. When state-connected land grabbers, when armed extortionists like NPA and Abus, when professional squatters come, the value of their land decreases, not increases.

6. "Land has no cost to bring into production."

Wrong. Land populated by NPAs and Abus has no value to you or anyone else unless you are part of these extortionist groups too. The Ayalas, the Sy family, etc. will not buy or develop this type of land even if sold to them at P1/sq.m.

A bare land, populated only by snakes, frogs, rats, other wild animals (and assuming no extortionists as mentioned above) has very low value.

The same land developed by land speculation capitalists -- with concrete road, drainage, canals, street lights, multipurpose hall with swimming pool, etc. -- has high value. I support this type of land speculation.

7. "The supply of land is fixed." 

Wrong. The supply of land is rising. Among the examples:

1. Land reclamation everywhere makes the land ever-expanding. The space where the new HK airport is now based used to be a sea. Many structures in Dubai are sitting on formerly a sea, again thanks to land reclamation.

2. What is inland water like a wide lake or river or marshland, part or whole of it can become land.

3. Hilly or mountainous land good only for bushes and snakes and rats to reside can become expensive mt resorts.

4. Some 1,500 hectares of land was non-existent in Metro Manila before, until the Bay City in Manila Bay was created via land reclamation, hosting the CCP complex, Financial Center area (PNP, PAL, WTC, GSIS,...), CBD (SM MOA, etc). About 2 more big land reclamation projects at Manila Bay are planned, about 600 hectares each.

5. China's artificial islands at the SCS/WPS.

It is through the land speculation of capitalists and entrepreneurs, the risks they faced and the rewards they might get someday, or they may lose even their shirts when the costly land devt project flops.

Gains from land use can be called economic rent or econ profit as a result of land development and speculation. Or it can be economic disaster if the project flops.

Common or communal ownership of land. Communism, lousy. 

7 " 'Land" includes water and all other natural resources'. 

Sigurista masyado. Pacific Ocean is land, Atlantic Ocean is land, agh! But then again, people are entitled to their illusion. 

Geo-commies argue that even the seas and oceans are "land" and hence, cannot be privately-owned. I'm floored by that argument, really weird and funny. So I will call the geoism movement as a leftist movement. No private ownership of land, only common, communal ownership, lousy. Liberty is individual, not national or clan or communal liberty. The same way that property rights refer to private property, not national or communal ownership. 

Private property, period. Disrespect private property and private ownership, that's leftism for me.

See also: