Abstract
In an effort to expedite the electrification in off-grid areas in the Philippines, the Qualified Third Party (QTP) scheme encourages private sector to engage in power generation and distribution business through competitive selection, a process that requires at least two rival bidders with rigorous registration requirements. An exemption is offered for microgrids with sub-100 kW capacity by not undergo competitive selection in order to further attract investors and private sector to engage in these off-grid areas since these areas are deemed highly unviable. The Department of Energy opened around 995 areas waived by electric cooperatives for third party servicing. The sub-100 kW capacity can serve areas with fewer than 500 household connections, which fits the profile of the 995 areas. In this work, the techno-economic feasibility of installation of sub-100 kW microgrids is done in order to know the required level of subsidies, loans, and/or grants to sustainably operate in these areas. The proposed microgrids were evaluated using ISLA, an open-source microgrid optimizer validated by HOMER Pro, by finding the optimal system component sizes of solar PV, battery, and diesel generators with the least levelized cost of electricity (LCOE). Initial results suggest initial investment cost for the establishment of 15 sub-100 kW microgrids ranged from USD 0.5 to 1 M (~PHP 25 to 55 M), with LCOE averaged at PHP 10.26/kWh. This corresponds to 30 % reduction relative to the LCOE from using diesel generator only. Strategies such as partial financing and full grant of capital expenditures show that the former can provide generation rates at par with typical generation rates of existing electric cooperatives at ~PHP 5 to 6 per kWh, while full subsidy can significantly reduce the generation cost to PHP 2 to 3 per kWh. Providing long term and low interest rates from financial institutions to fund these projects will help hasten the deployment of sub-100 kW microgrids. To achieve financial sustainability in these areas, productive use of energy through income generating projects should be highly encouraged in order to give the inhabitants the capacity to pay.
