Solar company heats up the power game in PH
March 25, 2023 | Manila Standard
Former Energy secretary Vince Perez and Solar Pacific Energy Corp. chief executive Mike Lichtenfeld quickly bonded when they first met as colleagues in pursuit of higher academic achievement at Yale University in Connecticut, USA.
They discovered that both have strong conviction for the environment and on building a dynamic portfolio of renewable sources of power on a commercial scale.
Lichtenfeld was pursuing a Master of Environmental Management and a Master of Business Administration, while Perez spent a year as a fellow at the university and later on was invited to teach a course on renewable energy investing in emerging markets.
“I was lucky enough to know him. When I graduated, I think it was the time he went back to the Philippines and founded Alternergy. At that time, I moved to California and started cutting my teeth in solar independently. I went to work for a number of companies based in San Francisco, developing large-scale solar projects throughout the US, mostly the Western US. But we stayed in touch. I frequently visited here, and we talked about when is the right time to push forward with a solar venture,” Lichtenfeld said.
Bound by common interest, Lichtenfeld and Perez ushered in Solar Pacific as a unit of Alternergy Holdings Corp. in 2018, further expanding its thrust of electrifying buildings after buildings, islands after islands through renewable power technology.
While Solar Pacific was founded separately from Alternergy in 2013, the company eventually became a part of the holding firm as provider of electricity using solar energy. They collaborated on project development and capital-raising activities.
Solar Pacific, backed by Alternergy, is the first renewable energy company to commercialize the so-called rooftop solar energy system, boosting daytime power supply in Metro Manila through solar panels perched atop buildings, specifically shopping malls.
An expert in solar power generation, Lichtenfeld believes that renewable energy will continue to evolve as the norm of the future. The firm’s pioneering approach will continue to leverage for new opportunities and scale up adoption of more solar-powered projects.
“We were founded with a mission to bring affordable high-quality, solar and solar plus storage projects, particularly to island communities here in the Philippines and eventually to other areas within the region in Asia Pacific, where electric utilities and commercial customers often struggle with supply chain issues around diesel and other forms of conventional power—with very high tariffs, of course, very expensive. And, of course, our mission is also to do what we can to mitigate climate change and other environmental impacts from conventional power,” he said.
Solar Pacific’s first project in the Philippines is a utility-scale solar photo voltaic device, built and financed under a bilateral power purchase agreement with the Cagayan Electric Power & Light Company. The Kirahon solar project is actually the first large-scale solar PV project in the Philippines outside the feed-in-tariff scheme of the government.
“We were very proud to be the first clean energy provider to build a utility scale solar project under a power supply agreement structure. We took a different approach from the FIT program, because we wanted to build the company around bilateral offtake agreements with electric utilities or commercial customers, because we wanted to have that confidence in our long-term revenue stream,” Lichtenfeld said.
The Kirahon solar project emerged as the very first out-FIT power supply agreement to be reviewed and approved by the Energy Regulatory Commission, creating a totally independent approach for future renewable power bilateral agreements.
“Through that experience, we of course, learned a lot. We were the first to secure the ERC approval for such a PSA. Of course, there was an education process that we went through. That was a good learning experience, both I think, for the commission and also for us,” Lichtenfeld said.
The Kirahon project paved the way for Solar Pacific to amass knowledge that will be useful for other pioneering pursuits—moving forward to solar rooftop installations as the company also tried its hand to export power generation services to an island in the Pacific.
Solar Pacific Pristine Power Inc., a Solar Pacific unit, is preparing to operationalize the solar hybrid project in the Republic of Palau in April 2023. With rated capacities of 15.3-megawatt solar output and 12.9-megawatt-hour battery energy storage system, the project will benefit the island of Palau through a power source that will go beyond the total combined power requirement of the island inhabited by only 20,000 citizens.
The Palau project is not just the first project of Solar Pacific outside the Philippines, but it is also the first to use both solar and larger-scale battery storage.
Lichtenfeld said the solar energy firm is committed to delivering its first electrons within the next few weeks after the mandatory testing and commissioning process to make sure everything works perfectly. The facility is expected to officially run by mid-May, but delivery of power may start by mid-April.
“It’s exciting for us. In addition to it being a first for us, we are very proud to be the first independent power producer in the Republic of Palau. They own and operate their own diesel system. So we’re the first foreigners to come in and deliver power. And from what we understand, this will be the first or the largest solar plus battery project in the Western Pacific today. So another kind of pioneering achievement, and again, none of these is easy. One of the things about our company, both Solar Pacific and Alternergy, is our commitment to taking it one step at a time being solution oriented,” he said.
As solar power projects are rather a novelty compared to conventional projects and even to hydro-power projects, Lichtenfeld said there is a long process to bringing an idea into reality. The Palau project, he said, took about three years in development, including two years in pre-development stage and another year for the construction phase.
At present, Solar Pacific is operating nine projects in the Philippines with two more rooftop projects starting construction within the year. The energy firm is in the process of closing financing and finalizing the agreement with suppliers for projects in the pipeline.
In its utter commitment to protect the environment, Solar Pacific never compromises its principles when scouting for locations, proportionately avoiding forest covers and environmentally-sensitive areas.
While solar panel costs rose due to the challenges of the pandemic, the company is optimistic that prices will revert to pre-pandemic rates when materials for solar rooftop systems were more affordable.
“It’s interesting that the cost of solar technology has come down, generally, from the late ’90s. When the pandemic occurred, everything went haywire. And so for the first time in decades, the cost of the solar equipment went up, and although it has stabilized, it still has not come down as much as we had expected. So our projections, let’s say three years ago, where prices would be today has not met the previous expectations. Instead of being precipitous, it actually spiked up and now it’s been kind of leveling out. We’re still seeing some market volatility because of supply chain issues that are still kind of the hangover from the pandemic,” Lichtenfeld said.
Amid the growing awareness for more environmentally-sound technology, Solar Pacific is seeing a spike in demand for new projects, particularly those that were put on hold during the pandemic and are now coming off the shelf.
Despite some supply and demand tension, the firm believes that prices will start to rationalize in the next couple of months and may drop to levels that will allow massive affordability in the next few years.
Solar Pacific expects to quintuple the amount of solar power it generates to 100 megawatts in 2023. Right now, the energy company is producing about 20 MW of solar power with possibility of increasing it to 35 MW once the Palau project goes on stream.
The growing capacity runs parallel to the growing interest of the corporate community, specifically, multinational companies, to channel a fraction of their power needs to investing into alternative energy technology. Satisfying these companies’ sustainability commitments and corporate social governance will drive demand for renewables.
Lichtenfeld said this gives the government an opportunity to push for renewable energy as a key part of continuing plan to grow the economy and a key part of the country’s infrastructure plan as well.
He said that every renewable power source has its downtime. To maximize the potential of solar energy, Solar Pacific will be scaling up solar projects by adding battery storage into the solar rooftop portfolio, similar to the Palau project.
Battery storage, being a piece of the more specific solution to increasing energy requirement, is where renewable will play a bigger role to make sure that the renewable penetration is stable, he said.
Love for music
As the day winds down, and solar-enabled functions simmer to a halt, Lichtenfeld powers up the night scene with his take on jazz with a local band.
Lichtenfeld and his jazz band is a regular act on weekends in Makati’s most energetic entertainment destination in Poblacion area. At a jazz bar, Lichtenfeld plays the keyboard. “It’s been really fun and it’s a great way to know the community and spend time. This is where I get my supplemental income,” he said in a jest.
Back in the US, his family spends time singing and playing Instruments, a habit he brought along when he moved to the Philippines.
Not only do Lichtenfeld and Perez share common interests in renewable energy, the friendship goes beyond power and electricity, as both are dive buddies. Lichtenfeld has been around the country exploring interesting dive sites.
“We’re avid scuba divers, and it just so happens that the Philippines is one of the best places in the world for scuba diving. I regularly go to El Nido, Anilao and even to places like Malapascua Island off Cebu coast which is great place to see thresher sharks. These places just so happened to be beautiful islands with excellent diving, and they also happen to be excellent candidates for solar and solar batteries,” he said. Othel V. Campos