Solar power is finally having its moment in the sun in the Philippines, and it's easy to see why. This sustainable, clean, and affordable energy solution is accessible to all, making it a bright choice for a brighter future.
While the initial switch requires an investment, long-term benefits can brighten up your finances and contribute to a greener future. In this guide, let's break down the cost of traditional electricity, the upfront cost required for solar power, and the various government incentives available.
Understanding the “traditional” electricity bill
Have you ever wondered what makes up your electricity bill? Understanding these components is crucial for gaining insight into your energy consumption patterns and taking control of your expenses. Let's break down the key elements that make up your electricity bill:
Generation Charge: The generation charge is the largest portion of your bill. It covers the cost of producing electricity from various sources and fluctuates based on fuel prices, power plant efficiency, and demand. This goes to the generation company where your electric cooperative sources power supply, including SLTEC Calaca Coal Fired Power Plant owned by ETM Philippines Holdings, Inc. (EPHI) and the Insular Life Assurance Company Ltd., (Inlife) or FirstGen Corporation Malampaya Gas of Lopez Holdings Corp., FGP Corp., Solar Philippines founded by Leandro Leviste.
Transmission Charge: Transmission charges encompass the cost of delivering electricity from power plants to distribution utilities, ensuring its efficient reach to your local area. This is paid to the National Grid Corporation of the Philippines or NGCP, our sole transmission service provider.
System Loss Charge: This covers the cost of electricity lost due to technical issues and theft within the distribution system.
Distribution Charge: Utility companies such as MERALCO or your local electric cooperative incur distribution charges to deliver electricity from substations to your home or business. These charges include the infrastructure and maintenance costs associated with local delivery.
Missionary or Universal Charge: The missionary electrification charge is a fee included in every electricity bill, supporting government initiatives to bring electricity to remote and underserved areas of the country. This means we are paying beyond our individual usage, contributing to a nationwide effort to ensure everyone has access to power.
Subsidies – Lifeline and Senior Citizen Discounts: The discount is given to low-income customers and seniors who use 100 kWh or less each month. The subsidy, up to 5%, is also paid for by contributions from all other customers.
Metering Charge: This charge covers the expenses for reading, operating, and maintaining power metering facilities and associated equipment, along with other costs related to providing metering services.
Supply Charge: It covers the costs of providing services to customers, including billing, collection, customer assistance, and related services.
Taxes and Other Charges: The government-mandated charge includes various costs, such as Value Added Tax (VAT) allocated to national and local government units, as well as environmental fees used for rehabilitating and maintaining watershed areas around hydroelectric plants to ensure continuous power generation.
These charges can accumulate, making traditional electricity costly for consumers. The generation charge, driven by our reliance on dirty, expensive, and imported coal and fossil fuels, is a major factor in pushing our bills higher. Essentially, it means we're paying more because policies allow power providers to pass on the cost of their fuel (like coal or natural gas) directly to consumers.
Breaking down the cost of switching to solar
Slash those pesky electric bills and soak up the sun's energy. Switching to solar in the Philippines is a savvy move that can put more pesos back in your pocket. But before you start basking in the glow of energy savings, let's shed some light on the costs involved. It's an investment, no doubt, but one that can pay off over time.
Upfront Investment:
Solar Photovoltaic (PV) Panels: The cost of solar panels has decreased significantly. In the country, a typical residential solar PV system can cost between PHP 150,000 and PHP 450,000, depending on the size and quality of the system. You can check out Yuda.com to determine the solar panels for your home or business.
Inverters: These are necessary to convert the direct current (DC) produced by solar panels into alternating current (AC) used in homes. Inverter costs vary but generally range from PHP 50,000 to PHP 100,000.
Installation and Labor: Professional installation is crucial for the efficient functioning of the solar system. Installation costs can range from PHP 20,000 to PHP 50,000.
Maintenance: Solar systems require minimal maintenance, mostly periodic cleaning and occasional checks. Annual maintenance costs are relatively low, and you can even do some cleaning yourself, making it essentially free.
Long-Term Savings:
Reduced Electricity Bills: By generating your own electricity with solar panels, you can greatly reduce your dependence on traditional power sources and enjoy lower electricity bills. Choosing the right system size for your home is key, potentially cutting your electricity costs by 30-50%.
Net Metering: Through net metering, households can take advantage of selling excess solar energy back to the grid, further lowering their electricity bills. This means that when your solar energy system generates more electricity than your home uses, the surplus is sent to the grid, and your utility company gives you credits for it.
Return on Investment (ROI): With an ROI of 3 to 6 years, investing in solar energy offers immediate cost savings, making it more appealing to potential buyers in the future. Curious about your solar savings potential? Use our calculator to find out.
Learn more about how solar can benefit your home and wallet. Read our full article on the benefits of solar energy here.
Enjoy government incentives, financing options, and tax breaks
The Philippine government offers a suite of incentives to make switching to solar even more appealing. These programs can significantly offset your upfront costs and make your transition to solar more beneficial than ever. Here's a quick look at what's on offer:
- Net Metering: This program allows residential users to sell excess electricity generated by their solar PV systems back to the grid. This is one way in which your electricity expenses are greatly reduced and in many cases, eliminated.
- Pag-IBIG Fund Housing Loan for Solar Panels: In support of renewable energy and environmental sustainability, Pag-IBIG Fund offers housing loans for the acquisition and installation of solar panels. Qualified members can finance solar panel installations as part of home improvements or alongside purchasing a housing unit, aligning with Pag-IBIG Fund's retail housing loan programs.
- Green Energy Option Program (GEOP): The GEOP allows commercial and industrial users to choose renewable energy sources for their power needs. Businesses can reduce their carbon footprint and lower energy costs by opting for renewable energy.
- Renewable Energy Act: The government provides various incentives under the Renewable Energy Act of 2008, including tax breaks, duty-free importation of renewable energy equipment, and financial assistance for renewable energy projects.
Investing in solar panels not only benefits the environment but also saves you money on electricity bills, putting more pesos back in your pocket year after year. With government incentives and programs making solar energy more accessible, there's no better time to start enjoying the savings that solar power can bring!
