Visualizing power generation in The Philippines

On Dec. 14, 2020 , By SolarTrade

Research on power markets in emerging markets of Southeast Asia is rather a tedious task with information being decentralized or under an old school format that is rather unappealing for the reader. Who wants to dig through government-issued PDF’s of 100 pages long after all? Even if you have the stamina to do so, finding the right documents can be a challenge on old fashioned government websites… Any UI designers around willing to give them a hand?

Jokes aside. In an age where access to information is plentiful, the access to the right information is still heavily restricted, leaving the local general public un/(des)informed on important topics, including power generation.

A light wind of change in the Philippines

A team led by Cezar John Estrada, Maria Salazar, Arthur Holt, Kenneth Munoz, Ladylyn Salvanera & Beejee Dequina have decided early this year to take matters into their own hands and started an independent digital platform, Energy Intel PH, with a goal to improve the literacy of 100M Filipino's on energy-related topics through data visualizations and videos. The demand for electricity in the country is after all expected to soar in the next 2 decades and decisions & initiatives taken today will tremendously impact the well being of the citizens, especially in a market plagued by high electricity prices and already to subjected to events of extreme weather, possibly attributable to climate change.

The PH power market visualized

In line with one of our previous articles discussing the carbon intensity of the Philippines ("how dirty is power generation in the Philippines") complementing a more regional analysis on the carbon intensity of the power sector of SEA, being 2 times more carbon-intensive than Europe's, Energy Intel has crunched official data issued by the government and created an open-source interactive data visualization historically pinpointing the power generation facilities in the country.

What does it teach us?

Electricity generation in the Philippines has doubled since 2003 to 100 000 GWh, while the population grew by 27% and the local GDP exploded by an astonishing +400%. As such increasing the yearly electricity consumption per capita from 600 kWh to 950 kWh. Still, a long way to go from the European average of 3000 kWh but getting closer.

The bad news is that the additional generation has been principally coal-driven. From the additional 50 000 GWh of generation between 2003 & 2019, about 43 000 GWh has been generated by coal power. That's 86%! Coal power accounts now for about 55% of the generation in the Philippines, up from 30% in 2003, increasing the dependency of the country on coal imports even more and increasing its carbon footprint drastically.

Is anything being done to absorb future demand with less carbon-intensive sources?

The data clearly draws rather a gloomy outlook. In the last 3 years, 81% of the newly commissioned power plants were powered by coal, equaling 2.8 GW. In contrast, only 170MW of additional solar power capacity was activated...

Is there a way I can help electrify and decarbonize the Philippines?

SolarTrade’s mission is to help accelerate the electrification of SEA and help countries of the region to switch to renewable energy, in particular solar power, by resolving the financing gap affecting SMEs. Via our crowd sale process starting at $100 per panel, anyone can make an impact, by helping schools/SME's of Southeast Asia access affordable and carbon-free electricity, while earning up to 15% per year. Over a 10-year period, the length of most leases, we aim at returning you an IRR of 10%, without banking on any government subsidies. Every kWh generated by the solar equipment in SEA will be twice as effective in reducing C02 emissions, compared to Europe where the carbon-intensity of the power sector is significantly lower. And to make it even better, you can monitor the whole process in real-time!

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SolarTrade partners with TripleA to offer Bitcoin payments

On Dec. 8, 2020 , By SolarTrade

SolarTrade has partnered with Singapore-based TripleA, an innovative fintech company fully accredited by the Singapore Fintech Association (SFA). The partnership allows us to accept Bitcoin payments without being exposed to the currency exchange risks, risks commonly associated with volatile cryptocurrencies.

So why cryptocurrencies?

To this day accepting global cross-border fiat payments for businesses located in South East Asia, even with innovative fiat payment processors such as public company Adyen & Stripe backed fast-growing Rapyd, is still an expensive and rather intransparent endeavor. Fees for most payment methods can easily exceed 3% for the merchant and exchange rates applied to the customer, even though regulated, are still arbitrary. You usually only find out after the payment what exchange rate has been applied to the transaction. Do you think this is fair?

Let's say you are a member located in Europe or the USA and want to participate in one of our high impact projects with generous yields, located in South East Asia. In order to fund the renewable energy project, we need to charge you in the local currency, let's say Philippines Pesos (PHP), to avoid being exposed to fiat currency exchange risks. After all, we settle our payments with our contractors in the local currency. This means, unless you magically have a bank account containing PHP currency (or you are tech-savvy and you have opened a global bank account with Transferwise), your EUR or dollars will need to be converted to PHP. And It's not unusual you end up with the short end of the stick, with an inferior exchange rate...

Working with cryptocurrencies allows us to put you back in control over the exchange rate. You decide when to buy the cryptocurrency at a transparent exchange rate dictated by the various exchanges available in the market, such as Coinbase (US), Bitfinex (HK), Kraken (EU), Coins (PH),... Furthermore, with significantly lower merchant fees, this allows us to make more attractive leasing offers.

Want to know more on how to get started with Bitcoin? This great article by crypto-runner will take you over the details.

How does it work?

It's even simpler and safer than paying with fiat-based payment methods such as Visa, MasterCard, Gcash. Select the Bitcoin payment option in the checkout, open your personal bitcoin-wallet, scan the barcode & confirm the payment. A few seconds later, your payment will be confirmed. The underlying blockchain technology allows you even to track the status of your transaction in real-time. Head to blockchain.com to see it for yourself.

Will other crypto currencies follow?

For now, we only accept Bitcoin. Once other cryptocurrencies (ETH, XRP,..) start to reach larger market caps & are liquid enough (more buyers & sellers), we will be looking to extend our crypto payment options.

Will I be able to be paid in Bitcoin instead of fiat?

Yes, soon. This is in our pipeline. Stay tuned!

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Access your SolarTrade account with Gazepass

On Nov. 23, 2020 , By SolarTrade

Are you always forgetting your passwords and wondering if there is not a better alternative? Are you constantly questioning if passwords are actually keeping your account safe?

We do! And we decided to start doing something about it.

As part of our security and convenience strategy, we have recently integrated & beta-launched Gazepass authentication flow into SolarTrade's ecosystem.

Gazepass que?

Freshly armed with $1M in funding, Gazepass, founded in 2018, mission is to eliminate passwords from the internet altogether and provide a better more user-friendly alternative to the 2-way authentication solutions including OTP's (one-time passwords). Their solution? A centralized user account secured by state of the art biometric recognition technologies, including AI-driven spoof-proof face recognition. Basically allowing you to become your own password.

So how does it work?

Once you have registered with SolarTrade, you can create your personal account with Gazepass. This will require you to provide a few details of yourself, including your biometrics, and confirm your email address. Once you are set up, your Gazepass account will be device tied. This means every-time you wish to use Gazepass with another device, you will need to reconfirm your identity with your biometrics before you can use your personal Gazepass account with this new device.

Armed with your brand new Gazepass account, you can now simply select the passwordless login feature on SolarTrade's login page. Reconfirm it's you by validating your biometrics (take a picture of yourself, provide a unique PIN number,...). Et voila, you are logged in!

What’s next?

For now, we will keep supporting passwords, which are a requirement anyway to register with SolarTrade, in parallel to the passwordless solution. Down the line, the end goal is to completely root out passwords from our platform and hand over the registration/login/identity confirmation process over to Gazepass. We believe this will bring the security of your account to another level, as we grow together. If you do have any questions or concerns, don't hesitate to reach out!

Learn more about us:

Filipino's can now participate with their preferred e-wallets!

On Nov. 13, 2020 , By SolarTrade

We have taken the mission of democratizing participation in renewable energy projects to the word.

It might surprise you but a great majority of the population living in emerging markets of Southeast Asia is still unbanked as of 2020. Par example in the Philippines, according to the BSP (Bangko Sentral ng Pilipinas) about 51 million Filipino adults are to this day still unbanked. That’s about half of its 106 million population. Indonesia, on the other hand, has 180M citizens that are still unbanked to this day. Credit & debit cards are king? Think twice.

So how can SolarTrade increase local participation in The Philippines?

"Fintech to the rescue"

The last 2 decades saw a rise in the popularity of SEA's fintech offering alternative banking, such as e-wallets, and payment options with a mission of closing this unbanked gap. Since its launch in 2004 in the Philippines, the undisputed and preferred mobile wallet Gash has grown its user base to 20M and this year, for the first time ever, it has exceeded 100B PHP ($2B) in transactions in a single year. Almost a 300% year on year growth! Closely following in second place is Paymaya, backed by Chinese giant Tecent, aiming at expanding its user base to 40M by 2023. Gaining popularity is the e-wallet launched in 2017 by Grab, the ride hailing unicor of SEA.

Being the most requested feature during the beta testing, we are excited to announce we have extended our PHP payment options to include Gcash, Paymaya & Grabpay!

Coming soon
For European members, we will extend our payment options to include Sofort and euro transactions. Through our partnership with Transferwise, we will as such be able to save on the currency exchange expenses, making it even more attractive to participate. And we are working on more exotic payment options, such as Bitcoin, for the tech savvier public.

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ReurAsia and SolarTrade announce strategic partnership

On Nov. 12, 2020 , By SolarTrade

SolarTrade and ReurAsia are pleased to announce they have entered into a strategic partnership, as such combining SolarTrade’s innovative crowdsourced solar leasing model focused on SMEs and ReurAsia's extended engineering expertise in renewable energy project development in The Philippines.

With our combined forces, we hope to super-boost the green and decentralized electrification of emerging markets in Southeast Asia, starting with the Philippines. The partnership will allow us to provide attractive, reliable, and safe solar leasing solutions to SMEs. As such democratizing access to affordable & carbon-free electricity for the local manufacturing industry, schools, logistics companies, hospitals, resorts, farms, … and help the region to reduce the carbon intensity of its power industry.

ReurAsia, led by ex- Areva engineer Maxime Droit, brings more than 25-years combined experience in renewable energy projects, with a focus on biomass, solar & waste to energy technology, to the table. The company worked on more than 180 MW of power generating capacity in SEA. Furthermore, through their partnership with Akuo Energy, a billion-dollar French conglomerate active in the renewable energy space, ReurAsia has access to a patented plug and play solar solution, a hurricane-resistant solar container that can be deployed and dismantled in a matter of hours.

While SolarTrade, founded by Rocket Internet alumni Wouter Gyssels will provide the digital presence necessary to capitalize on the small to medium size solar leasing project (<1MW of peak capacity). SolarTrade’s crowd sale process allows anyone globally to directly participate in the solar leasing projects in SEA, starting as low as $100 and in return be rewarded with generous yields up to 15% pa. Through its digital platform, the company provides real-time insights on all the stakeholders involved in the project.

Read ReurAsia's version of the article.

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How Carbon intensive is the power sector in SEA?

On Oct. 19, 2020 , By SolarTrade

With eye to reaching the goals of the Paris climate agreement, a global movement has emerged to out phase carbon-intensive technologies. Especially the power sector, remaining one of the largest emitters of GHG (greenhouse gases), is going through a global transformation, with more and more renewable energy capacity being implemented and better energy conversion efficiencies are being achieved. For example, the carbon intensity of the power sector in Europe has decreased by a spectacular 25% over the last 20 years. In the early 2000s, 1kWh of generated electricity, about enough energy to brew 12 pots of coffee, used to emit about 400g of Co2. At the end of the 2010s, this has fallen below 300g per kWh. The best student in the EU class is Sweden, with a carbon intensity as little 10g per kWh, driven by Hydro & nuclear accounting for 93% of the total electricity generation.

In comparison, over the same time period, the US’s power sector reduced its carbon intensity by a whopping 50% from 600g to 400g per kWh. Still above the current European average but definitively impressive.

What about Southeast Asia?

Unlike Europe & the USA, Southeast Asia has had to deal with an explosion in population, up by 170M from 2000, and lightning-fast economic development with a GDP more than quadrupling over the last 2 decades. This combination alone has massively stressed the local electricity generation infrastructure, with the electricity demand more than doubling since 2000 according to IEA.

With a primary goal of fulfilling this additional demand for electricity, it is not a surprise that the region has mainly focused on technologies that were considered reliable, fast to build, and affordable before considering their auxiliary effects such as carbon emissions and environmental impact. Hydro was developed at a massive scale and where the topology/hydrology wasn't permitting hydro, coal & gas power generation were chosen as the default option.

"Today, the generation of 1 kWh of electricity in SEA emits 90% more CO2 than in Europe"

In 2000, the electrification of the Southeast Asian region stood at a paltry 62%, leaving 190M people without access to electricity. The electricity generated in SEA was about 400 TWh (10^12), about 16% of all the electricity generated at the time on the old European continent, 2500 TWh. About 80% or 320 TWh of this electricity in SEA came from technology using fossil fuels, resulting in about 600 g of Co2 per kWh generated as per IEA Energy Outlook 2019 Report.

By 2019, the electrification rate in SEA shot up to 90%, and total electricity generated topped almost 1000 TWh, still only about 35% of Europe's generation. Only Cambodia & Myanmar keep struggling with electrification rates well below the regional average. The energy mix barely changed, with fossil fuels still accounting for the majority of electricity generated. It shouldn't, therefore, come as a surprise that the carbon intensity of the power sector barely improved. Today the generation of 1 kWh of electricity in Southeast Asia emits about 580g of Co2 or about 90% more than in Europe and 45% more than in the US.

So what?

After all, you might be thinking SEA is still consuming way less electricity on a per capita basis [~ 1500 kWh vs 3800 kWh], and, even accounting for this higher carbon intensity, emits largely less Co2 for its electricity generation on a per capita basis along the way, 870 vs 1140 kg Co2 per capita. That's definitively true but only for now.

With the continuous development of the region, Electricity demand in the region is expected to soar, as much as doubling to 2000 TWh by 2040 as per the IEA. Without improving the carbon intensity of its power generation and even accounting for additional population growth, it will only be a matter of years before the Co2 emissions on a per capita basis will surpass Europe's and start to hunt on the USA.

How can you help?

SolarTrade’s mission is to help accelerate the electrification of SEA and help countries of the region to switch to renewable energy, in particular solar power, by resolving the financing gap. Via our crowd sale process starting at $100 per panel, anyone can make an impact, by helping schools/SME's of Southeast Asia access affordable and carbon-free electricity, while earning up to 15% per year. Over a 10-year period, the length of most leases, we aim at returning you an IRR of 10%, without banking on any government subsidies. Every kWh generated by the solar equipment in SEA will be twice as effective in reducing C02 emissions, compared to Europe where the carbon-intensity of the power sector is significantly lower. And to make it even better, you can monitor the whole process in real-time!

Learn more about us:

What is SolarTrade?

On Oct. 3, 2020 , By SolarTrade

Today marks the 1-month anniversary since SolarTrade has gone live on a pre-registration basis. We are pleased to see a worldwide interest to support us in our journey to electrify Southeast Asia with affordable and clean electricity! Thank you! We have even added the member count statistics on our homepage. We do believe this level of transparency is key for a long term collaboration and will highly define our ability to make a dent in the electricity landscape of Southeast Asia.

Many questions have been asked in the last few weeks. Therefore, we believe we owe our new audience a more detailed answer on what SolarTrade is all about, what problems we are trying to solve, how it works, and our current approach.

An overview

1. Our mission

Our mission is twofold.
Provide businesses and communities of Southeast’s Asia emerging markets access to affordable and carbon free electricity. More than 50% of the electricity in Southeast Asia is still generated via technology relying on coal, notoriously one of the most carbon-intensive fuels. With Southeast Asia economies growing at breakneck speed and additional coal capacity in construction, the region will have a global impact for years to come. Most electricity markets in SEA are currently monopolized, leaving minimal room for innovation/disruption and in some countries burdening the end customers with high electricity prices, especially in The Philippines. Read more about electricity prices in SEA. Add on top that the local financing systems are undeveloped, leaving most SME's, forming btw the backbone of the local economy, without access to affordable capital, it becomes clear that the conventional top-down approach for change will not work. SolarTrade could form the financing lifeline for these SME's to free them from the shackles of the local electricity monopolies and reduce their carbon footprint.

On the other hand, we want to democratize global participation in renewable energy projects. We believe the investment industry surrounding renewable energy initiatives is largely outdated. Most of the financial instruments available are definitively not customized for the normal citizen. It usually requires a large amount of capital to get started and misses out to integrate more innovative technology as providing real-time insights on how the capital is utilized and how the investment is performing. Through SolarTrade’s solar crowdsale, starting as low as $100, anyone in the world can finally participate in (cross-border) renewable energy projects. You can as such help local communities, combat climate change, and reap financial rewards for yourself from the comfort of your home.

2. What is SolarTrade?

SolarTrade is your typical digital market place trying to resolve a 2 sided problem. We bring individuals, wanting to make an impact or/and looking for an additional income stream, closer to businesses & communities of emerging markets in need of more affordable electricity.

With the help of our members and assisted by our third-party certified contractors, we focus on deploying & maintaining <1MW solar installations on businesses and communities premises, sealed by a solar performance agreement. This type of agreement allows these entities to enjoy the benefits of the solar installation, cheap and carbon-free electricity, without the need to deploy their own capital (usually not available in the first place). The reason for the focus on sub 1MW solar installations is that they are usually too small in size (< 1 million USD) to be even considered for financing by institutional players, PE funds, or family offices. To make sure there is a financial upside to the story for the individuals participating, we only work with selected projects and type of tenants that fulfill the criteria. The ideal project is deployed on an entity that will consume all or most of the electricity generated by the solar system in real-time over the lifetime of the lease, such as is the case with hospitals, manufacturing plants, cold storage facilities, malls, some office spaces, some resorts, … And an ideal tenant that has a solid track of record of fulfilling their financial obligations, to avoid default. Generated electricity not consumed in real-time loses, unfortunately, a great deal of value in most Southeast Asian countries, read more about the topic here where we discuss why solar power might not be as interesting financially for residential homeowners in the Philippines.

3. The solar crowdsale offering

The reason for the choice of a crowd-sale offering, instead of debt/equity security offering, is again twofold. Via our crowd-sale offering, an individual participating buys a physical solar panel, on which it will keep the ownership at all times. You do have the right to pick up your physical asset at any time unless it is generating electricity because of safety reasons. We believe this does reduce the risk of participating significantly compared to buying into a debt/equity security offering, where you end up buying a “piece of paper”. Of course, the solar crowdsale offering is definitively not bulletproof either. Some of the projects will be remote and difficult to access. Some of our members are even located on the other side of the planet, making it impossible for them to physically pick up their solar panels. Even with additional insurance, there is still a risk that par example a typhoon (see force majeure) will lead to the full destruction of the solar installation. The risks involved in a project are outlined in each of our offers, please do read these carefully before participating [see our demo project]. We do believe however that working with a solar crowd-sale offering provides more protection to the participants to deal with events of default. In case the tenant, for some reason, can’t fulfill their financial obligations anymore, you still keep ownership of your panels, safeguarding your “principal” These panels can be liquidated, converted into cash, if whished, to at least recover part of your "principal".

The other reason for working with a crowd sale offering is the bureaucratic complexity of organizing cross-border securities offerings. Especially in Southeast Asia, the amount of paperwork and time needed to set up an offering for just a single project is excessive. Since our offering is focused on smaller size projects, this would just be impossible to manage.

To conclude, our solar crowdsale offering allows us to capitalize smaller-scale projects and at the same time, we do believe it provides more security for the participants since they keep the ownership on the panels all along the way.

4. Status of Business

SolarTrade is a fully self-funded early-stage technology company. The current pre-registration approach allows us to validate the interest for our offering and at the same time collect some critical feedback. This feedback is extremely important to reiterate our offering structure and adjust our platform before hosting any solar projects. If you have any additional feedback, we do welcome it. Reach out to us here. The pre-registration approach is neither ideal especially for marketplaces that thrive on a healthy supply (offering) and demand (individuals willing to participate). Yes, it is true SolarTrade has & is not currently hosting any projects and this might raise questions. But we are working on it.

In the meantime, we hope to receive your honest feedback [provide feedback] and improvement suggestions. The more pre-registrations and more feedback we collect, the better we will be able to tune our solar offering to your needs. So share with your friends , overload us with messages. We are waiting for you!

Learn more about us:

The cost of electricity in Southeast Asia

On Sept. 26, 2020 , By SolarTrade

Before the end of the decade, the population in Southeast Asia is expected to outgrow the entire population on the old European continent. Currently, the population in SEA stands at 670 million, up by a whopping 170 million since the start of this millennium. And it is rather young, 30 years on average. In emerging markets, such as Indonesia & the Philippines, accounting for half of the region’s population, the population is even younger, merely 26-28 years. This is a sharp contrast to the near stagnating and aging population (an average of 43 years!) in Europe, only up by paltry 20 million since the year 2000.

This population boom in Southeast Asia has come hand in hand with a spectacular increase in economic activity with the GDP almost doubling in the last decade only. Examples of this economic upraise are the spectacular transformation of Singapore. In the early 1960s, Singapore was still considered as undeveloped farmland. Today it is one of the wealthiest if not the wealthiest country on earth, even surpassing the United States on a GDP per capita basis! The emerging markets as well, such as the Philippines, are blasting at full speed triggered by globalization. Remember that English customer service call? Chances are that the agent is located in The Philippines. With a population highly fluent in English, the country is one of the preferred countries for BPO (business process outsourcing companies). The industry now accounts for 15% of the national GDP, while 20 years ago the industry was merely a blip on the economic radar (<1% of GDP to be exact). And let’s not forget about the OFW’s, overseas Filipino workers, driving critical industries such as health care, construction, shipping...

This fast transformation of the region to an economic powerhouse has stressed local electric infrastructure and supply. Demand for electricity in the region has increased by a massive 80% since 2000, with millions of new customers gaining access to electricity, and still growing at an average 6% per year. This demand has been absorbed by energy investment in additional capacity of mainly more conventional energy technologies, led by coal power generation, at the great disadvantage of making the region heavily dependent on primary fuel imports and increasing CO2 emissions.

But what does electricity in SEA actually cost these days? And how does it compare to other parts of the world?

An analysis of grid electricity prices.

Off-grid electricity prices fluctuate widely and are out of the scope of this article.

Southeast Asia covers about 4.5 million km2, or about half the size of Europe, and compromising of countries such as Cambodia (~population of 17 million), Laos (~population of 7 million), Myanmar (~population of 54 million), Malaysia (~population of 32 million), Thailand (~population of 70 million), Indonesia (~population of 270 million), Philippines (~population of 110 million), Singapore (~population of 5.8 million), Vietnam (~population of 95 million), and few smaller entities.

From high electricity prices to low

1. The Philippines

The Philippines spans not less than 7,641 islands and its retail electricity supply consists out of several geographical monopolies. Broadly speaking this means that a customer has only a single choice for his electricity. If you are unhappy with the price and would like to explore alternative electricity providers, well you are out of luck. This is in stark contrast with most developed markets, where even though the electricity distribution is a natural monopoly, customers can still pick their preferred electricity supplier.

In the National Capital Region (NCR), home to 24 million people, Meralco, a company with a market capitalization of PHP 300 billion and one of the most profitable companies of the country, dominates the retail electricity supply. Electricity will set a residential customer, making up 92.1% of the company’s customer count, back 8.5 PHP per kWh in August 2020, or about 0.18 USD and reach above 9.3 PHP (tax Inclusive), ~0.2 USD, for larger residential customers. Interested in the details? You can the full breakdown of active rates of Meralco here.

In perspective, Meralco isn’t even the most expensive retail electricity supplier in the Philippines. In Mindanao, the southern part of the country, the Davao Light and Power company charges residential customers a minimum of PHP 9.05 per kWh. Depending on your categorization, you easily end up paying 9.4 PHP per kWh. In the Visayas, home to the renowned island of Boracay, rates are even higher, with rates reaching above 10.5 PHP per kWh or 0.22 USD.

This is about 40% higher than the average electricity rate of US residential customers!

2. Singapore

Singapore, a small but densely populated country, sandwiched between Malaysia and Indonesia, enjoys a more sophisticated and open electricity market since 2019. This is the result of an initiative of the local electricity market authority launched in 2017 in a bid to liberalize and encourage innovation in the power industry. This means that unlike with monopoly markets, you do as a customer have the power to choose your preferred electricity supplier!

As of July 2020, there are about 12 different electricity retailers in Singapore offering each different plans, consisting of fixed or variable electricity pricing packages. Seedly has created a great tool to help customers choose the right package for their needs. Check it out here. On average, electricity will set you back about 0.17-0.18 SGD per kWh or about 0.12-0.13 USD per kWh.

Interested to read more about Singapore's OEM initiative? Read more here

3.(I) Thailand

Thailand's energy market is centered around the state-owned Electricity Generating Authority of Thailand, EGAT, which is responsible for generating, transmitting, and wholesaling electricity, and whose own generating capacity accounted for 33% of Thailand’s total electricity generating capacity as of the end of 2019. As the Transmission System Operator (TSO), EGAT oversees the balance of the supply and demand in the transmission system and controls and administers all the electricity generated in provincial areas from those power plants connected with its high-voltage transmission lines and high-voltage substations. EGAT is the only organization that can purchase or resell wholesale electricity to other distributors.

Besides EGAT, there are two retail distributors who are responsible for distributing and providing low-voltage electricity to end-users, the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA), with the MEA servicing Bangkok, Nonthaburi, and Samut Prakan provinces (28% of the market in 2019), while the PEA services the remainder of the country (71% in 2019).

In Bangkok, electricity is charged progressively to residential customers. The first 15 kWh of the month will set you back about 2.35 Baht per kWh, about 0.07 USD, and can reach up to 4.4 Baht per kWh, 0.14 USD, for consumption exceeding 400 kWh per month. Read the full breakdown here.The PEA’s electricity cost structure is similar to the MEA and can be found here.

3.(II) Malaysia

Even though talks have been held in 2019 to liberalize Malaysia’s electricity market, TNB, the largest utility company in MY, still holds a firm grip on the local retail electricity market. The expected reforms will give consumers more options to buy their electricity from but they will have to wait until mid-2021 if everything goes according to plan. This is the country’s second try to open the electricity market, after blowing off the first version of the reforms in 2005.

Electricity will set residential customers back about 22 sen per kWh, or 0.053 USD for the first 200 kWh of consumption of the month. The next 100 kWh is charged at a higher rate of 33.4 sen per kWh, 0.08 USD. Larger residential customers exceeding 300 kWh are charged 0.13-0.14 USD per kWh for everything above. This pricing puts Malaysia more or less on the same level as Thailand.

4. Vietnam

Vietnam’s demand for electricity has increased 20 times over the last 3 decades. Currently, at the forefront of SEA’s transition towards renewable energy, Vietnam's cumulative installed PV capacity is now a whopping 44% of Southeast Asia’s total PV capacity, mainly driven by the generous and long-term guaranteed FIT (feed-in tariffs) implemented back in 2017.

In Vietnam, the largest supplier of electricity in Vietnam is still the state-owned Vietnam Electricity Company (EVN) which is regulated by the Ministry of Industry and Trade, supplying electricity through its five subsidiary distribution companies. Up to 2015, EVN had a full monopoly on the electricity market but the country has made introductory steps to liberalize the market with the integration of a wholesale market par example.

Based on the latest publication on EVN’s website, today’s retail electricity price for residential customers in the country can be as low as 1700 VND and up to 2900 VND per kWh, 0.07 – 0.12 USD, for heavier users. Larger commercial and industrial customers can even secure rates of sub-1000 VND, 0.04 USD per kWh. These low prices are per this 2018 Harvard report only possible due to its low-cost electricity coming from its legacy hydropower plants, generating 37% of the country's total electricity!

5. Indonesia

Indonesia is the most populated country in Southeast Asia. The electricity supply to the Indonesian people is monopolized by PLN (Perusahaan Listrik Negara), the second-largest state-owned company of the country by assets, carrying out functions that include generation, transmission, and distribution of electricity. Despite the monopoly structure, Indonesian’s electricity rates are surprisingly low, mainly driven by large government subsidies. In 2018 alone, the government had to step in to cover US$2.1 billion PLN’s operating losses. For 2020, the government allocated more than US$4 billion to electricity subsidies.

As of today, retail electricity rates for grid-connected customers are hovering between 1000 – 1500 IDR per kWh, or 0.065- 0.1 USD per kWh. The question, of course, is if the country can maintain these low electricity prices with government deficit on the rise. You can find the full breakdown of PLN's most recent tariff structure here.

6. Myanmar

Since the first steps were taken to reopen the economy in the early 2000s, after decades of isolation and a brutal military dictatorship, Myanmar has been growing at a breakneck speed of 8% GDP per year. Myanmar government-owned electricity market and infrastructure are still in its early stage and have a lot to catch up to. As per the local ministry of electricity, the electrification of the country is less than 45%, leaving about 6.2 million households, or about 27 million people, without access to electricity. The country aspires to electrify 100% of its population 10 years from now.

Residential rates for customers who are lucky to be connected to the grid can be found here. Driven by large scale & low-cost hydropower electricity generation (>50% of the country’s electricity generation) and high subsidies expected to reach US$1 Billion this year, the residential rates can reach as low of 35 MMK per kWh, 0.03 USD, for the smallest consumers. Intermediary consumers are charged about 70-110 MMK per kWh, 0,055-0.08 USD. Consumers exceeding 200 kWh are charged about 125 MMK per kWh or 0.09 USD.


7. Laos

In Laos, it’s the Electricite du Laos, a state owned company, that solely owns and operates the country's electricity generation, electricity transmission, and electricity distribution assets. Currently, about 90% of the population is electrified in the country. Currently, residential rates are being heavily discussed in the country. As per the last publication by the government, electricity sets a residential customer back about 355 Lak per kWh or 0.04 USD for the smallest consumer. Larger consumers are being charged about 0.075 USD per kWh. Rates are expected to increase over the next years by about 1% per year.

Conclusion

Electricity rates for residential customers vary widely in Southeast Asia, mainly driven by different local policies. From as little as 0.04 USD per kWh in Laos to 0.22 USD per KWh in the Visayas region of the Philippines, a whopping 40% more than the average electricity rate of an American citizen. With an impressive population- and economic-growth, each country in the region is relentlessly expanding and innovating its electricity landscape to fulfill the needs of its citizens.

SolarTrade’s mission is to help accelerate the electrification of SEA and help countries of the region to switch to renewable energy by resolving the financing gap. Through our crowd sale process starting at $100 per panel, anyone can make an impact, by helping schools/SME's of Southeast Asia access affordable and carbon-free electricity, while earning up to 15% per year. Over a 10-year period, the length of most leases, we aim at returning you an IRR of 10%, without banking on any government subsidies. And to make it even better, you can monitor the whole process in real-time!

Learn more about us:

Is solar power really viable for homeowners in PH?

On Sept. 16, 2020 , By SolarTrade

Electricity prices in the Philippines are among the highest in Southeast Asia easily reaching ~0.020USD per kWh. With high and consistent sunshine throughout the year in The Philippines, is solar power a viable alternative for its residential homeowners? Or is the technology only viable for commercial and industrial customers? An overview.

Philippines residential electricity rates

The rates would differ based on where you are situated in the Philippines. Typical households consume around 250 kWh per month. In Manila, electricity rates for households of this consumption level based on MERALCO are set to Php 8.42, 0.17 dollars per kWh, resulting in an average monthly bill of Php 2,100. In Davao, powered by Davao Light and Power Co. Inc, rates are slightly higher at Php 9.05 or 0.019 USD per kWh, resulting in an average monthly bill of Php 2,260. Lastly, those in the Visayas region such as Cebu are powered by Visayan Electricity offering rates at Php 10.97 or 0.023 USD, resulting in an average monthly bill of Php 2,750.

To put the above numbers into perspective,
Suppose an individual earns pretax Php 30,000 monthly (620 USD), about 2 times the Manila minimum wage, after-tax they keep around 27, 000 PHP. This means they will allocate 7-10% of their monthly earnings just to cover their electricity expenses.

How much solar energy does the Philippines receive?

So before rushing to get a solar power installation with the hope of reducing your electricity bill, it is important to know whether the country receives enough solar energy from the sun. You want after all your installation to be as effective as possible and this starts with maximizing the amount of energy hitting the solar panels. Different countries receive different amounts of solar energy. Even a different part of a country does receive a different amount of sunshine. So how does the Philippines fare on this topic?

The country is blessed with its near equator geography and tropical/sunny climate. A first common metric used by the industry to assess the viability of solar power technology is the Photovoltaic Electric potential. Roughly speaking, it represents the average daily output of an average solar panel in the region, on a per kWh/kWp basis. Based on data provided by the world bank, the country has an average photovoltaic potential of about 3.6-4.6 kWh/kWp. A 1kW system in The Philippines can approximatively cover the energy needs of 2 fridges, each consuming about 1-2kWh per day. This about 25-55% higher than compared to most of Germany par example. Some of the areas with the highest photovoltaic potential in the Philippines can be found in Central Luzon (average of 4.4), Ilocos (average of 4.6), Southern Bicol (average of 4.2), Coron island (average of 4.4), Manila, on the other hand, hovers around an average of 3.6, Cebu and Davao are doing slightly better (3.8-4.0). In monetary value, a 1kW installation in Manila can on average create 11,000 PHP in value per year, in ideal circumstances.

Bear in mind, these are average yearly estimates. The actual photovoltaic output will vary daily throughout the year and are influenced by a large set of other factors. Curious how a real functioning solar installation in the Philippines performs? See the real-time output of a solar installation in Imus, Cavite which is averaging 3.5-4.2 Kwh/kWp.

The cost of a residential solar installation

The last 30 years saw a spectacular decrease in the manufacturing cost of solar power, photovoltaic technology, falling below $1 per W from 77$ per W in 1977. All of this while the quality of the systems increased. Solar panel's lifetime of 25 years is today's industry standard, warranted by the manufacturers, and commercial panel efficiencies, indicating the adequacy to convert sunshine into electricity, are reaching +20%. Unfortunately, the manufacturing cost of the solar panels represents only one small part of the overall cost of the system. Additional expensive components such as the DC/AC inverter need to be accounted for. Furthermore, international & local logistics, distribution margins, and installation labor have a fierce impact on the total retail cost of the installation. As per the DOE, a 1kWp installation will set you back around 120 000 PHP today, or about $2.4 per W. The larger your installation, this cost on a per W basis will drop. It costs the engineering time about the same amount of time and effort to inspect a site, design a 1kW- and a 5kW system. The logistics necessities are about the same as well. You get the picture. Following the same logic, it shouldn’t surprise you that system cost for commercial & industrial customers is significantly lower. These days, a larger system beyond 100kW costs about $0.8-0.9 per W or only 30% of what a residential customer will pay. This huge cost dependence on system size puts the residential customer at a great disadvantage.

“Falling manufacturing cost not reflected for residential customers”

So big is better? The intermittency issue and net metering

Well, it depends. To understand why, let’s first jump into some basic physics.
In an electric system, electricity generation and consumption need to be balanced at all times, in the absence of storage. On a residential level, this means, if the solar system is not producing to cover the residential consumption, additional electricity will need to be pulled from the electricity grid to make up for the difference. This happens automatically, as long as the grid network can absorb this additional demand. On the other hand, if the solar system is out- producing the real-time residential consumption, par example at noon when the sun is brightest and when one’s out at work, any surplus will need to go somewhere, and in grid-connected systems, it is injected back into the grid. The catch is when residential customers are injecting electricity back into the grid, they are basically giving this electricity away for free. Under the Philippines' net metering schemes, applicable for small scale solar installations, owners can be compensated for excess electricity sent to the grid credited at full kWh value set at 5.00 Php / kWh as blended generation cost. But they still do need to apply for the net metering (cost of a minimum of 10 000 PHP, if they don’t have the proper meters, they can even end up being charged for this “consumption”!). This means as well by not consuming the electricity and injecting it back into the grid, the electricity loses about 40% of its economic value to the owner of the installation.

So we understand that injecting electricity back into the grid should be avoided. You get less money back for your investment. Your 1kW system in Manila instead of generating yearly 11 000 PHP in monetary value, would only generate 9600 PHP in case 30% of the electricity coming from the solar installation had to be reinjected in the grid. This is definitively not unusual for households where no one is home during day time and little appliances are running.

“Size does matter”

The size of the solar system matters a lot if one wants to limit the payback time of the installation. To avoid injecting electricity back into the grid, the dimensions of the solar systems need to be chosen wisely. This comes hand in hand with understanding the electricity consumption pattern of the residence. Is the house usually occupied during day time? If not, can appliances be scheduled to run during day time? What about weekends? … The more one consumes electricity during day time (especially around noon time), and this consumption is consistent throughout the year, the more it will make an investment in larger solar installations financially interesting.

This is another advantage that commercial and industrial entities have on residential customers. On top of a significantly lower cost of the set up ($0.9 per W vs $2.4 per W), industrial and commercial entities have a more consistent and predictable electricity consumption pattern, making it easier to dimension the system and as such to maximize their investment. These 2 factors alone can in some case reduce the payback time of the installation for commercial and industrial customers to less than 4 years in some cases.

Conclusion

The Philippines enjoys an abundance of consistent solar energy. With high electricity prices plaguing the country, it makes it perfect to consider solar power as an alternative. Unfortunately, residential customers start with a double disadvantage compared to commercial and industrial, higher cost of installation on a per W basis for small installations and more volatile electricity consumption patterns leading to larger electricity injections. Even though these disadvantages, solar power for residential customers can make sense as an alternative to high electricity prices. But it highly depends on the consumption behavior of the household.

Are there other ways to bank on the Philippines solar potential?

Solar energy provides more opportunities for SMEs and businesses. They have higher electricity needs, more consistent consumption during the day-time, and due to their larger size, the cost of the system will be considerably cheaper on a per kW basis, making the investment more appealing. But because they lack the capital, which can reach a few 100 000’s USD, most of these businesses are still reluctant to make the investment.

SolarTrade’s mission is to fill this exact financing gap, with your help through an innovative crowd sale process and a gamified digital platform. As such anyone in the world can participate in the electrification of emerging SEA markets, starting as little as $100. Through our platform, you can buy and lease out solar panels to entities that are looking for more affordable electricity while earning a very generous yield of up to 15% p.a. Over a 10 years’ period, the usual lease length, this means an IRR of easily 10%.

Learn more about us:

How dirty is electricity in The Philippines?

On Sept. 14, 2020 , By SolarTrade - Guest writer

In the last 20 years, the Philippines has gone through a tremendous growth phase with the national GDP more than tripling. This growth has been driven by an explosion in population from 75M in the early 2000s to 110M as of today and the rise in globalization.

If you ever received an English customer service call, it's highly likely the call is coming from the Philippines. With a young population (on average 25 years old!) and highly fluent in English, the country is the preferred country for BPO, business process outsourcing, companies. The BPO sector accounts for more than 1.2M jobs and producing just short of 15% of GDP! While 20 years ago, it only accounted for less than 1% of the national GDP.

As the country is modernizing, more advanced technologies are rolled out and businesses are becoming more energy-intensive. From horses to cars, candles to LED lights, and access to appliances are some to cite a few. A high population means more car ownership, more appliance usage at home, more entertainment, etc.

This massive growth has come hand in hand with an additional appetite for electricity.
According to Climate Analytics, the electricity consumption per capita in the Philippines has increased to a value of 699 kilowatt-hours (kWh) per capita, which is still well below the world average of 3,000 kWh. To keep the lights on and the wheels spinning, the country is currently generating about 106 000 GWh of electricity per year, according to the local DOE (Department of Energy).

And it is expected to keep growing in the next 20 years, as the standard of living becomes higher and the country is continuing its national electrification!

Can the supply of electricity follow the current demand?

There are parts of the country without reliable access to affordable electricity. In a survey conducted by the Philippine Institute for Developmental Studies, the Philippines has an electrification rate of 83%, leaving 16 million without access to electricity, or about 15% of the population. Especially rural areas are under electrified. Par example, remote regions (off-grid) such as Mindoro lag behind with an electrification rate of only 40.9% to provide some context. The archipelagic nature of the Philippines makes it difficult to electrify these remote areas. Alternative options for off-grid areas involve the use of diesel generators. The true cost generation rate of these diesel generators is very expensive and can reach to Php 20 per kWh, or about 0.4 USD, versus the average generating rate of the grid which is at 6 - 7 Php according to Giz.

This lack of access to affordable electricity has deadly side effects. The WHO estimates that yearly 86, 000 people in the Philippines die from indoor air pollution, pollution that is generated from the population having to resort to alternative more dirty cooking techniques. To put this number into perspective, about 15x times more Filipinos die per year from indoor air pollution alone than the total of Filipinos deceased (~5000) from COVID-19.

Are there any existing efforts to improve the electrification rate especially in rural and remote areas?

There are efforts such as the Expanded Rural Electrification imposed by DOE to increase the electrification rate in the country. As reported by IRENA, for rural areas, this involved extended power lines through electric cooperatives. As for remote areas, the alternative was to put diesel-based generators. The National Electrification Administration (NEA) Reform Act of 2013 was also implemented to ensure more sustainable ways of rural electrification. Diesel generators are for one, costly, and two, generate greenhouse gas emissions. With the implemented act, renewable energy use such as solar was applied in their barangay line enhancement program. Concrete plans include exploring solar and wind energy that could reach about 191 MW of solar and diesel hybrids which estimates at 2,074 kilowatts.

How is electricity generated in the Philippines?

The total power capacity of the country as last reported in 2019 by DOE, amounts to 25,531 MW with around 16,606 MW that is available. Luzon, covering the most populous areas including the capital city Manila, takes up around two-thirds of the installed capacity and is mostly powered by fossil fuel plants (70%).
About 40% of the installed capacity is coal-based, 15% oil-based, 14% natural gas-based, and the remaining, 30%, renewable-based (Hydropower taking the top spot, followed by geothermal power).

The generation statistics paint an even more dramatic picture on the country’s dependence on coal technology for power generation. Of the 106 000 GWh of electricity generated, about 80% has been generated with fossil fuel technology with coal accounting for ~60% of the total generated electricity! And this is not where it stops, unfortunately, to absorb the country’s insatiable appetite for electricity, an additional of 4 GW of coal-fueled power plants are already committed to be built. A further 8GW of coal power capacity is in the planning stage. This is in stark contrast with other technologies (0.5GW of committed capacity for oil, 0.5GW of committed capacity for natural gas, and 0.5GW of committed capacity for renewables).

This reliance on coal power has and will have a tremendous impact on the local emissions associated the technology such as Co2, sulfur dioxide, soot, … Currently, the power sector in the Philippines accounts for about 50% of the Co2 emissions in the overall local Co2 emissions coming from fuel combustions. This is up from 37% back in 2020. According to Climateanalytics, coal power in The Philippines accounts for at least 30Mt of Co2, or in other words 30 billion kg.

Interested to read more?
DOE Report 2019
Climate Analytics Report 2019

How can I help?

SolarTrade’s mission is to help accelerate SEA switch to renewable energy by resolving the financing gap. Through our crowd sale process starting at $100 per panel, anyone can make an impact, by helping schools/SME's of Southeast Asia access affordable and carbon-free electricity, while earning up to 15% per year. Over a 10-year period, the length of most leases, we aim at returning you an IRR of 10%, without banking on any government subsidies. And to make it even better, you can monitor the whole process in real-time!

Learn more about us:

Crowdfunding in Southeast Asia. An overview

On Sept. 11, 2020 , By Joyce Aguirre

We have all heard of Indiegogo and Kickstarter – the platform that helped revive the fidget toy craze from three to four years ago. These crowdfunding platforms have been helping in building brands and products becoming reality – but what really is crowdfunding and its potential?

What is crowdfunding and how did it start?

It was in the 18th century when the first form of crowdfunding scheme took place. Alexander Pope created his so-called “subscription method” to help him put into publication his translated version of The Iliad. For 200 years now, this system of democratizing investing and business ownership has aided in realizing countless innovations. However, even with centuries of history on its back, crowdfunding is considered to be still in its infancy. Crowdfunding only gained great popularity in the 21st century. Many of us were introduced to the idea through the launch of Indiegogo and Kickstarter in the years 2008-2009; crowdfunding found a boost in 2015 when its market volume grew by 200% in Europe, Africa, and the Americas.

Today, we know crowdfunding to be a manner of raising money from a large number of people using online platforms. However, crowdfunding is more than just collecting money from online users. According to Richard Branson, English business magnate and founder of the Virgin Group, the reason he loves this method of raising money is that it connects businesses to the public, and instantly creates customers and investor base – it is free promotion and market testing! As of date, the world crowdfunding market is valued at 34 billion USD (25 in peer-to-peer lending, 5.5 in equity and donation, and 2.5 in equity) and is comprised of 171 active countries that is dominated by China, the United States, and the United Kingdom (Feng, 2019). Additionally, Fundly reports that as of 2019, crowdfunding has contributed 65 billion USD to the global economy and has aided the success of 1.5 million campaigns.

What are the different types of crowdfunding?

Currently, there have already been countless of established crowdfunding sites led by Kickstarter, Indiegogo, and GoFundMe. Different types have likewise come to emerge, including niche platforms for real estate (Fundrise, Crowdestate), green energy (Trine), social causes and non-profits (Crowdrise, Fuel a Dream), art (KissKissBankBank), and many others (e.g., regional platforms such as Funding Societies and Akseleran for Southeast Asia, and Twino for Europe).

Traditionally, there are four (4) primary types of platforms according to function:

 Donation-based crowdfunding (e.g., GoFundMe, Crowdrise): Gathers financial contributions from the public. Usually used for social cause and not for profit campaigns.
 Reward-based crowdfunding (e.g., Kickstarter): Donors receive some exchange to their contribution. This reward, or exchange, can either be product, service or even discount.
 Debt crowdfunding (e.g., ZOPA): Acts similar to a loan, wherein investors could expect a principal and an interest.
 Equity crowdfunding (e.g., Seedrs and CrowdCube): Donors give monetary contributions in exchange for a piece of ownership in the company. Unlike the previous types of crowdfunding, the equity method is popular among businesses that are yet to be launched.

Concurrently, a technology called crowd selling or crowd sale is developing in the blockchain world. Crowdsale is, basically, crowdfunding using cryptocurrencies (e.g., bitcoin, ether, etc.). In crowd sale, the acquired crypto tokens could serve both as reward and equity. However, this concept is much younger than crowdfunding, thus regulations are still largely unclear. To date, only a handful of companies (e.g., Swarm, Koinfy) have conducted crowdsales.

Why is crowdfunding lagging in Southeast Asia?

Although China has the largest volume share at over 70% in the crowdfunding market, the rest of the Asia-Pacific region remains to lag behind Europe and the Americas. Southeast Asia (SEA) fell behind its counterparts due to low financial literacy, lack of knowledge in alternative financing solutions, and proliferation of informal business practices in the region. However, the crowdfunding scene in the SEA has seen significant improvement in the past few years due to the potential that is underscored by its growing demand for more flexible financing schemes. Alternative funding methods have become critical due to the gap created by banks from favoring large businesses over small and medium-sized enterprises (SMEs). As of 2019, two out of three businesses in the region are considered SMEs, and they make up for about half of the regional GDP.

What about crowdfunding for renewable energy projects in Southeast Asia?

While the numbers are loud and clear, SME potential in the region remains to be widely restricted. In effect, high-growth industries such as renewable energy are not realizing their full potential.

One of the rising areas in the SEA crowdfunding scene is the renewable energy industry. According to the International Energy Agency (IEA), energy demand in SEA will double until 2040, at 4% annual growth – a number that is twice the world average. This surge has permitted the upward economic progress of the region, which has seen a 300% rise in Regional Gross Domestic Product from 2005 to 2016. However, SEA has transformed into a global hub for trade, manufacturing, and finance at the expense of sustainable development.

In a 2019 report, IEA stated that only 15% of the total SEA energy demand comes from renewable sources (hydropower, geothermal, solar, and wind), while the rest is derived from coal and gas power. At this rate, the International Renewable Energy Agency (IRENA) target of 23% of primary energy coming from renewable sources by 2025 in SEA would be far from getting achieved (The ASEAN Post, 2020).

This lag is attributed to the deficiency in available financing support and channels. Asian Development Bank and REN21 agree that funding schemes from private and public institutions continue to be limited to large-scale projects. Such is unfortunate because small, disaggregated renewable energy projects have monumental potential in efficiently augmenting local energy needs. This financing issue is especially critical for regions with less mature investment climate, and with weaker financial market, like SEA. Given the foregoing, the need for investment facilitation in renewable energy projects is critical in SEA and similar emerging economies.

Why invest in renewable energy?

A study conducted by Imperial College Business School found out that a five-year investment in renewable energy in Europe and the United States could yield around 200% in returns. IRENA has an even more positive outlook by asserting that returns would be at 300-800%. According to La Camera, Director General of IRENA, investing in renewable energy systems would provide economic benefits of three to eight times the capital in the next 30 years.

How can I take part in renewable energy investment in Southeast Asia?

With SolarTrade, investing in renewable energy projects located in emerging markets has never been simpler, accessible, and transparent. Through our crowd sale process starting at $100 per panel, anyone can make a positive impact on the environment and help businesses with affordable electricity while earning up to 15% per year. In over 10 years, the length of most leases, we aim at returning you an IRR of 10% – without banking on any government subsidies! To make it even better, you can monitor the whole process in real-time!

Learn more about us:

Why is electricity so expensive in the Philippines?

On Sept. 7, 2020 , By SolarTrade - Guest writer

Experiencing high electricity bills? A lot of Filipinos have already stormed social media with complaints about Manila Electric Company (MERALCO) for their overbill. And who shoulders the costs? The consumers, sadly. These costs, after all, have certain implications that do vary per household.

So, how exactly does this look for most of the population of the Philippines?

Let’s say, for example, you earn an average of PhP35,000, ~720 USD, a month which is common for most Filipinos. Average consumption would be roughly 200 kilowatt-hours per month with a rate of Php 8.49 per kilowatt-hour (kwh), ~0.17 USD, based on MERALCO if you’re situated in Metro Manila. Your total costs would amount to Php1,698 which is around 5% of your total income. And this is if you go easy with your airconditioning. While this may not seem much for those with middle-high income classes, those with lower income would need to secure at least Php 7,337 just for basic necessities – making that 5% much more significant.

Now assume you own a small cupcake bakery business. You consume around 400 kilowatt-hours per month. The rates for these commercial services increase from Php 8.49 to Php 9.1237 or about 0.19 USD. Your monthly bill would amount to Php 3,649. Take note, bakeries earn a range of 8,000 – 15,000 a month. The change in cost is quite drastic from just a small increase in rate per kWh.The burden is excessively bigger to the residential and small-medium enterprises that need to balance their savings with daily costs. And it is these small-medium enterprises (SMEs) are that form the backbone of the local economy making up 99.65% of the total businesses and employing 65% of the population.

"Basically high electricity prices are killing SME's businesses and employment potential."

To put this into perspective, Singapore, a country with high living standards and high household income, has a uniform electricity rate of about 0.2 SGD per kWh (7.12 PHP or 0.15 USD). The electricity in Singapore is about 15% cheaper than in the Philippines. Indonesia's electricity rates, highly subsidized don't even reach above 1600 IDR per kWh (5 PHP, 0.1 USD) for grid-connected customers or about 40% cheaper. Vietnam does even better with rates dropping consistently under 0.1 USD / 5 PHP per kWh.

The Utility Game

If you’ve ever played Monopoly, remember landing on those utility tiles that are fully upgraded? You pay a huge amount, screaming curses at your friend who owns the electricity property and gains your money. That’s not too different from how the utility business works in the Philippines. Utility companies are one of the highest-earning businesses with MERALCO for one, making a revenue of $1.4 billion in a quarter. In fact, if you check the list of top-earning businesses in the country, you would find that there are a lot of utility companies such as Petron Corporation, San Miguel Corporation, Semirara Mining and Power Corporation, First Gen Corporation, and Aboitiz Power Corp - all of which deal with electricity distribution. You may also recognize the families behind these corporations such as Ramon Ang from San Miguel Corp, Ray Espinosa and Manny V. Pangilinan of MERALCO, and John Aboitiz from Aboitiz Power Corp. What about water, isn’t that another utility? You have the Ayala Corporation owned by Jaime Augusto Zobel de Ayala as well as private companies Manila Water and Maynilad. These companies make about $300 Million revenue with Ayala's highest-earning around $4 billion. Seems like some of the biggest names in the Philippines are top players. Winning the game means max profit, and you are there to help. How? Through your fixed costs.

So, what's in your MERALCO Bill?

The MERALCO bill is composed of different miscellaneous costs. We pay mostly for the generation of electricity. Why is this high? When we use more expensive power sources such as imported coal or gas, then prices should become higher. The Philippines, along with countries such as Thailand and Malaysia, use around 80% of natural gas and coal to power their country. In the case of the Philippines, natural gas is sourced domestically making it cheaper compared to Thailand which imports around 70%.

If we are able to supply our own gas, why are our prices high?

We are also paying for the investments needed to develop our power plants which require a lot of capital. The governments of other countries usually subsidize these projects, this is not the case for the Philippines. Gas prices are also increasing over time as they are running out. And just like Thailand, we may be on our way to becoming import-dependent. This is also the case for coal, another major power source. The Philippines was once rich in coal. During the time wherein we had a lot of these, most of them were actually exported. Right now, we are actually importing a lot of coal. This adds a lot of external economic factors associated with foreign price increases because we have no other option but to import. Aside from generation costs, we also pay for electricity lost during transmission. Given that the Philippines is composed of different islands, we would expect complications with distributing electricity all across the country.

How are they earning from this?

Take the case of MERALCO, the country’s main distributor of electricity and the only distributor in Metro Manila. Basically, they earn from distributing electricity. Note that the amount they earn is only a small percentage of your electricity bill. This includes distributing charges, metering charges, and retail charges. So how are they earning so much? There are two schemes to this. First, MERALCO uses a sort of block system wherein they offer different rates depending on how much electricity you need (i.e. 50 - 70kwh, 300 - 400kwh, etc). In short, the more you need, the higher the rates. Second, they even distinguish between residential, commercial, and industrial rates, as you recall from my example with the bakery business and households. Maximizing profits is the name of the game, after all. This spells bad for service and potentially, we may see surpluses as households and SMEs are discouraged from consuming electricity. They lose in both costs and service!

The Economics of Electrical Distribution Industries

The conditions seem favorable for these industries to maximize profit, how so? Let’s recall some economic concepts of natural monopoly and economies of scale. The context electricity distribution industry in the Philippines is somewhat like a turf system with each region having its own franchise like how MERALCO handles Metro Manila and some provinces such as Laguna and Quezon. The concept here is they would not want other industries to overlap, only needing a single provider per area. Therefore, only a select few private industries distribute electricity in the region. This is also the case for energy providers Visayan Electric Company (VECO) in Cebu and Davao Light and Power, Inc. in Davao.

The implications?

A single franchise produces services meant for an entire market at lower prices instead of having several ones - every profit goes to them. No competition means they can control prices unlike other countries that have multiple suppliers, therefore alternatives are offered to decide the best prices. What’s bad about this scheme is that they can regulate the supply. And should supply go down, while demand for electricity will always be increasing, well - expect prices to increase as well since they are, after all, the only provider in the area! There really is no incentive as well to regulate the high generation costs which we pay most of in our electricity bill.

Can’t other companies enter the market then?

What discourages them is high infrastructural costs and protective regulations. When you enter a non-competitive market, you would be at a disadvantage from let’s say MERALCO who has already been a major supplier. And since that industry is already in place, where would new industries get funds needed for the high infrastructural costs? Back to the Monopoly example, landing on a tile with more electrical properties results in higher gains versus tiles with only one property. Existing suppliers have all the advantages and gains to make those entering the market uncompetitive. This discourages diversification via green investments such as renewable energy industries given the same problem of needing capital. Exiting the market is just as costly. Electricity is a vital public utility, hence the government would not allow these investors to just leave whenever they want. They impose penalties.

The conditions have made it impractical to put two distribution companies in the same area. The high costs incurred by industries like MERALCO are often solved by the fixed costs we pay in our bill. If you add another distributor, then they would have to split these fixed costs and that may not be enough for either company. It would only result in them increasing their fixed costs to make up for the ones lost from having to “share” with others.

Conclusion

The proliferation of utility companies come at the cost of residential and SMEs that shoulder the high costs of their profit maximization schemes. The natural monopoly - regional in this case - has made it difficult for other electrical distributors to enter the market in hopes of decreasing costs incurred by the people.

Being the hardest hit by high electricity prices, SME's would tremendously benefit from alternative sources of electricity such as solar. With off the chart irradiation values and consistent sunshine throughout the year, the technology could could help the entities to partially break free from the monopoly. Unfortunately, they do lack the capital or don't have access to affordable capital needed for the solar installation.

SolarTrade’s mission is to fill this exact financing gap with your help through an innovative crowd sale process. As such anyone in the world can participate in the electrification of emerging SEA markets. Through our platform, you can buy and lease out solar panels to entities that are looking for more affordable electricity while earning a very generous yield of up to 15% p.a. Over a 10 years’ period, the usual lease length, this means an IRR of easily 10%. And even better, you can track the whole process in real-time on our digital platform.

Learn more about us:

Renewable Energy in SEA. What's the status?

On Sept. 1, 2020 , By SolarTrade - Guest writer

The Earth has experienced an increase in warming since the pre-industrial era. Does it necessarily feel hotter then? Not exactly, a warming climate does not mean it is hot everywhere. But there are serious implications. A warmer climate, after all, results in the worsening of many disasters. If you ever wondered why floods and typhoons are getting stronger or why so many places are experiencing longer droughts, well that is the warming happening. Global temperatures have increased from a range of 1-1.2 degrees Celsius since 1850. How much of this warming can be attributed to human emissions? Most of these actions pertain to the burning of fossil fuels. If a Volcano emits about 1 billion metric tons of CO2 annually, fossil fuels account for 35 billion. In other words, human activities have contributed around 60 times more CO2 emission than volcanoes every year. Around 84% of the world is powered by fossil fuels and is still the primary source of energy.

What does energy supply have to do with limiting warming? Well, this would involve major reductions in greenhouse gas emissions from fossil fuel use. But then comes the question of how this can be done when society requires a lot of energy. As agreed upon the Paris Agreement of reduced temperatures, countries have begun to divest from carbon-intensive energy sources. Fortunately, renewable energy is emerging in the energy industry

Have we begun to shift completely to RE?

This is not to say that all part of the world has completely stopped its investments in fossil fuels. Renewable Energy (RE) after all, is intermittent therefore requiring other energy sources to meet overall energy demands. The problem with RE is that they require batteries to store energy during times wherein there is no sun or wind for example. Countries in the EU such as Europe have begun to invest in improved battery technologies. But this is not the case for countries in SEA wherein the use of fossil fuels has increased even until today.

Painting the Energy Picture in SEA

Energy demand has been increasing with SEA being the highest in the world - the top five regional countries being Indonesia, Thailand, Malaysia, Vietnam, and the Philippines. The highest share of energy in the region is natural gas but as these resources dwindle, the country needed to diversify their energy mix.

How are they still coal dependent?

With coal being highly available and cheaper than other fuels, demand for it has increased in the region. There are even countries within SEA such as Thailand that have promoted further coal consumption through subsidies. Think initial cheaper energy options like short term solutions, only to be burdened in the long run. Not to mention the added health and social implications of added emissions. Based on the region's power mix, coal has an expected increase of about 78% contribution to the total energy supply by 2040, one of the few countries wherein coal is expected to rise. This renders renewable energy prices uncompetitive.

Prices are still uncompetitive in these countries, so why the shift?

Significant developments have taken place as the regional countries have made commitments towards reducing their Greenhouse Gas (GHG) emissions by 2030 given they are highly vulnerable to changing climates. Even the slightest change in temperature could result in detrimental effects for these countries in the form of increased incidences of flooding, droughts, and storms. Countries are responding to this in their own ways. Thailand, despite its coal subsidies, has set its renewable target to increase by 30% by the year 2037.

Challenges and Opportunities toward Long-Term Energy Investments.

Several countries in SEA such as Vietnam and Thailand are faced with the challenges of having only one dominant power source aside from fossil fuels mainly hydro and natural gas. When these countries experience drought as well as a shortage of resources, it leaves them vulnerable. Vulnerable in what sense? In the sense of securing electricity. Without resources, countries would have to import from other countries. The problem with imports is that prices for fossil fuels are volatile. Fossil fuels, after all, tend to experience an increase in prices based on trends given their high demand in the market. This would add additional burdens to governments should importation become their only option. The challenges present opportunities for RE development in SEA. Diversifying the electric mix – aka adding other major energy options such as solar, wind, and geothermal, could be introduced as stable forms of electricity.

Can RE measure up to the energy output of fossil fuels?

Say, for example, the case of Vietnam which recently expanded its solar panels. This added capacity amounted to around 18,712MW which would translate to around 300 coal power plants. That saves up a lot of costs that would otherwise be needed to buy coals. We’re also talking about an average of 3,893,003 MT of GHG per plant mitigated. The benefit of solar energy, on the other hand, is that is cost-free when used as an energy load base as compared to coal. This is also a cleaner alternative as converting solar into energy does not release GHG emissions. Additionally, the country receives an abundant amount of sunlight in which there is no risk of losing in the long term so long as the sun is up.

Leading the Energy Mix – SEA Countries Potential in RE

There are three main factors that have led to the shift in RE observed in different countries in SEA:

• Subsidies and Energy Policies – The addition of renewable energy policies and subsidies such as Feed-in-Tariffs have encouraged solar and wind panel expansions. Renewable energy policies set targets that involve local stakeholders to participate. Therefore, this rationalizes investments made given that they are guided by timetables and milestones. As for the FIT, solar industries are now offered safety nets regarding RE prices. They will be offered above the market prices for long term contracts – which are never the case for fossil fuel industries. This economic incentive would be perfect especially since RE is a new technology and otherwise, a risky thing in the perspective of foreign investors. Countries such as Vietnam and Malaysia have been successful in the implementation and are ranked between 1st and 4th in terms of renewable shares.

• Abundance in Resources – Geographically, countries located in SEA are abundant in solar, wind, and biomass. Take for example Laos and Cambodia which have been abundant in biomass - Laos being powered by 69% biomass and Cambodia shifting from diesel fuel to biomass. In terms of solar and wind, Thailand, the Philippines, and Indonesia have high potential which could lead to more RE developments in the future given reduced costs for PV technology.

• Technological Advancements – Technological advancement in Singapore has allowed it so to supply its own energy despite having no coal reserves. The country imports around 98% of its energy needs. Developments in RE such as solar technology have given them an option to become self-sufficient, therefore reducing costs needed to import which could be redirected to other sectoral developments.

Conclusion

Commitments to reduce GHG emissions have led towards diversification of energy mix in regional countries in SEA. Renewable Energy development provides opportunities to shift towards a cleaner and renewable form of energy. In order to meet renewable targets, countries must accelerate their investments. While the potential is clear, regional countries are still not fully ready to make the shift. There is still a massive gap in capital to divest from fossil fuel use.

SolarTrade’s mission is to fill this exact financing gap through an innovative crowd sale process. As such anyone in the world can participate in the electrification of emerging SEA markets. Through our platform, you can buy and lease out solar panels to entities that are looking for more affordable electricity while earning a very generous yield of up to 15% p.a. Over a 10 years’ period, the usual lease length, this means an IRR of easily 10%. And even better, you can track to the whole process in real-time

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SEA's fight against climate change

On Aug. 29, 2020 , By SolarTrade - Guest writer

No part of the world is spared by the deteriorating climate situation. Southeastern Asia is one of the areas most affected if the latest data is anything to go by. The Asian development bank released a report that shows a 1.8% loss in GDP annually for six countries namely Sri Lanka, India, Bangladesh, the Maldives, Bhutan and Nepal.

As the southeastern Asia region seeks to expand economically, it seems it needs to tackle climate change. Like the rest of the world, the region has its work cut out if the global temperature increase has to remain below 2°C. It must tackle greenhouse gas emissions that are related to the energy industry. Diversion from coal-powered thermal plants should be an urgent matter. Vietnam has currently 24 GW of operating and under construction coal capacity (or ~40% of its total installed power capacity), Indonesia has 43GW (or ~40% of its total installed power capacity), the Philippines has 13GW(or ~40% of its total installed power capacity) and India a monstrous 274 GW.

Two Decades of Climate Change

India has been on the receiving end of deadly heatwaves. Australia had a rude start to 2020, as fierce wildfires ripped through the communities. Droughts on the African continent are becoming more common. No part of the world is spared by natural disasters that have every sign of climate change triggers.

Southeast Asia may have experienced frightening floods in recent months, but the pain has been there for decades. The region has experienced a temperature increase every decade for the last six decades,
which can be visualized by Mckinsey's charts. It must not come as a surprise that the Global Climate Risk Index includes four countries from the region among the ten leading countries in terms of climate change effects. This index looks at various parameters including storms, heatwaves, and floods.

SEA has had its share of these in the last several decades. The economic, political, and social impacts that accompany natural disasters have been devastating for the region. For instance, we all know floods can created destruction, cause huge financial losses but most severe of all do rip lives apart.
The 2012 floods in Thailand might still be fresh in our minds, affecting 13.5M people and causing $46.5 billion in damages. More recently, Boracay, the most prestigious island of the Philippines, was struck by a Typhoon, Ursula in December 2019, and destroying 400 000 homes in its path during the Christmas period.

Yet floods and typhoons are just the tip of the iceberg. Rising sea levels are affecting the viability of life in megacity Jakarta, where the government has already taken steps to physically move the capital city to a safer location. Yes, you read this right.

Energy Mix in the SEA Region

Developing economies (SEA included) contributed 80% of the energy-related emission growth in 2019, according to data by the IEA. Japan, the European Union, and the United States all experienced a decline. The International Energy Agency (IEA) estimates that the energy demand in SEA will increase by 66% alone within the next 20 years, especially driven by its explosion in population and growing economy. Owing to its low cost and availability, coal will continue to feature prominently in this increase. Environmental groups are concerned by this overreliance on fossil fuels. Relying on coal-based power generation is already incompatible with the benchmarks set under the Paris Agreement.

What is the status of Renewable energy in the Southeast Asian region?

The region has no option but to stimulate a wide transition to renewable energy if it wants to reach its goals set by the Paris Agreement. When you look at the commitment of member countries to renewable energy and energy efficiency, even in the face of the COVID-19 pandemic, you can agree that clean energy is at the heart of SEA's future. During the Asia Clean Energy Forum (ACEF) 2020, Asian Development Bank (ADB) President Masatsugu Asakawa reiterated the importance of using clean energy to catapult the region to greater development heights.

It is true that the global pandemic will slow the progress of RE in the region, and some political and social dynamics may affect the industry. But this period can serve as a learning opportunity for all entities on how to handle current and future energy needs, especially for countries that are not self-reliant (cfr. Coal imports, etc).

Despite the challenging 2020, a lot has been happening in the industry:
• BlackRock and partners have started a $500 million climate fund
• Constant Energy has secured a loan to build and commercial & industrial solar pipeline in the region
• Wartsila announced plans to install a 100-MW energy storage plant
• Singapore based Cleantech Solar raised $75M from ING to help achieve 500-MW solar goal.

The question then begs, why are coal and other conventional fuels dominating the region? The SEA's governments are not doing enough to promote cleaner energy. Vietnam's favorable green incentives are more of an exception than the rule in the region. Even worse, in Indonesia par example, fuel, electricity, and even coal are actually subsidized making investments in renewable energy significantly less attractive on a large scale.

And like in any sector, access to big money can be extremely influential and prevent change in the RE sector. Globally, powerful forces control the oil and gas industries. SEA is not different, and players in the RE industry are still relatively voiceless.

Conclusion

Climate change is a serious threat to the SEA region with larger-scale natural disasters hitting the region such as typhoons, floods, intenser El Nino's,...
Even though there is hesitance in a large scale implementation, there is no doubt that renewable energy has a great potential for the region, especially solar, supported by off the chart solar irradiation values, constant sunshine throughout the year and proximity to the main manufacturing hubs of the equipment. Solar PV technology is easy to deploy is low maintenance and making it ripe for application. On a large scale, this large scale renewable energy implementation could help the region to decarbonize itself and help improve the lifestyle of millions of people through poverty alleviation, job creation, and improved health.

We want you to be part of SEA's transition to renewable energy.
With SolarTrade, investing in renewable energy projects located in emerging markets has never been simpler, accessible, and transparent. Through our crowd sale process starting at $100 per panel, anyone can make an impact while earning up to 15% per year. Over a 10-year period, the length of most leases, we aim at returning you an IRR of 10%, without banking on any government subsidies. And to make it even better, you can monitor the whole process in real-time!

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Investing in green energy, how do i get started?

On Aug. 27, 2020 , By SolarTrade

Today, it has never been easier to buy and sell stocks & derivatives, driven by the low, near 0%, commission and gamified platforms of technology darlings Robinhood (USA, valuation of $8.6B), Revolut (EU, valuation of $ 5.5B), Trade Republic (EU, valuation of $400 M). You install the app or log in on their browser-based platform, connect your bank account and you can start trading worldwide financial instruments in a matter of minutes. It’s that easy. You don’t even need to be wealthy. A few dollars, even dollar cents, will get you started.

Unfortunately, when it comes down to participating in worldwide green energy projects, projects with a long term impact, significantly less subjected to short term speculation, and above-average returns, the situation is quite different. The renewable energy investment environment of today is largely reserved for the big money of institutions and wealthy individuals, enjoying consistent and in most cases juicy returns over periods spanning decades.

So what options do I still have to invest in renewable energy?

A. The good old green bond

Green bonds are fixed income, debt instruments designed to raise funds for projects and businesses that should have a positive environmental or social impact. With environmental, social, and governance investing increasingly going mainstream, green bonds have gained significant traction among larger firms or governments looking to boost their sustainability projects. Smaller entities, lacking the firepower to go through an extensive due diligence process, have little hope to get official approval to issue their own green bonds.
Since the category’s inception just 10 years ago, the global green bond market has rapidly grown to about $400 billion in value. This might sound significant but they only account for a little 1% of the global market. Southeast Asia’s green bond market is even more meaningless, just a blip of exactly $8 billion in 2019, with the majority of this capital raised in Singapore.

So what do they earn?

Actually very little, even lower than conventional bonds to our big surprise. Even the riskiest green bonds, issued by corporates or governments with a shaky credit rating and located in less stable countries, will yield you up to 6% per year. Riskier means as well a higher likelihood you will lose all of your invested money. In Europe, the green bond will on average earn you around 3.4% per year. Still better than your average savings account, but definitively not great.

Are all green bonds actually green?

Unfortunately, no. Even though the bond offerings need to undergo an elaborate due diligence process by the regulator, you actually have very little insights on how the bond money is used. About 10% of all green bonds in H1 2020, despite not meeting CBI’s (Climate Bonds Initiative) standards, were still issued. Examples of misuse include a Chinese entity that used the green bond capital to fund clean coal projects.

I still want to buy them. How do I get started with green bonds?

Green bonds can be bought directly from the main investment banks such as Deutsche Bank, Goldman Sachs, JP Morgan or you can participate by buying shares in a green bond index fund, par example. The kicker though is that most bond offerings require you to shell out a few 1000’s dollars to get started.

B. The rise of crowdfunding platforms

Crowdfunding is the practice of funding a project, an individual, or a venture by raising small amounts of money from a large number of people. The concept has been around since the 1700s with the Irish Loan Fund to be the first of its kind of resorting to crowdfunding to fund loans to the poor. It took however until the widespread of the internet for modern-day crowdfunding to really take off. This was a major milestone in democratizing the access to affordable capital, critical for smaller entities, and at the same time providing anyone with the opportunity to make it big by investing in a successful venture.

Today’s digital crowdfunding ecosystem is large and growing at a furious pace of 18% per year, expected to top $90 billion in 2022 globally, mainly concentrated in Europe and the USA. And it is diverse, to name a few, you can participate with a few dollars in crowdfunding campaigns to get new innovative consumer products off the ground through Kickstarter, provide loans to individuals in need through p2p lending platforms such as Twino in Europe or upcoming startup Akseleran in Indonesia, participate in larger real estate projects with Fundrise, or support a good cause via gofundme, such as providing relief to citizens of Beirut affected by the explosion of this year.
So what about renewable energy crowdfunding?

The space is still largely in its infant stage but you can already participate in renewable energy projects, starting from a few dollars, with upcoming players such as ecconova (Belgium), Trine (Sweden) or TheSunExchange (Africa) to name a few. There are in general 2 types of offerings in the renewable energy crowdfunding space: debt or equity. With debt, you, the donor will provide a loan to the entity/project with the expectations of being repaid with an additional interest rate. With equity, you basically will receive a stake in the project in exchange for your money and you will be repaid based on the success of the project. The yields, what defines the financial attractiveness, are largely dependent on the type of offering. Par example Trine’s debt offering, starting at 25 euro, used to capitalize renewable energy developers and installers in Africa and near Asia, will yield you around 7% per year with the period of the loans spanning around 5 years. In contrast, through TheSunExchange’s crowd sale offering, you will acquire solar panels, instead of just paper certificate (security) such as is the case with debt offerings without any collateral, that will be then subleased to an entity as part of a larger solar leasing agreement which usually spans +10 years. Your earnings will be dependent on the electricity generated by your panels which is then sold to the tenant entity. In this case, the yield is heavily dependent on the viability of the technology, in this case solar, at the location of the project. The higher the solar potential, the lower the cost of solar technology and a higher local electricity price usually results in significantly better yields. In TheSunExchange’s case, they claim their projects to yield an IRR of 10-15% over periods of 15 years.

What about crowdfunding for renewable energy projects located in SEA?

Even though growing at lightning speed and enjoying a large potential for solar power with potentially high yields, as discussed in a previous article, SEA’s renewable energy crowdfunding space is largely untapped, unfortunately. Limiting as such yield-hungry and eco-minded global retail investors to participate in this massive opportunity.

Conclusion

There is a lack of financial instruments/tools available for the public to be involved in renewable energy projects. Available instruments to the public are not transparent (difficult to know how the money is actually used) or high-ticket size (you need money to get started, above 1000$) or relatively low in yield. Alternative instruments offered via digital platforms, through a crowd sale and crowdlending offering, are slowly catching popularity in Europe but they are heavily focused on the domestic market, still leaving out projects in emerging markets where the impact and the yields can be significantly better.

With SolarTrade, investing in renewable energy projects located in emerging markets has never been simpler, accessible, and transparent. Through our crowd sale process starting at $100 per panel, anyone can make an impact, by helping schools/SME's of Southeast Asia access affordable and carbon-free electricity, while earning up to 15% per year. Over a 10-year period, the length of most leases, we aim at returning you an IRR of 10%, without banking on any government subsidies. And to make it even better, you can monitor the whole process in real-time!

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Understanding Solar Intermittency

On Aug. 24, 2020 , By SolarTrade - Guest writer

Rapid urbanization experienced across different cities worldwide has resulted in increasing population growth, industrial development, and improved living standards. This has led to a continuous growing demand for electricity, especially in the fast-growing economies of Southeast Asia, SEA. As a consequence, greenhouse gas emissions have been skyrocketing due to the intensive use of traditional, non-renewable energy sources such as fossil fuel and oil in the traditional power industry. With a rising concentration of greenhouse gases, climate change has become a real threat. Renewable energy technologies could provide a way out but there are still major technical hurdles, such as intermittency, to overcome.

The Solar Panel PV Technology

Recent developments in technology have made harnessing solar energy into a viable alternative source for electricity generation to address the limits of other energy sources. The journal article of Shaikh et al. provides a detailed explanation of how harnessing solar energy works conceptually. 1366 TW strikes the earth continuously, that's 1366 000 000 000 000 W. To put this into context, this comes down the combined output of 1366 000 1GW nuclear power plants. To be able to utilize sunlight (photons) as energy, they must be converted to electricity. Photovoltaic (PV) cells are exactly doing this. These small devices capture and convert sun rays into electricity. Assembled together, they make up your solar panel. Amidst the global trends to minimize the use of fossil fuels, the solar panel PV Technology is a promising alternative as it offers a more sustainable and cleaner option towards energy generation.

Intermittency of Renewable Energy

One of the major challenges of relying on Solar Energy is that it does not produce electricity continuously. A simple cloud can reduce the output of a solar installation instantaneously. Furthermore, submitted to larger factors such as earth rotation and inclination, day time hours can vary widely from one location to another, which results in ever-changing solar energy reaching one specific location throughout the year.

Why is this such a problem?

In a power system, in the absence of affordable and large scale storage technologies, the consumption and generation of electricity need to even out at all times. On a micro-scale, if you would try to toast your bread with a solar-powered toaster and a cloud would happen to block the sun, nothing much would happen. Your bread would still be un-toasted. On a macro scale, this means that if a large solar farm is affected by a massive cloud, other generation technologies have to make up for the reduced output of this solar farm. Otherwise, the grid will suffer a blackout. This is what we call the intermittency issue. Battery technology could help smoothen out the intermittency issue but as of this day, the available technologies are rather expensive and not available at large scale yet.

Do all countries experience Intermittency?

Yes, but to different extents. Some countries receive more sunlight than others. The Earth is tilted at about 23.8 Degrees and this has certain implications on the intensity of sunlight received by certain places. While we can argue that the Sun does shine equally on all parts of the Earth, it is in the areas located at or near the Equator that receive higher amounts of direct sunlight—as they are closest to the sun—as compared to those located at poles. This in part explains why certain countries have different climates. To better contextualize this, comparing the solar potential of let’s say, countries located near the Equator such as the Philippines would have a range of about 3.65–5.46 GHI (Global Horizontal Irradiation is used as a measure for solar potential in a country) as compared to Germany which ranges from 2.75–3.34. The maximum of Germany is even smaller than the minimum of the Philippines. Countries located near the equator, such as the Philippines and Indonesia in Southeast Asia, have furthermore pretty much fixed day time hours throughout the years, making the intermittency problem less severe. While, Germany par example, has to deal, alternately, with short dark days in winter and long sunny days in summer.

Impact of intermittency on renewable energy investments

Aside from causing technical challenges, intermittency does affect the investment worthiness of renewable energy technologies, solar energy in particular. This is especially true for countries that are not encouraging the implementation of renewable energy, as such not offering any subsidies like FIT (feed-in tariff),...Dimensioning the perfect solar installation is key to the financial success of a project. Ideally, you want your installation to cover as much of your daily electricity needs but not more. Any surplus of electricity needs injected back into the electricity grid or stored (if available). Without a feed-in tariff or net-metering, allowing you as such to "sell" this surplus as a generous price, the surplus electricity is basically economically worthless.

Higher intermittency makes it harder to dimension the solar installation. In wintertime in Germany, par example, when the demand for electricity is actually the highest, the actual amount of sunshine is very little, and therefore there would be a tendency to over-dimension the solar installation. In the summertime, however, when the sun is plentiful and the demand for electricity is lower, this same installation would generate a massive surplus of electricity. Now Germany has done a tremendous job by implementing solar power at a large scale but it must be said that it is mainly driven by subsidies.

On the other hand, in SEA countries, close to the equator, this intermittency problem is less outspoken throughout the year. Generation is way more consistent, making it easier to dimension the solar system. Combined with the region's high electricity prices, this makes investing in solar energy worthwhile even without government subsidies.


SolarTrade's mission is to democratize investments in renewable energy and help communities in South East access affordable and carbon-free electricity. Through our crowd sale process starting at $100 per panel, anyone can make an impact while earning up to 15% per year. Over a 10 year period, the length of most leases, this means an IRR of 10%, without banking on any government subsidies.

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Are We Finally Ready for the Green Economy in 2020?

On Aug. 19, 2020 , By SolarTrade - Guest writer

Millions of users in South East Asia (SEA) may be getting assess to electricity, but this is putting pressure on the existing energy systems. Even worse is the fact that most of this demand is being addressed through increased use of fossil fuels. Carbon dioxide emissions are the inevitable result. By 2040, the number of annual deaths associated with indoor and outdoor air pollution in the region will have hit the 650,000 mark. The International Energy Association (IEA) reveals that there were 450,000 such deaths in 2018.

Interestingly, global warming and other issues linked with persistent use of fossil fuels have been contentious arguments in the last decade or so, mostly in the political circles. Now that it is evident to many that renewables can provide handsome returns on investment, investors and politicians appear to be reading from the same script. The renewable industry has been awaiting this kind of push for years. This realization is part of the reason why there is increased investment in renewable energy. Are businesses in the SEA region ready to be part of this opportunity for renewable energy investing?

Thirst for Clean Energy: Big Money Involved

A new report shows that the global average investment in renewable energy is increasing. There might have been slower investment in China and Europe, but the United States increased its share by 28% to $55.5 billion last year as compared to 2018. According to the report, cost of solar power continues to decrease due to economies of scale and improved technology. Every clean energy enthusiast should hope that the Covid-19 pandemic does not affect the investment figures for 2020, as the world rushes to contain temperature rise to within 2 degrees Celsius.

Renewable energy offers reduced carbon footprint and significant cost savings, and big global companies have taken notice. Amazon has undertaken to be carbon neutral by 2040 with significant investments into wind and solar energy. Apart from powering its new headquarters with solar energy, the retail powerhouse intends to have solar projects in Australia, United States and Spain. This comes on the backdrop of the CEO Jeff Bezos announcing that the firm will set up Bezos Earth Fund, a unit worth $10 billion and focused on climate research.

American giant tech company, Apple, recently announced its intentions to become carbon-neutral by 2030. US-China Green Fund-Apple collaboration will see investments worth $100 million go into energy efficiency projects for the technology company’s suppliers.

South East Asia (SEA) Renewable Energy Investing

The last decade saw the Asia energy landscape become synonymous with rampant pollution and environmental degradation. Anyone familiar with Ho Chi Minh City, Vietnam, can attest to the fact air pollution from coal powered power plants is a serious problem here. Notwithstanding, that is not the complete story for Vietnam and the region. Optimism reigns in the air that the South East Asia (SEA) region is ripe for adoption of a new energy model if the recent renewable energy impetus is anything to go by.

Companies like Meta Corporation are attracting investments from different quarters. Ayala Corporation plans to inject at least US$1 billion by 2025 for the establishment of renewable (wind and solar) energy installations. Examples of giant financial firms involved in this initiative already are the International Finance Corporation and the Asian Development Bank. Significant investments are also coming from GE and Siemens. Siemens is particularly noticeable for its contract to build a massive solar farm in Vietnam. The German firm is collaborating with Trung Nam Group.

What is the motivation behind these Green Efforts?

In America, Walmart and Target are in an interesting contest: Who is greener. In an effort to appear as the best driver for the green agenda, these firms are investing heavily in solar power. Target scooped the best award for on-site solar capacity, but Walmart is also doing well with its various strategies, including power purchase agreement (PPA).

Europe is renowned for crowdfunding websites, which are making RE projects possible. Initially, Indiegogo and Kickstarter were the only widely known sites, but newer options with even higher capital-intensive projects have emerged. A good example is Citizenergy, which has the €280,000 Mar De Fulles tourism project under its belt.

These instances demonstrate an awakening to the gains of renewable energy investing, for not only the sustainability goal but also to polish the corporate image. Many consumers are attracted to businesses that address climate change. Surveys have shown that customers rate sustainability efforts highly. An example is the August 2018 Nielsen report, which reports that 81% of respondents strongly supported the idea of companies supporting environmental improvement efforts.

It is time for retailers (even in SEA) to capitalize on the voice of their consumers, and probably help in democratizing of investing in sustainability projects. Environmental impact is evident in every step of the retailing value chain, from manufacturing to waste disposal. With a robust renewable energy strategy, this industry can have a massive impact on regional and global efforts for sustainability.

Investment Potential for Businesses in SEA

The SEA region should take maximum advantage of its massive renewable energy potential backed by close proximity to the equator. According to the United States agency for international development, the region enjoys an average of 1,500-2,000 kilowatt-hours per square meter annually as solar irradiance.

Land is largely suitable for solar, but there is a disparity among the nations, with Myanmar and Thailand being the most advantaged. The Philippines and Cambodia tend to have balanced suitability for both wind and solar energy. Generally, wind energy resources are less favorable as compared to solar power in the SEA. Land is limited in places like Singapore, Brunei, and Indonesia.

It is pleasing to note that RE policies exist, with Indonesia, Vietnam, Thailand and Philippines among those leading the way. These countries have done a commendable job of increasing incentives for investors and developers, establishing renewable energy tariffs and developing financing schemes. Of course, there is room for optimization and expansion of these policy measures to take full advantage of the superior RE potential in the region with a goal of democratizing of investing.

That Asia-Pacific region is developing to a center for clean energy, both in the manufacture of renewable energy technologies and deployment. Cooperation among member countries for technology transfer should enhance investment in the green economy in the South East Asia (SEA) region even further.

One would wonder then, why small-scale businesses in the region are still unable to take advantage of the investment opportunities. Businesses are largely innocent in this matter since there are supply-side challenges such as the following:

• RE policies are sometimes unclear
• Capital costs are high
• RE end-users and entrepreneurs don’t have access to debt financing tools

Alongside ironing out the above issues, respective governments should strive to promote formal business practices and build knowledge about the various financing solutions for businesses interested in RE installations. This will give RE investors the confidence they need about the return on investment.

Conclusion

South East Asia (SEA) may have a lower per capita energy consumption compared to Europe and other developed regions. It may also possess abundant fossil fuels to drive the economies for several decades to come, but it is worthwhile to worry about energy security. Time for the region to adopt the green economy is now. It is happening and it may be just a matter of years before the rest of the world falls behind in terms of renewable energy investment.

Even though renewable energy investment is on the rise, today's available instruments for the average individual (retail investor) to participate in cross border renewable energy projects are still extremely limited. You need a lot of capital to get started, have limited choice in the projects you can participate in, and knowledge about existing financing options is scanty. The RE space is largely reserved for wealthy and institutional players, leaving the retail investor stranded.

With SolarTrade, investing in renewable energy projects located in emerging markets has never been simpler and accessible. Participate in our solar panel crowd sale campaign and earn while electrifying emerging markets with affordable and carbon-free electricity.

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Solar leasing, que?

On Aug. 13, 2020 , By SolarTrade

In a previous article, we covered South East Asia’s potential for solar power for electricity generation purposes. As pointed out, with near-perfect geography and the great climate, SEA is an appealing region to deploy solar power at a large scale. Roughly speaking a solar panel in the Philippines will output 30-50% more electricity over a single year compared to the same solar panel deployed in Germany par example, simply because there is more sunlight (or irradiance for the technical geeks). The output of a solar panel in the Philippines is furthermore considerably more consistent throughout the year, unlike the solar panel in Germany which is exposed to dark winters and sunny summers. Low intermittency is usually preferred for a better economic viability of a project. This will be true until storage technologies such as batteries will become significantly more affordable.

One of the major drawbacks of solar power is the initial investment that is required. Unless you are deep-pocketed, purchasing and installation cost are the deal-breaker. With today’s advanced technology, solar power installations can run for 15+ years with a minimal additional maintenance cost, generating as such massive savings over the years. Despite this argument, shelling out 100’s thousands of dollars for a complete installation that can take up a few years to pay itself back has been a no go for a lot of entities. For most traditional businesses, spending your hard-earned money on cost-cutting measures, which electricity is, is not as sexy as making investments to increase your companies’ revenue.
Throughout the years, various financing instruments have been experimented with to stimulate the implementation of solar power. European banks, par example, have started to offer renewable energy/sustainability loans with affordable interest rates, even though solar systems are of a depreciating kind.

But what if you are not eligible or didn’t want to take out a loan? The bureaucratic procedure can be rather tedious and taking out a loan is risky after all. And this for some savings on your electricity bill that can take years to be substantial.

The solar leasing solution was born. In order to attract more clients and sell more solar installations, solar installers started to experiment with financial products. Instead of demanding customers to pay for the installation upfront, solar installers would only charge a minimal deposit upfront & charge a recurrent fixed fee per month to the client. To minimize the risk, solar installers knew exactly where their customers were living. Furthermore, the truth is it was highly unlikely the customer had any intention to steal or break the panels, especially with the danger of electrocution. This model works for the customer as long as the savings achieved with the (free) electricity generated by the panels cover the monthly leasing fee. A great example of a company banking on this solution is Enpal, a rising German solar technology start-up.

What about solar financing solutions in emerging SEA?

Solar financing solutions are rather limited. An average business has in general no access to an affordable bank loan, especially if the loan is used to capitalize the solar installation. On the other hand, solar leasing in SEA is still in its infant phase, especially compared to Europe. There a few smaller players, such as the Buskowitz group in the Philippines and upcoming regional player Cleantech Solar, who recently secured a $75 million loan. But it is extremely limited. The main reason is the lack of available capital in general in Southeast Asia. Most solar installers do lack the financial power themselves to provide the solar leasing solution. They need the help of larger financial entities to mitigate some of the risks.

Where there is a need, there is an opportunity.

SolarTrade’s mission is to fill this exact financing gap through an innovative crowdsale process, Solartrade - how it works, and a gamified digital platform. As such anyone in the world can participate in the electrification of emerging SEA markets. Through our platform, you can buy and lease out solar panels to entities that are looking for more affordable electricity while earning a very generous yield of up to 15% p.a. Over a 10 years’ period, the usual lease length, this means an IRR of easily 10%.

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Welcome To SolarTrade

On Aug. 13, 2020 , By SolarTrade

After months of intense focus, the platform is now live to the public. We are ready to democratize investing in renewable energy and with your help to electrify businesses in South East Asia with affordable & carbon-free electricity.

Call it a stock trading application, such as Robinhood but with far deeper socio-ecological-economic implications. A tool for anyone to make a cross border impact by empowering businesses in emerging markets, fight climate change and at the same time earn a very generous yield of up to 15% per year with very limited risks. You can even see your investment, generating green power, in action in real-time!

What’s there not to like?

The impact, renewable energy investment space has been outdated for a while. It is clumsy at best, not transparent, technology is poor, and worst of all it is principally reserved for wealthy individuals & institutions who are happy to pocket all the profits. You need some serious money to get started and good luck finding the right investment instruments that have the right scope (yes I’m looking at you green bonds. Used for all kinds of purposes other than sustainability), have an appealing yield, and can be liquidated. Everyone speaks about wanting to something about climate change and helping emerging markets but none one is given the tools to do it and even if they find a way to participate they end up poorly rewarded.

So why the focus on electrifying South East Asia?

650M people are now living in South East Asia and the local economy is growing at a furious rate. Annual GDP growth rates of 5% are the standard and have resulted in an exponential demand for electricity over the last 10 years to power factories, BPO’s, resorts, malls, residential compounds, … To this day, however, there is still a general lack of appropriate infrastructure to absorb this additional demand (see a large number of diesel generators in Indonesia) and in some markets, monopolies are just keeping the price of electricity high (especially Philippines). Renewables have an incredible potential in Southeast Asia, the irradiation values are off the chart. With near-perfect geography & climate, solar power can thrive in these markets and provide a sustainable & highly profitable solution (without need for government subsidies. Unlike most European markets. A secret no one likes to share). Unfortunately, once you speak to a local business owner, you will understand that they just don’t have access to the kind of capital that is required to get started with a solar system.

It’s with great enthusiasm that I’m writing these lines. Bringing an idea from an initial abstract concept to a live and tangible product is rewarding feat by itself. We are now open for pre-registration and are performing our due diligence on a few projects. Stay tuned.

I hope to have you part of our journey!

Wouter Gyssels

Feedback to share? Reach me via wouter@solartrade.io

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SEA's Solar Power Potential

On July 21, 2020 , By SolarTrade

Southeast Asia has emerged as one of the fastest-growing economic regions in the world, with GDP growth rates reaching 5% year over year the last decade. With growth comes a greater appetite for more energy resources to fuel its economic expansion. An estimated 250 GW of capacity will need to deployed, according to a study performed by the consultancy company Roland Berger, by 2035 to fulfill the additional demand for electricity in South East Asia alone.

The region’s favorable geography & climate makes it a prime location for renewable energy, in particular, solar energy owing to the presence of abundant sunshine throughout the year. Combined SEA’s easy access to the main manufacturing hubs, a spectacular decrease in the cost of the technology over the last decade, and arising international trends towards sustainability, this could be the solar technology’s golden era in SEA.

Increasing Demand For Energy In Southeast Asia:

According to the International Renewable Agency, energy consumption in Southeast Asia nearly doubled between 1995 and 2015, growing at an average pace of 3.4% annually and energy demand is expected to continue to grow by an average of 4.7% annually by 2035. This energy appetite is driven mainly driven by the explosion in population, now reaching 650M people and urbanization of the region. And the population is still young, very young, on average 26 years old in the Philippines, 29 years old in Indonesia. Similarly,industrialization, driven foreign investment in Southeast Asia, has added additional stress on the demand for energy. The region is expected to need an additional 250 GW of capacity to fulfill the additional demand for electricity.

A Blessed Geography of the Region:

With close proximity to the equator and blessed with abundant sunshine throughout the year, South East Asia's potential for solar power is huge. A first common metric used by the industry to assess the viability of the solar power technology is the Photovoltaic Electric potential. Roughly speaking, it represents the average daily output of an average solar panel in the region, in kWh/kWp.
In Central Europe, where most of the population and economic activity is concentrated, this value is 2.9 for Berlin/Brussels/Paris/London par example. By comparison, in South East Asia, the solar potential in Metro Manila (Philippines) & Jakarta (Indonesia), 2 of the most populous cities on earth, and growing fast, is already 3.8. A panel in Manila will therefore roughly to speak output 35% more electricity compared to the same panel deployed in Paris.
On top of this significant advantage, the electricity output of the solar panel in Manila will be significantly more consistent throughout the year. Simply because daylight time for countries near the equator is stable and consistent. Paris, Berlin, Brussels have to deal with seasonal fluctuations of short days during the winter and long days during summer. Why is consistency so important? Unfortunately, electricity can't be stored affordably yet on a large scale. This means electricity generation and consumption need to balance each other. If the solar panels aren't producing enough electricity, let's say during wintertime, other technologies need to make up for the missing generation. This is called the intermittency problem of renewable energy, which we will elaborate more in another chapter.

Solar Power As A Low-Cost Source Of Energy option:

The last 30 years saw a spectacular decrease in the manufacturing cost of solar power, photovoltaic technology, falling below $1 per W from 77$ per W in 1977. All of this while the quality of the systems increased. Solar panel's lifetime of 25 years is today's industry standard, warranted by the manufacturers and commercial panel efficiencies, indicating the adequacy to convert sunshine into electricity, are reaching +20%. There is still more work to do on the auxiliary components, needed for the installation, such as inverters that have a more limited lifespan of 10 years.

So why is solar technology still so expensive? Manufacturing cost is only one small part of the overall cost of the system. Logistics, distribution margins and installation labor have a fierce impact on the total retail cost of the installation, depending on your location. Other market forces such as price-fixing, which happens when par example a group of solar installers unifies in a cartel and decides to offer the same price (par example in the Philippines), can have a significant consequence on the retail price. Overall, Western countries have typically a higher labor cost and the logistics cost to get the equipment from the manufacturing hubs, located in Asia, is significant. Compared to SEA's countries where labor is significantly cheaper and are closely located to the main manufacturing hubs.

Solar power's golden era in SEA. Has it already started?

Vietnam is taking the lead in South East Asia's transition to renewable energy, with a significant focus on solar power, mainly driven by its generous government policies. The country recently inaugured a solar farm that can produce 688 million kWh of green electricity annually, enough to electrify around half a million households. Other countries in the region are slowly following the pace but each is dealing with its own problems to speed up the implementation of solar power. A discussion for another set of articles.

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