Business World, 24 March 2019


It’s summer 2019 and the sun is beating down hard on the equator. Draught and dying crops are littering the Philippine landscape. Physical but especially mental activity is a hard slog. In the Serengeti Wildlife Reserve in Equatorial Africa, lion prides ignore prey to doze off in the shade for hours. The lions are not being lazy; they are just obeying the rule of efficient energy use. Under the harsh midday sun, the endotherms’ most energy-efficient posture is supine and asleep under the shade.

Westerners who found themselves in the equator have called the natives “lazy” but Dr. Jose Rizal in “The Indolence of the Filipino” had alluded to this partly as “adaptation” to climate. When it’s chilly in the temperate latitudes, there is always a sufficient layering of clothing that keeps one warm inside and physically and mentally alert. In the equator, extreme disrobing does not suffice. Any exertion heats up the body; which in fact gives comfort on a cold and discomfort on a hot day. Heat speeds up oxidation and decay in organics: foodstocks, wood materials, etc., while it supports a plethora of harmful bacteria and viruses. This is the backdrop for the so-called “equatorial paradox” the closer to the equator the lower is per capita income. The equator seems at times like a cruel tyrant exacting high tributes from hapless natives. No wonder that equatorial latitudes, like the Sub-Saharan Africa, host the most abject poverty.

Equatorians can’t be blamed if sometimes they curse the light that brings heat; if sometimes they woe the accident of their birth. But while equatorians can’t change their heritage of solar surfeit, they now can, as in Jujitsu, turn it in their favor. For equatorial poverty, unlike equatorial tyranny, is not destiny.

History shows that technology has allowed humans to transcend the limits of geography. Modern refrigeration has rendered certain closed spaces in the equator suitable for food preservation and for mental and physical activity. I, for one, take refuge in air-cooled coffee shops to think and work. But this comfort has been achieved by burning the by-product of yesterday’s solar radiation, fossil fuel. By the same token have we built a massive system of power generation, transmission and distribution on the back of Michael Faraday’s rotating magnet; furthermore, we have built an immense concrete transportation system to host Nicolaus Otto’s internal combustion engine. We dismissed the possibility that today’s solar abundance can be deployed to loosen the grip of equatorial tyranny with a once valid excuse, that being price differential and intermittence.

The proverbial crossing of the Rubicon in power coincides with the leap from ethics to economics from “helping mother earth” to “helping the bottom line.” Tree-hugging zealots made news, but it is shrewd capitalists making huge bets in emerging renewable revenue streams that are ramming the gates open. European electricity and gas supplier giant, Eon, has begun divesting its fossil-based assets to concentrate on renewables. Norway’s sovereign wealth fund is divesting its oil and gas holdings that have become more risky. Norway’s oil and gas giant, Statoil, is also moving into renewables for reasons now purely economic. At the current furious rate of technical advance, the stranding risk of gas and coal assets is fast ramping up.

The demand side of the power market poses the other stranding risk factor. Large establishments with ample capital, such as malls and supermarkets, will now begin to save and even make money by converting ample idle roof space into solar farms to meet part or all of their needs, to charge grid-scale batteries thus avoiding the cost of diesel-fired backup generators and to shave off peak power demand for a more stable grid power. Or they can rent out these idle roof spaces to new solar power entrepreneurs or retail electricity suppliers. Fossil-free fast food outlets will become commonplace. Residential PVs will also follow suit when the capital constraint is eased. The disruption here will be as immense as any promised by the Fourth Industrial Revolution.

That is not to say that government should prohibit new fossil-based investments by the private sector. Market players are better at reading the short and long investment horizon than government and, anyway, they wager their own money in a competitive market. Aboitiz Power is carrying the cost of its mothballed bunker fuel-burning power barges. Privatization spared the NPC and the taxpayers of their stranded cost!

Government can however employ policy “nudges” rather than mandates. The share of electric vehicles (EVs) in government vehicle purchase should progressively rise. New public school and office buildings should now be solar PV-equipped for part of their largely daytime needs besides jump-starting students in the wonders of electrochemistry. EVs could be exempt from number coding. PEZA should now plan for fossil-free ecozones. The seamless integration of distributed and centralized generation requires urgent government attention.

Solar PV and storage technology now allow us to transform the abundance of light from a liability into an enormous asset, one which promises to leapfrog the problem of high electricity cost. But to monetize it, we have to let Capitalism’s creative destruction take its course. Government forbearing, profit calculus and market competition will propel the nation to a bountiful embrace of the light.