Column | Economic Affairs When solar power comes at a cost to nature areas

 ST ILLUSTRATION : MIEL

Dr Tilak Doshi

Solar power is the world’s fastest-growing energy source as of last year, according to Paris-based International Energy Agency (IEA). Indeed, photovoltaic or PV technologies have gone mainstream in many countries, with dramatic falls in costs and improved technological feasibility.

To this end, the Energy Market Authority (EMA) has recently awarded a $6.2 million research grant to study solar power generation. And at the recent Singapore International Energy Week, Senior Minister of State (Trade and Industry) Sim Ann announced the launch of a $17.8 million research grant to advance energy storage technologies. The remaining challenge now is to find space for utility-scale solar farms as urban areas run out of available rooftops on commercial and residential buildings.

Reflecting this quest for space, reservoirs in land-scarce Singapore could soon play host to floating solar energy farms, as the national water agency PUB announced in a press statement recently. With tenders called for engineering and environmental studies on floating solar farms in Tengeh and Upper Peirce reservoirs, such installations will soon have a noticeable impact on the natural landscape.

Similar developments in other parts of the world have led to fault-lines in the environmental movement, as one wing supports the clean, emission-reducing aspects of renewable energy while the other bemoans the loss of natural landscapes’ aesthetic and recreational value to solar and wind farms. In 2014, for instance, Britain’s environment secretary Liz Truss criticised large-scale solar farms as a “blight” on the countryside as she announced plans to axe a subsidy for the schemes. In Singapore, one letter writer to The Straits Times expressed that while floating solar panels might be a laudable clean energy move in our land-scarce island, it is “disappointing” to know that public reservoirs like the Lower Seletar could lose their scenic beauty and children be deprived of learning from these natural landscapes.

The work of valuing access to and enjoyment of natural landscapes has been of professional interest to economists for a long time. In conducting cost-benefit analysis of changing natural landscapes, economists and conservationists have had to grapple with trying to value the aesthetic and leisure uses of natural areas in the absence of private property rules. In advising policymakers on the costs and benefits so as to guide public use of natural environments, economists use a number of techniques which attempt to elicit the public’s valuation of environmental amenities offered by natural landscapes.

“Contingent valuation” techniques for instance use surveying methods to directly measure the public’s willingness to pay for environmental amenities available to them, or alternatively, their willingness to accept payments in return for “giving up” such access to environmental amenities. Such valuation is based on carefully constructed hypothetical markets in such amenities.

A simpler approach would be to estimate the value of the natural landscape to those living outside the area who would pay the cost of travel to such areas including the cost of entry (if imposed by an agency to maintain the area) and the cost of such ancillary services such as boat hire, the right to fish, and so on.

Yet another means to estimate people’s valuation of natural landscapes would be to estimate comparable market values where people own property in proximity to similar areas of natural beauty. “Hedonic” pricing refers to attempts to estimate actual market transactions as a proxy to estimating the value of areas with similar environmental characteristics. For instance, the latest market values of private property located near open bodies of water, such as Sentosa or elsewhere in Singapore, would give some indication of what people are willing to pay in the open market for access to natural scenic areas which boast similar environmental characteristics.

As Singapore embarks upon environmental policies to meet national targets as outlined in its commitments to the Paris Agreement, it needs to ensure that other equally worthwhile environmental objectives – such as assuring citizens open access to the natural habitats offered by our reservoirs such as Lower Seletar – are appropriately weighted.

Will we as a society regrettably face “blights” in our natural landscapes as we cover open bodies of water with floating solar panels? And what about the “option value” of those who might not be able to visit such areas but would willingly pay for it as a bequest to future generations who are likely to appreciate the aesthetic and leisure values of lakes for kayaking or fishing even more than us?

A cost-benefit analysis of various options is very much warranted to study the impact of establishing more solar PV installations across Singapore, and perhaps, comparing that to initiatives to promote energy efficiency across industries and households.

• Tilak Doshi is an energy sector consultant and author of the recently-published book Singapore Chronicles: Energy. Professor Euston Quah is head of economics, Nanyang Technological University.
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• Tilak Doshi

  Dr Tilak Doshi is an energy-sector consultant and the author of many articles and three books on energy economics, the most recent of which was “Singapore Chronicles: Energy” (Straits Times Press, 2016). His previous appointments include chief economist, Energy Studies Institute, National University of Singapore; executive director for energy, Dubai Multi Commodities Center; specialist consultant, Saudi Aramco (Dhahran, Saudi Arabia); chief Asia economist, Unocal Corporation (Singapore); and director for economic and industry analysis, Atlantic Richfield Corporation (ARCO, Los Angeles).