By Myrna M. Velasco
A benchmark pricing pre-approved by the Energy Regulatory Commission (ERC) will be cast as a “reference tariff’ in the government’s auction of new 2,000 megawatts (MW) of renewable energy (RE) projects.
Energy Undersecretary Felix William Fuentebella said the propounded benchmark rates will be set system-wide – or calculated based on avoided cost for Luzon, Visayas and Mindanao grids.
He noted that based on the recommendation of the National Renewable Energy Board (NREB), the benchmark price will be the avoided cost plus estimated costs of baseload, mid-range and peaking RE technologies.
“That benchmark pricing will also be the guide in the GEOP (green energy option program) as well as for the DUs (distribution utilities) – these are being explored for the pre-approved rate that will be applied in the auction,” he said.
Energy Secretary Alfonso G. Cusi disclosed in a budget hearing in Congress that the initial 2,000MW of RE installations is targeted for bidding within the year – and will underpin the country’s Renewable Portfolio Standards.
The energy chief noted that the 2,000MW will be “auctioned to all developers,” but he emphasized that the pricing benchmark will be the “avoided cost” – explaining further that such refers to “the blended cost that we are all paying right now.
On the GEOP, Fuentebella emphasized that consumers in the 500-kilowatt consumption range would be able to contract for supply coming from RE capacity.
He said that was brought down by half compared to the 1.0-megawatt threshold that was initially set voluntarily under the Retail Competition and Open Access (RCOA) policy.
Cusi, for his part, has stressed that in the technology-neutral energy mix paradigm of the Department of Energy, there will be “no quotas” to be set even for RE projects.
Nevertheless, he qualified that the energy department will just kick off with the 2,000MW auction for new RE installations because they would also need to consider the variability aspect of some RE technologies as well as the hurdles of integrating them to the grid.
Fuentebella has also divulged in a Congressional hearing that there will be a separate auction for micro-grid areas that will be utilizing RE in their provision of electricity to consumers in these domains.
The details for that particular bidding for RE ventures are still being fleshed out, but he said it will be open to all generators.