The Department of Energy (DOE) is proposing to hike the increment of renewable energy (RE) installations under the Renewable Portfolio Standards (RPS) policy by more than double or 2.52 percent by year 2023.
Under the original RPS rules, the yearly increment for RE installations had just been at 1.0-percent – meaning, the increase of RE share in the supply portfolio of off-taker (or capacity purchaser) distribution utilities (DUs) shall just be at a growth rate of 1.0-percent annually.
But the energy department is pushing for a heftier growth of 2.52-percent on a yearly basis –starting year 2023 – so the country can meet the 50-percent target of RE share in the energy mix by 2040. The initial years of RPS implementation in 2020, 2021 and 2022 will retain the 1.0-percent increment.
The DOE qualified that the adjustment to 2.52-percent of the minimum annual increment of RE “is necessary to meet the aspirational RE share of at least 35-percent in the country’s energy mix (as expressed in megawatt-hours) by 2030; and achieve an even higher RE share by 2040.”
The escalation of RE increment will result in higher electric bills for Filipino consumers, but there is no calculation provided yet by the energy department as to the scale of rate hikes that the Filipino consumers will have to burden from that policy enforcement.
The DOE has propounded such policy modification in a draft Circular that it recently issued – and that is now the subject of industry comments and inputs as well as subsequent public consultations before it gets finalized.
The RPS policy is being aligned as the next ‘incentive mechanism’ for RE investments in the country, because that will underpin the award of power supply agreements (PSAs) that shall be underwritten by off-taker DUs, including biggest power utility firm Manila Electric Company.
The targeted RE developments in the country are ranging from 44,000MW to 71,000MW through years 2030 and 2040 – and these are the goals that will shift the Philippine energy mix to cleaner technologies.
The RE developers that will be awarded with RPS-underpinned power supply contracts will be the entities that will be declared to have ‘winning offers’ in the green energy auction program (GEAP) to be undertaken by the DOE.
There will be a green energy auction reserve price or GEAR tariff that shall be calculated and instituted by the Energy Regulatory Commission (ERC) – and that will then serve as the ‘price ceiling’ in the RE capacity tendering to be carried out by the DOE.
Players in the RE sector are expecting that the first bidding for GEAP will be concluded this year, so the anticipated RE capacities to comply with the initial year of the RPS can be finally awarded. ###