DOE to craft separate ‘remuneration package’ for hydro, geothermal in RE auction

Published December 12, 2021, 10:00 PM

by Myrna M. Velasco

The Department of Energy (DOE) will craft separate “remuneration packages” on hydropower and geothermal technologies in the targeted auction of renewable energy (RE) capacities for compliance of mandated participants to the Renewable Portfolio Standards (RPS) policy.

A revised DOE circular said that for geothermal and impounding hydro facilities, the DOE upon recommendation of the Green Energy Auction Committee (GEAC) will “develop a specific auction policy and guidelines or a separate auction policy and guidelines or a separate renumeration package under the GEA (Green Energy Auction).”

Other than hydro and geothermal, the DOE similarly propounded that the Green Energy Auction Program (GEAP) may consider “other emerging RE technologies to be included” in the RE capacity tendering process.

The GEAC, under the newly issued circular, has been reconstituted and it was proposed to be headed by an Assistant Secretary to be designated by the Energy Secretary. The rest of the membership will come from RPS composite team, including the respective officers of the Independent Electricity Market Operator of the Philippines (IEMOP), which is the operator of the Wholesale Electricity Spot Market (WESM), and the National Transmission Corporation.

As targeted, the initial RE capacity to be bidded out by the DOE to be underpinned with power supply agreements (PSAs) by mandated participants such as the distribution utilities (DUs) will be set at 2,000 megawatts.

Further, a Green Energy Auction Reserve (GEAR) price shall be calculated and prescribed by the Energy Regulatory Commission (ERC) on a peso-per-kilowatt hour basis; and this shall serve as the ‘ceiling price’ in the bidding.

The DOE apprised interested parties that those intending to join the GEAP shall comply with mandated submission of documentary requirements, including letter of intent signed by the qualified supplier’s authorized representative; proof of authority of the qualified supplier’s authorized representative; work program; and proof of payment of registration and processing fee.

“The auction shall be conducted for new and existing RE capacities, as defined in (the) Circular, and are duly registered with the DOE, with no existing power purchase agreement/power supply agreement with any DU or end-user at the time of the agreed delivery date/s,” the DOE rules stated.

The circular also emphasized that “participating entities shall be allowed full recovery of prudent and reasonable economic costs incurred,” and there is specific stipulation that “the winning bidders’ offers shall be considered their prudent and reasonable economic costs.”

It was further prescribed that “the GEAC shall evaluate the qualified suppliers” in accordance with the terms of reference (TOR); and that committee will also subsequently declare the parties that will be accredited as “qualified bidders” which will then be issued with user-specific IDs (identification) that they will use in the bid process.

On the final auction date, the energy department sets forth that ‘all qualified bidders shall place their bids capacity (in megawatts) and price (peso-per-kWh) offer through the electronic bidding platform operated by the DoE, using the user-specific IDs provided by the GEAC.”

In determining the winning tenders, the DOE said it will “rank the offers from lowest to the highest bid price,” then through the GEAC, the winning bidders shall be declared and shall also be subsequently served with notices as well as certificates of award.