The Department of Energy (DOE) will be firming up the terms of reference (TOR) for the targeted auction of 2,000 megawatts of renewable energy (RE) capacity that will be offered to investors this year.
The TOR for the RE bidding, according to Energy Assistant Secretary Redentor E. Delola, will be known to the bidders simultaneous to the issuance of the “green energy auction reserve” or GEAR price by the Energy Regulatory Commission.
“We are finalizing the TOR for the auction. It will be released along with the reserve price from the ERC,” the energy official noted.
The GEAR price refers to the maximum price offer that will be set by the ERC on peso-per-kilowatt-hour (PhP/kWh) basis; and it shall be enforced as the ‘ceiling price’ to be complied with by the qualified bidders in the RE auction.
Director Sharon Montañer, chief of the Renewable Energy Division of the ERC, indicated that the GEAR price is now at “the finalization stage on the part of the technical team,” and the next step will be to subject it to the deliberations of the Commission level.
“Upon approval, it will be posted for comments and public consultation,” the ERC official said, adding that the formula employed basically mirrors the feed-in-tariff (FIT) system but with some warranted adjustments.
Delola also conveyed that the DOE and the industry regulator will meet next week to discuss updates on how each agency has been progressing on the remaining to-do list for the tendering of RE capacities that shall be underpinned by the Renewable Portfolio Standard (RPS) policy instituted by the government.
“If all schedules are followed based on the issued NOA (notice to auction), we shall have the auction during this administration,” he stressed. The term of the outgoing Duterte administration is until June 30 this year.
The allocation of RE capacities to be placed on the auction block will be: 1,400 megawatts for Luzon grid; 400MW for Visayas; and 200MW for Mindanao grid across hydropower, biomass, wind and solar technologies.
On the non-inclusion of geothermal in the Green Energy Auction Program (GEAP), Delola explained that such decision was anchored on the need to facilitate the auction for RE technologies previously covered by FIT incentives, “considering that the GEAP will adopt certain arrangements under the FIT Rules.”
The RPS policy, as underpinned by the Renewable Energy Act, serves as the legal fiat that will usher in the country’s pathway to energy transition as that will greatly aid in increasing the share of renewables in the power mix.
The RE bidding will be administered by a Green Energy Auction Committee (GEAC) spearheaded by the DOE; and that designated body will also undertake evaluation of the submitted offers as well as the eventual award of the capacities to be underwritten with power supply agreements (PSAs) by the off-taker distribution utilities.
The RPS edict provides an alternative market for the generated capacity of the RE projects, hence, ensuring guaranteed revenue stream for the investors.