ERC sets ‘reserve prices’ for RE capacity auction
By MYRNA M. VELASCO
The Energy Regulatory Commission (ERC) has issued the preliminary green energy auction reserve (GEAR) pricing for renewable energy (RE) capacity installations scheduled for bidding this year by the Department of Energy (DOE).
In a notice issued by the ERC, the price for solar technology is P3.6248 per kilowatt hour (kWh); wind P5.2887 per kWh; biomass P5.5480 per kWh; and run-of-river hydro P5.8705 per kWh.
Of all the RE technologies, solar has the biggest price drop if compared to the second wave feed-in-tariff (FIT) for that technology at P8.69 per kWh.
The GEAR price will serve as the cost ceiling for financial offers that RE developers will be submitting per technology – and the likely winners are those with lower price tenders with warranted technical and legal qualifications.
For the RE tariff to be firmed up, the ERC is inviting all affected players and relevant stakeholders to submit their comments on the proposed GEAR prices by March 30 this year.
The energy department will be auctioning up to 2,000MW of RE capacity as part of the industry’s compliance to the Renewable Portfolio Standards (RPS) policy, a prescription under the Renewable Energy Act that will incentivize the third wave of RE project developments in the Philippines.
The RE capacities include ,260MW of aggregate solar capacity to be spread in with 900MW in Luzon; 260MW in Visayas; and 100MW in Mindanao. For wind farm projects, the DOE is similarly aggressive on its invitation for investments for 360MW capacity in Luzon; and 20MW for Visayas.
On the other technologies, the scale of hydropower developments to be auctioned will be 80 megawatts for Luzon and 50MW in Mindanao; while for biomass, capacity installations will be 60MW in Luzon; 120MW in the Visayas and 50MW in Mindanao.
The regulatory body previously indicated that the GEAR pricing shall be anchored on a formula that will factor in the prevailing prices in the Wholesale Electricity Spot Market (WESM), the FIT subsidy for RE as well as the cost downtrend being experienced in each technology.
Given the processes yet to be completed in finalizing the GEAR pricing as well as the DOE’s terms of reference (TOR) for bidding, it is anticipated that the RE auction may already be moved as a first major undertaking of the next administration.
RE is the focus of capital flow in the domestic energy sector, primarily after the Duterte administration had pulled the plug on new batch of coal-fired power installations in the country.