ERC to set new tariffs for next RE auction

Published November 24, 2022, 4:11 PM

by Myrna M. Velasco

The Energy Regulatory Commission (ERC) will be calculating new green energy auction reserve (GEAR) tariffs to serve as “price ceiling” for next round of renewable energy (RE) capacity auction to be administered by the Department of Energy.

The regulatory body indicated that it can only draw up the next reserve prices across RE technologies for the Green Energy Auction Program (GEAP)-Round 2 once the DOE already firms up the final volume or capacity to be offered in the next bidding.

Sharon Montaner, chief of the Renewable Energy Division of the ERC, said “we are in the initial stage of calculation of the GEAR prices, but we cannot really finalize until we see the target of the DOE.” Essentially, the GEAR tariff represents the “maximum amount” that could be submitted by a bidder in the RE capacity tendering process. Hence, the price offers to be accepted shall be lower than the ERC-approved green tariff per technology.

In the last RE auction enforced in June this year, the prescribed GEAR prices per technology was pegged at P3.6779 per kilowatt-hour (kWh) for solar; P6.0584 per kWh for wind; P5.0797 per kWh for biomass; and P5.4913 per kWh for run-of-river hydro – and these were targeted to be enforced to the qualified RE projects without escalation or adjustment indices.

DOE Acting Assistant Secretary Mylene Capongcol said the agency already slated a target date for the second RE auction, but this has yet to be presented to Energy Secretary Raphael P. M. Lotilla for approval.

“We have a target date for round 2 (of GEAP), but not yet presented to the Secretary. We are now doing the assessment of Green Energy Auction 1,” she conveyed.

Some players in the industry have been raising questions about the nature of award of the 20-year power supply agreements (PSAs) won by developers under GEAP Round 1, especially the aspect of having just one company winning most of the contracts of the 2,000MW capacity that had been offered.

Other questions concern about oversubscription allotted per RE technology while some winning tenders were likewise discovered to have gone beyond the prescribed GEAR prices.

Industry players have high expectations that under the leadership of the new DOE Secretary and ERC Chairperson Monalisa C. Dimalanta, “lopsided” rules and policy frameworks of the GEAP will finally be fixed prior to conducting the next round of RE capacity bidding.

The GEAP is a competitive bidding system for RE capacities that shall be installed in compliance to the Renewable Portfolio Standards (RPS) policy set forth under the Renewable Energy Act.

The RPS has been instituted to widen the market base of RE-generated capacities – that way, the propounded hike of clean technologies’ share in the power mix at 35-percent by 2030; and 50-percent by 2040, will be concretized.