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Manila Bulletin devider Business devider 20-year cost recovery for RE capacity awardees mulled

20-year cost recovery for RE capacity awardees mulled

Published Apr 10, 2022 08:10 pm

Renewable energy (RE) developers who will be awarded allocations under the Green Energy Auction Program (GEAP) of the Department of Energy (DOE) could be entitled to 20 years of cost recovery to reinforce the revenue stream of investors over a stretch of two decades.

According to Energy Assistant Secretary Redentor E. Delola, the government is “looking at 20-year recovery” for the project sponsors who will be declared winners in the slated RE capacity auction this year which will cover at least 2,000 megawatts.

He explained that the offers for the capacity auction will be based on the price ceiling to be instituted by the Energy Regulatory Commission (ERC) under the green energy auction reserve (GEAR) pricing mechanism.

Currently, the preliminary GEAR prices estimated by the ERC had been at: P3.6248 per kilowatt hour (kWh) for solar; P5.2887 per kWh for wind; P5.5480 per kWh for biomass; and P5.8705 per kWh for run-of-river hydro.

Delola emphasized that the cost recovery of the RE developers under GEAP shall be done as add-on cost to the feed-in-tariff allowance (FIT-All) charge being collected by fund administrator National Transmission Corporation (TransCo) from all consumers in their monthly electric bills. Then the GEAP-qualified RE developers will be paid by TransCo based on the winning tender that they submitted during the DOE auction.

The pass-on cost to the consumers, Delola said, will be based on a blended price or the average price of all the winning offers in the auctioned RE capacities.

The auctioned volume will have to be channeled through the Wholesale Electricity Spot Market (WESM) and to be administered by the Independent Electricity Market Operator of the Philippines (IEMOP). Then it will be via the spot market where the mandated participants (primarily the distribution utilities (DUs), will be sourcing the required RE percentage of their supply portfolio as prescribed under the Renewable Portfolio Standards (RPS) policy of the government.

“IEMOP will compute the volume allocation, while TransCo will compute the blended rate. IEMOP will assign the volumes to the DUs; and the DUs will pay TransCo,” Delola noted.

He specified that there is also “opt-in mechanism” for the DUs if they will choose to corner RE capacity for their RPS compliance through the volume auctioned by the energy department.

Under the opt-in system, any eligible DU can take a portion of the auctioned volume. For example, if a DU opts in for 200MW, the equivalent 200MW of the volume from the entire blend of the winning bidders could be cornered by that specific DU, the energy official expounded.

Related Tags

#DOE #RE #AUCTION #GEAP #COSTRECOVERY
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