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Manila Bulletin devider Business devider ERC will no longer set 'reserve price' for geothermal capacity auction

ERC will no longer set 'reserve price' for geothermal capacity auction

Published Nov 23, 2023 06:59 am

At A Glance

  • Geothermal is core technology in the renewable energy (RE) genre that the government has been aggressively promoting for fresh investments, as the DOE sees potential for the country to elevate its stature again as one of the biggest producers of geothermal energy in the world.

The Energy Regulatory Commission (ERC) will no longer prescribe a ‘reserve price’ for the scheduled green energy auction (GEA) covering geothermal capacity developments.

“We just agreed with the DOE (Department of Energy) on the parameters how we will eventually approve the rates in the PSAs (power supply agreements),” ERC Chairperson Monalisa C. Dimalanta noted.

The regulatory body indicated that through the parameters drawn up with the DOE, it is expected that tariff offers in the geothermal capacity bidding will not reach levels that could be classified as ‘run up’ prices, that in turn, could be detrimental in the electric bills of consumers.

The DOE has been planning to administer the GEA process for geothermal within the year, but the entire industry is still waiting for the framework as well as the tender notice and the terms of reference (TOR) yet to be issued by the department.

Geothermal is core technology in the renewable energy (RE) genre that the government has been aggressively promoting for fresh investments, as the DOE sees potential for the country to elevate its stature again as one of the biggest producers of geothermal energy in the world.

At present, the Philippines is ranked as the third largest producer of geothermal energy, next to Indonesia and the United States. But in previous decades, the country had been second biggest geothermal producer and it had been almost neck and neck with the US in the top spot.

In the planned GEA, the industry players have been batting for a degree of flexibility on how they will calculate their offers during the RE auction, hence, instead of the ERC setting a green energy auction reserve (GEAR) price, they would want this tossed out in the tender submission for geothermal capacity; and so far, that has been heeded by government regulators.

To shore up investments in the geothermal sector, the energy department likewise tapped the help of the Asian Development Bank (ADB) on the conduct of a study that will de-risk project developments in the sector.

Owing to that initiative, the DOE is expecting the multilateral lending firm to identify as well as recommend action plans that the State can enforce so it can whet investors’ appetite again on geothermal projects.

As culled from DOE data, despite the downtrend in geothermal investments through the years, this technology’s share in the energy mix remained strong – having provided roughly 10,000 gigawatt-hours in energy generation as of last year. 

 

 

 

 

 

Related Tags

electricity rates Department of Energy renewable energy Energy Regulatory Commission green energy auction
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