Differentiated pricing for OSW technologies proposed

At a glance

  • A pricing differentiation for fixed-bottom and floating offshore wind technologies will provide leeway for project sponsor-firms to judiciously assess their risks on invested capital.

A "differentiated pricing" is being proposed on the offshore wind (OSW) technologies that shall be deployed for projects in the country to consider divergent cost calculations on tariffs for the fixed bottom and floating OSW solutions.

In a briefing with the media, Pierre-Antoine Tetard, vice president for Business Development of Spanish firm Bluefloat Energy said “we see offshore wind as a specific technology and bottom fixed offshore and floating offshore wind are two specific technologies.”

Bluefloat is proposing up to 7,600 megawatts of offshore wind investments in the country to be implemented over several years.

Tetard explained that a "differentiated" or "discriminatory pricing" for the two technologies has been the same viable formula that worked in other markets, primarily when it comes to de-risking offtake on the generated capacity of offshore wind farm installations.

“We would recommend such approach (differentiation of pricing), which is also what we observed in the markets globally – such as the UK (United Kingdom) and other European markets. Even markets like Taiwan recognized the difference between the two technologies,” Tetard stressed.

The company did not provide any reference pricing that the Philippine energy market can latch onto when it comes to tariff-setting for OSW, but the Bluefloat Energy executive indicated that floating offshore is the technology that commands higher rate because of the unique technical requirements as well as the heftier investment required for such installation.

Bottom-fixed offshore wind is being regarded as the more traditional form of harnessing wind at sea – and is often installed in shallow waters ranging from 30 to 60 meters.

Conversely, for floating offshore wind developments, this could go up to a depth of 360 meters and there would be specific foundational design to be set up; plus there may be challenging seabed conditions that the project developer would have to hurdle, hence, it will be costlier to install them.

In the case of the Philippines, a World Bank study exhibited that the country's vast OSW potential leans more on floating offshore installations.

If there is regulatory enforcement on tailor-fit pricing or tariff setting for each technology, it was opined that investors would be able to assess the risks on the scale of capital that they require for their projects. Such pricing flexibility can better stimulate investment flow; and the naturally occurring outcome of that will be guaranteed shoring up of green technology-generated power supply in the host-country.

The Department of Energy (DOE) previously sounded off plan to pursue a separate auction for offshore wind technology, although the timeline and capacity to be offered have yet to be firmed up.

The Energy Regulatory Commission (ERC) that will be determining the tariffs to be applied to the OSW technologies.