Senator Pia Cayetano (Senate PRIB)

Senator Pia Cayetano has underscored to the Energy Regulatory Commission (ERC) the urgency in finalizing green energy auction reserve (GEAR) prices. 

Cayetano, in the recent Senate hearing on the Department of Energy (DOE)’s proposed 2025 budget, said that doing so would allow the auction of renewable energy (RE) to proceed this year. 

“That is one of the priorities I think we need to do, because in everything, the goal is to make the shift to renewables and this is directly related to that. I hope we can get that done. I understand there are things that have to be done in the side of ERC as well,” she said.

DOE Secretary Raphael Lotilla and ERC Officer-in-Charge (OIC) and Chief Executive Officer Jesse Hermogenes Andres were present at the hearing.

The DOE assured Cayetano that the third Green Energy Auction (GEA-3) will be completed within the year. 

“Our target for the Green Energy Auction 3 is to finish it before the end of the year such that the pumped storage hydro, [more than] 3,000 megawatts (MW), will be able to come in five years from now,” DOE Undersecretary Rowena Guevara told the senators.

But for the GEA-3 to happen, the ERC must release first the GEAR prices. It is the mandate of the ERC to determine GEAR prices or the maximum price offers for the GEA.

“One of the items required there would be the approved pricing methodologies with ERC. We’re coordinating that,” Lotilla said. 

Cayetano says many investors are waiting for the third leg of the GEA, which facilitates investments in the RE space. 

In the last two years, the DOE has conducted two rounds of auction which generated a total of 5,306 megawatts (MW) of RE commitments for delivery in 2024 to 2026.

However, the energy department received commitment for only 3,580.76 MW out of the 11,600 MW offered under the GEAR2. 

The DOE earlier cited supply limitation, low incentives, delay in the conduct of grid impact studies, and the cost of financial guarantees as some of the reasons for low investor turnout during the GEA-2.  

GEA-3 covers non-feed-in-tariff (Non-FIT) eligible renewable energy technologies like geothermal, impounding hydro and pumped-storage hydro under DOE Circular No. DC2023-10-0029.

The estimated capacities for non-FIT Eligible RE technologies are: 699 MW from impounding hydro; 3,120 MW from pumped storage hydro; and 380 MW from geothermal. 

GEA-3 will also cover run-of-river (ROR) Hydro, which is a FIT-eligible RE technology.