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Manila Bulletin devider Business devider ERC to issue 'green energy tariff' for hydro, geothermal capacities on offer

ERC to issue 'green energy tariff' for hydro, geothermal capacities on offer

DOE sets August bidding

Published Feb 12, 2024 08:58 am

At A Glance

  • The settlement of the non-FIT capacities had been mandated to be done through the operator of the Wholesale Electricity Spot Market (WESM) or the Independent Electricity Market Operator of the Philippines (IEMOP), but the DOE cannot give details yet how the exact payment shall be done to the qualified non-FIT RE developers.
  • In the set-up of the FIT-eligible RE capacities, state-run National Transmission Corporation (TransCo) had established and maintains specific account for the FIT Fund; and it signs a Renewable Energy Payment Agreement (REPA) with the qualified RE developers as a legal framework for their cost settlements.<br> 

The Energy Regulatory Commission (ERC) will issue ‘green energy tariff” that shall serve as the basis for the acceptable price tender for the 4,199 megawatts of non-feed in tariff (non-FIT) renewable energy (RE) capacities that shall be offered this year by the Department of Energy (DOE) under the green energy auction (GEA) program.

The energy department announced that it will conduct the bidding on August 14 this year for non-FIT RE capacities – comprising of 3,120 megawatts of pumped storage hydro, 699MW of impounding hydro; and 380MW of geothermal capacity.

On top of that, the DOE is also scheduling auction for 200MW run-of-river hydro capacity with targeted deliveries from 2026 to 2028. The reserve price for this technology shall be determined via the green energy auction reserve (GEAR) price to be issued by the ERC for FIT-eligible RE installations.

For the non-FIT impounding and pumped storage hydro plants, capacity deliveries are slated from 2028-2030; while geothermal capacities shall be delivered from 2024 to 2030.

The DOE will start registration of qualified suppliers by May 13, 2024; then posting of qualified suppliers will be July 4. And following bid submission in August, the notices of award for non-FIT capacities will be December 10; while for run-of-river hydro will be on September 18.

In keeping with the prescriptions of DOE Circular No. DC2023-10-0029, it was stipulated that for non-FIT hydro and geothermal facilities, price offers shall be anchored on the non-FIT GET (green energy tariff) that shall be endorsed by the DOE and approved by the ERC.

“The winning bidders for each auction round of the GEA for non-FIT eligible RE technology shall be those whose price offers were endorsed by the DOE to, and approved by the ERC after evaluation based on the approved set of parameters and criteria,” the DOE Circular stated.

The settlement of the non-FIT capacities had been mandated to be done through the operator of the Wholesale Electricity Spot Market (WESM) or the Independent Electricity Market Operator of the Philippines (IEMOP), but the DOE cannot give details yet how the exact payment shall be done to the qualified non-FIT RE developers.

The energy department just indicated that the WESM rules on the non-FIT RE settlements will eventually follow, but it cannot say at this point if specific account shall be maintained by the IEMOP or an analogous mechanism for payments on these specific capacities shall be instituted.

It is worth noting that in the set-up of the FIT-eligible RE capacities, state-run National Transmission Corporation (TransCo) had established and maintains specific account for the FIT Fund; and it signs a Renewable Energy Payment Agreement (REPA) with the qualified RE developers as a legal framework for their cost settlements.

There is also a transparent system of FIT adjustment application with the ERC to prudently recover any increase or adjustment in the subsidy payments to the qualified RE developers – and there is a systematic approval process for the adjustment in feed-in-tariff allowance (FIT) when passed on as separate line item in the electric bills.

Beyond these missing details in the bid notice of the DOE at this stage, industry players are also raising legal question on the basis of including non-FIT RE technologies in the GEA or auction of RE capacities that shall be underpinned with long term power supply contracts, because this is not exactly provided for in Republic Act 9513 or the Renewable Energy (RE) Law.

Further, the DOE is quizzed on how the offtake (capacity purchase) will be allocated, especially if the distribution utilities (DUs) are already fully contracted based on the Power Supply Procurement Plan (PSPP) that they have submitted to the department. 

 

 

 

 

 

Related Tags

hydropower feed-in-tariff Department of Energy (DOE) Energy Regulatory Commission (ERC) green energy auction
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