The Energy Regulatory Commission (ERC) is racing against a tight deadline to finalize the financial model for the fifth Green Energy Auction (GEA-5), the Philippines’ first competitive tender solely for offshore wind (OSW) projects.

The challenge: completing the work, which will set the maximum price for the OSW bidding, within a 30-day deadline that runs straight through the Christmas holiday season. The deadline follows the Department of Energy's (DOE) recent release of the auction's terms of reference (TOR).

In an exclusive interview on Tuesday, Dec. 2, ERC Chairperson Francis Saturnino Juan said the commission is “upgrading [the pricing model] that was used in the previous GEA rounds” as it refines the price for the next renewable energy (RE) bid.

“Hopefully, we can come out with the initial [price] so we can subject it to consultations,” Juan told the Manila Bulletin on the sidelines of the UK PACT (Partnering for Accelerated Climate Transitions) event.

The 30-day window given to the commission to formulate the OSW auction pricing means the deadline is set around Dec. 25, creating a rush that could push the process into January.

“We’ll try to work on this as early as we can, given the time constraints and the coming holidays,” Juan said.

The commission has yet to determine the indexation adjustment for the projects—a financial mechanism that allows developers to recover costs incurred between the award and commercial operations.

But Juan guaranteed that the adjustment would comply with the TOR specified by the DOE.

While developers are eager to participate, the ERC chief noted the potential impact on consumers once OSW technologies begin to generate power.

Juan explained that the price per kilowatt-hour (kWh) for offshore wind technology is intrinsically higher than that of more mature renewable energy sources. This forces the regulatory body to perform a careful “balancing act” to manage the potential extra costs passed on to end-users.

“Each technology has an intrinsic cost... Then you also have to look after the interests of consumers in terms of the affordability of the rates,” he concluded.

Juan Daray, UK PACT Program Manager, confirmed that OSW consultants have supported the creation of the auction's financial model and assisted with port readiness.

“[This is] to make sure that assumptions for the cost of OSW are from good benchmarks around the world. But also make sense in terms of the technical feasibility in the Philippines,” Daray shared. “On the DOE side of things, we have provided technical assistance to make sure developers are ready in terms of port infrastructure.”