Holy Week brought solemn reflection to many—but for renewable energy (RE) investors, it delivered preliminary Energy Regulatory Commission (ERC) flagellation—that’s via a savage preview of green energy auction reserve (GEAR) prices that could nail their green dreams to the regulatory cross and may also render their financial forecasts bleeding.

Solar investors, in particular, are hissing with resentment—scorched not by the sun but by downcast reserve prices as prescribed in their respective investment domains—that’s from ground-mounted to rooftop installations as well as prospective floating solar farm developments.

Beyond the sting of lower-than-expected reserve prices, the investors are very much worried also on the solar + battery energy storage system (BESS) tender getting knocked out—which is a debut offer packaged as integrated renewable energy and energy storage system (IRESS) in the fourth Green Energy Auction (GEA-4); because if the ERC won’t do the right thing on price correction, the government won’t just be losing bids, it will forego an opportunity of achieving some degree of power reliability in the grid.

Investors reckon that solar + BESS is primed to square off with gas in the mid-merit ring, commanding a competitive tariff of ₱8 to ₱9 per kilowatt-hour (kWh), but with the ERC fixing the rate down to ₱5.2835 for IRESS, hopes on concretizing those capacities could crumble.

It’s worth pointing out that the solar + BESS long-term power supply agreement (PSA) snagged by power utility giant Manila Electric Co. (Meralco) from its mammoth Terra Solar project has heftier levelized cost of electricity (LCOE) rate of ₱5.80 per kWh and that will deliver 850 megawatts (MW) of mid-merit capacity to its load network—to be drawn from 3,500 MW of utility-scale solar installations coupled with 4,500 megawatt-hour (MWh) of BESS installations.

Compared to the IRESS tender’s smaller 50 to 100 MW projects spread over 2026 to 2029, the development costs could be steeper, as capacity whittling down means losing the economies of scale that come with massive, one-off projects like that of the Terra Solar project.

Circling back to the other technologies, one investor qualified that their expectation was for ground-mounted solar rates to be at least a little higher or sustained at ₱4.4043 per kWh under GEA-2. However, the ERC hacked it down to ₱4.148; and rooftop solar wasn’t spared either, taking a cut from ₱4.8738 to ₱4.7679 per kWh.

In the last auction, the Department of Energy (DOE) took a swing, but it completely missed the mark on floating solar, with investors blaming it on the low tariff of ₱5.3948 per kWh. Now in GEA-4, even with a slight uptick to ₱5.9515 per kWh, that’s still perceived as pocket change given a capital-heavy development play for such technology.

If there’s any group of investors grinning over the preliminarily-set reserve prices, it’s the onshore wind farm developers—as tailwinds seem blowing in their favor with their rate climbing to ₱6.5134 from ₱5.8481 per kWh in the last bid round. One developer firm forthrightly stated that “the IRESS won’t work. Floating solar and ground-mounted are just about doable, but we don’t expect full subscription, except for wind.”

Investment tug-of-war: floating solar vs IRESS

Beyond the bruising tariff debates, there is also an emerging tussle over capacity allocations—whether to chop targeted floating solar capacity, so IRESS or solar-plus-storage can bulk up; that way, the grid’s strained absorptive limits can also be eased.

Some investors argue that based on estimates, the cost of floating solar developments will be more expensive compared to IRESS, hence, that could jack up the overall rates for consumers.

Further, they noted that floating solar—similar to the ground-mounted installations—will pile more pressure onto the grid, therefore, that will command costly and time-consuming expansion in transmission infrastructure; while for IRESS, it can optimize the existing grid without painful project delays and exorbitant price tag.

And if the comparison is between ground-mounted and floating solar, the former can be built in shorter time, hence, there will be more immediate capacities to address thin reserves.

As investors voice their concerns from every corner, Philippine Solar and Storage Energy Alliance (PSSEA) Chair Tetchi Cruz-Capellan slammed the point home: “the private sector just wants consistency in the rules,” stressing that the methodologies from the first two RE capacity auctions should stand, unless everyone’s on board for a change—that is to avoid the chaos of mixed signals and moving goalposts.

She qualified that “once a financial formula has undergone public consultation and adopted, the private sector expects it to remain because it will guide them in the investment decisions. Changing the methodology creates confusion and uncertainties.”

At this stage, the ERC still has plenty of wiggle room to set the final GEAR prices across technologies; and for the DOE, there might be a need to revisit some components of the GEA-4 design if they want these targeted investments to be concretized into real, measurable capacities that will beef up the country’s power supply.

On top of all these concerns, energy officials better keep their eyes also on grid integration—because no matter how many power plants get built if their capacities can’t be wheeled to power demand nodes, the country’s energy insecurity will just keep spiraling.

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