The Department of Energy (DOE) is planning a dedicated renewable energy (RE) auction for off-grid islands in a bid to lower consumers’ electricity bills by reducing the universal charge for missionary electrification (UCME).

Energy Undersecretary Rowena Guevara said during a recent media briefing that the DOE is preparing a new round of the Green Energy Auction (GEA) specifically for off-grid areas served by state-run National Power Corp. (Napocor).

The GEA for Napocor is designed to replace costly diesel-fired power plants with RE facilities and battery energy storage systems (BESS), improving energy security while reducing the cost of missionary electrification, which is recovered from consumers nationwide through UCME.

According to Guevara, the initiative is expected to ease the financial burden on consumers, noting that the average true cost of power generation in off-grid areas is about ₱18 per kilowatt-hour (kWh), while generation costs in some remote islands can reach as high as ₱62/kWh. Replacing diesel-fired generation in these areas is expected to significantly lower electricity costs.

“We are targeting 20 islands, specifically the larger ones, to be auctioned off [to RE developers]. We had a focus group discussion (FGD) last week for the potential developers and the local government unit (LGU) of select islands,” she said.

“Right now, because the prices for solar plus battery systems keep going down, we want to replace the diesel plants in the Napocor area with those.”

The DOE is finalizing the auction parameters and the list of the 20 target islands, with the auction expected to be launched next year.

The actual reduction in UCME will depend on the winning bids submitted by developers during the auction.

“At the end of the day, when the GEA for Napocor becomes successful, we can lower the cost of UCME,” Guevara said.