ERC may not set price ceiling for geothermal auction

THE Energy Regulatory Commission (ERC) said it expects to set price parameters for the geothermal auction by next month for the third round of the Green Energy Auction (GEA), and maintained the option of not setting a ceiling at all.

“We are currently studying the pricing parameters for geothermal. Our target with that is it should be finished by December… after that, discussions with DoE (Department of Energy),” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said on the sidelines of the ASEAN Clean Energy Week last week.

The ERC determines the green energy auction reserve (GEAR) prices, or the maximum price in peso per kilowatt-hour that will serve as the ceiling price in GEAs.

The GEA program aims to promote renewables as a primary source of energy through competitive selection of renewable energy output.

Ms. Dimalanta said last month that the ERC is considering setting no ceiling prices for the upcoming round of GEAs.

Currently, she said that instead of GEAR prices, the DoE has requested the setting of pricing parameters.

She said regulators want to be “clear as possible” on the steps to be followed by bidders across the entire process.

“We’re open to not having a GEAR for geothermal and pumped storage hydro because we recognize the business model there is different. The funding requirements are different so it’s very hard to set out that number and make them bid,” Ms. Dimalanta said.

“Second, for geothermal and pumped storage hydro, there are only limited players so there’s really no auction to speak of. But for solar, there are so many players so it’s really a prime condition for an auction with a set tariff,” she added.

Asked about concerns GEAR prices may be too low, she said: “We’re open to reviewing the rates. What our market operation service will do is to conduct another discussion with the developers and see what else may be adjusted.”

“We’re also cautious about it because it may be unfair to those who have submitted bids before and took that risk of bidding at those rates so we’re reviewing that.”

GEA-3 may be conducted in the first quarter of 2024, she said, after an original timetable of the fourth quarter of 2023.

In GEA-2, the DoE opened for bidding a total capacity of 11,600 megawatts (MW).

It said in July that the auction resulted in bids to provide 3,580.76 MW, later reduced to 3,440 MW after some participants failed to comply with auction requirements.