ERC rejects FIT-anchored RE pricing

By MYRNA M. VELASCO – Updated February 17, 2020, 11:05 AM
from Manila Bulletin

The Energy Regulatory Commission (ERC) has thumbed down proposals to anchor “green energy pricing” for new renewable energy (RE) projects to the degressed feed-in-tariff (FIT), with the agency noting that such will have costly impact on the power bills of consumers.

Sharon Montaner, chief of the Renewable Energy Division of the ERC, said the agency will instead conduct its own study first before coming up with a formula on the proposed “green energy tariff,” which is designed to compensate the greenfield RE ventures that will be developed within the scope of the Renewable Portfolio Standards (RPS) policy instituted by the Department of Energy (DOE).

It was also the DOE which proposed in its draft Circular that the “green tariff” shall be benchmarked on the degressed FIT rates of the RE technologies, primarily those on solar, wind, hydro, biomass and even geothermal.

But Montaner explained that if the degressed or reduced FIT rates of solar and wind – at ₱8.69 per kilowatt-hour (kWh) and ₱7.40 per kWh respectively – will be adopted, such will be very expensive because these were still based on rates eight years ago.

“The rates where the degressed solar and wind FITs were anchored were still based on 2012, so these were high. Any decrease in the cost of the technologies will not be captured,” she stressed.

The ERC official similarly qualified that in a more realistic sense, “there had been no degressed FITs for solar and wind,” but rather these are the second wave FIT rates imposed for the higher installation caps set for these two technologies.

Montaner said, “We only have degressed FIT rates for run-of-river and biomass,” and these were based on the ERC ruling issued in 2015. The reduced tariff for biomass hovered at ₱6.5959 per kWh; and hydro at ₱5.8705 per kWh.

The FIT is an investment perks system for RE project developments – and it is a form of subsidy shelled out from consumers’ pockets and collected via the electric bills.

After the FIT-incentivized era of RE installations, the next phase for the Philippines will be the enforcement of the RPS policy, or that edict which requires distribution utilities (DUs) to source certain percentage of their supply from RE technologies.

The targeted implementation kick-off of the RPS is this year – and the projects to be granted with the pre-approved “green energy tariff” shall be considered via a competitive selection process (CSP) or auction that will be administered by the energy department.

The RPS is a policy track that the government is pursuing so it can heftily increase the share of RE in the country’s power mix by year 2030, and it is also held as the Philippines’ contribution in addressing global climate change risks.