- The investors are sending signals to the DOE and the ERC that the lower-than-warranted GEAR prices, as well as the tricky concerns of grid integration and the Gordian knot of project permitting processes had been among the niggling concerns which prompted some investors to back out from joining the RE auction.
Low turnout for second RE auction
Versus 11,600MW offered; lowest turnout for Mindanao grid
BY MYRNA M. VELASCO – Jul 3, 2023 07:46 PM
from Manila Bulletin
AT A GLANCE
The second green energy auction (GEA-2) administered by the Department of Energy (DOE) logged a relatively low turnout with bidders subscribing 3,580.76 megawatts only or just roughly 30-percent of the 11,600MW total capacity offered to investors for delivery within 2024-2026 timeframe.
Preliminary results from the DOE on the GEA-2 bidding held Monday, July 3, showed there were only 108 bids compared to the 339 potential anticipated by the department.
Additionally, it was noted that of the 7,715MW of RE capacities set for Luzon grid, the bid outcome yielded 36.5-percent uptake or equivalent 2,817MW with 92 winning bids.
In the Visayas grid, the total capacity on offer had been set at 2,695MW, but the bid result just accounted for 25.1-percent or equivalent 675MW, cornering just 11 winning bids.
For the Mindanao grid, capacity takers had been extremely marginal at 5.7-percent for just 68MW aggregate capacity with five (5) winning bids out of the 1,190MW that had been programmed for tender.
When asked on the next steps for the RE bid round, Energy Undersecretary Rowena Cristina Guevara said “we will review and we will also have discussions with the auction participants.”
She added that the department “will decide on the unsubscribed capacity after our discussions with the auction participants.”
Companies which joined in the bidding hinted to media that “the DOE did not show the winning bidders yet, it only showed the capacities of the winning bidders.”
The DOE specified that the official list of winning bidders will be posted on the DOE website by July 12 this year; and the notice of award (NoA) will likewise be issued on that same day.
The RE industry players similarly stated that many qualified bidders backed out from joining the contracting round because the green energy auction reserve (GEAR) prices set by the Energy Regulatory Commission (ERC) had been perceived “to be low”; and such levels would not be able to economically justify the completion of RE projects when interest rates are rising and prices of equipment are on uptrend due to the ‘temporary perfect storm’ currently sweeping the RE industry.
Based on ruling rendered by the ERC last month, the GEAR prices across technologies had been: P4.4043 per kilowatt hour (kWh) for ground-mounted solar, P4.8738 per kWh for rooftop solar, P5.3948 per kWh for floating solar, P5.8481 per kWh for onshore wind, P5.4024 per kWh for biomass and P6.2683 per kWh for biomass waste-to-energy.
Nevertheless, ERC Chairperson Monalisa C. Dimalanta indicated that “this is not only a factor of the GEAR price;” while she noted that “we will evaluate the outcome of the auction with the DOE so we can improve, as necessary.”
Further, concerns on the lack of guarantee for timely grid integration and the very long lead time on securing system impact study (SIS) for projects proved as a niggling hurdle to completion of projects within the timeframe set by the DOE; and the investors would not want their bid bonds forfeited due to project delays; then there are also recurring drawbacks on project permitting.
“These winning bids were ranked based on offers from the lowest to highest bid prices and stacked corresponding to the respective RE technology per grid,” the department emphasized.
The winning bidders that will be declared after post-qualification process will be awarded with
20-year power supply agreements (PSAs) for their committed capacity deliveries.
