DoE backs FiT rate extension for small river hydro projects

By Victor V. Saulon – September 2, 2019 | 10:53 pm
from Business World

THE Energy department is supporting the extension of the feed-in tariff (FiT) rate for small hydroelectric power projects until developers have fully taken up all the capacity that the agency has offered for the renewable resource, an official handling the matter said.

“For run-of-river hydro projects, it’s until full subscription. So it will continue until ma-fully subscribe ’yung 250 [megawatts, MW] (until the 250-MW quota is fully subscribed),” said Mylene C. Capongcol, director of the Department of Energy’s (DoE) Renewable Energy Management Bureau (REMB), in an interview on Monday.

She said at least 100 MW had been taken up by developers who build small hydro projects, which usually have long gestation periods, or time used from project construction, commissioning and commercial operation.

Of the subscribed capacity, not all have secured approval from the Energy Regulatory Commission (ERC), Ms. Capongcol said.

“So we’re looking at an additional 100 MW,” she said.

Asked about whether the full subscription could extend beyond this year or stretch until next year, she said: “The mechanism is until it is fully subscribed.”

“Our bureau is preparing a communication with the (ERC) for the run-of-river [feed-in tariff],” she said.

Monalisa C. Dimalanta, chairman of the National Renewable Energy Board (NREB), earlier said that her office will seek the extension in a meeting with the DoE secretary.

“[For run-of-river, the] request will be to allow testing/commissioning and eligibility even after December 2019 as long as installation capacity is not yet fully subscribed,” she said in a text message.

She said the full subscription is expected in the second quarter of 2020. She said the request of NREB, a panel composed of members from the public and private sector, would cover a “degressed” rate for the renewable energy, which is currently being evaluated by the ERC.

Ms. Capongcol said the FiT rate to be given to the new small hydro projects would depend on the ERC. “It’s ERC’s option,” she said.

Aside from the small hydro FiT extension, NREB is also looking at requesting the DoE’s approval to accommodate the capacity that exceeded the 250-MW installation target for the resource.

“For biomass, request will be to allow capacity even beyond the installation target to be certified as long as commissioned by end-December 2019,” Mr. Dimalanta said.

However, Ms. Capongcol said the DoE has yet to decide on the biomass excess capacity.

“As of now, based on the guidance of the DoE Secretary Alfonso G. Cusi, until 2019 na lang (only) because (the two-year extension) will be finished by 2019,” she said.

“Inaaral pa namin pero (We’re still studying the matter but) we’re not extending as of now the biomass [feed-in tariff]. But we may devise a mechanism on how we will be able to accommodate ’yung lumagpas (the projects that exceed the quota),” she added.

The FiT scheme was meant to encourage investment in renewable energy by granting the preferential rates until the capacity installation target of 250 MW each for small hydro and biomass is fully subscribed.

Under the previous extension, the board sought a rate of P5.8705 per kilowatt-hour (kWh) for small hydro projects and P6.5969 per kWh for biomass projects.

The requested rates were the degressed values from the July 27, 2012 feed-in tariff rates issued by the ERC, which set run-of-river hydropower at P5.90 per kWh and biomass at P6.63 per kWh. The implementation of the FiT system started on Jan. 1, 2015 and was supposed to remain in effect for two years, or until December 2017.

On Feb. 23, 2018, the DoE informed the ERC of its resolution extending the FiT for biomass and small hydro for another two years until Dec. 31, 2019, or upon successful commissioning of projects covering the remaining balance of their respective installation targets, whichever comes first.

The DoE recommended that the FiT to be granted should be the rate at the time of the successful commissioning of the projects. The ERC initiated its own review and re-adjustment of the FiT rules as prompted by the missed installation targets.