ERC issues GEAR prices

BY LENIE LECTURA – MAY 30, 2022
from Business Mirror

The Energy Regulatory Commission (ERC) has released the Green Energy Auction Reserve (GEAR) prices for the first round of the Green Energy Auction Program (GEAP).

The GEAR price for solar is P3.6779 per kilowatt hour (kWh), P6.0584 per kWh for wind, P5.0797 per kWh for biomass, and P5.4913 per kWh for run-of-river hydro. These shall serve as the ceiling price for the first round of the auction that would be conducted by the Department of Energy (DOE).

“We have set the GEAR Prices for each type of technology consistent with the Notice of Auction of the DOE setting the auction capacities on a per technology basis, and using the Discounted Cash Flow Model with 46 parameters and assumptions for each technology,” ERC Chairperson and CEO Agnes VST Devanadera said.

The ERC, in accordance with its mandate under Section 25 of the Electric Power Industry Reform Act, is tasked to allow the recovery of prudent and reasonable economic costs incurred, consistent with the declared policy to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability, in order to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market.

The approved GEAR prices considered the stakeholders’ comments, inputs, and concerns before and after the public consultation held last April 12.

The financial model used by the ERC does not allow any escalation or adjustment due to changes in foreign exchange and inflation, therefore, the GEAR prices are fixed during the whole life of the project.

Further, the GEAR Prices are lower or within the range of the recent Power Supply Agreements (PSA) for newly constructed plants or plants that are ongoing construction, taking into consideration the approved rates and the escalation/ adjustment provisions of these PSAs.

“In the determination of a representative project and the computation of the GEAR Prices, the Commission was guided by the principle of efficiency and international benchmarks to ensure that only the cost of efficient plants will be passed on to consumers,” Devanadera added.

The implementation of GEAP is seen to encourage greater private sector participation in the generation sector through renewables. With GEAP, the country’s renewable energy program will be met particularly in targeting the attainment of the 35-percent RE share in the generation mix by 2030.