ERC to seek DOE guidance for geothermal, hydro auction

BY MYRNA M. VELASCO – Jul 18, 2023 04:21 PM
from Manila Bulletin

The Energy Regulatory Commission (ERC) will seek guidance from the Department of Energy (DOE) in setting the price of hydro and geothermal capacities under the green energy auction reserve (GEAR) given the huge cost for these projects.

ERC Chairperson Monalisa C. Dimalanta noted of the cost for geothermal and hydro projects. “We need to do a workshop for geothermal and impounding hydro because for these two projects, the front-end cost will be huge, especially for geothermal,” said Dimalanta.

The tendering process for hydro and geothermal capacities for the third Green Energy Auction (GEA-3) program is slated within the year. In this process, the DOE decides on the specifics of the technology while ERC calculates the pricing.

For geothermal power development, in particular, she noted that the biggest component of the cost will be on the exploration for steam resources to be utilized in running the plant.

“We need to do proper risk allocation metrics – and for now, we don’t know yet what projects the DOE will auction, for example, whether or not these projects already have data (for steam exploration and development),” the ERC chief emphasized.

Dimalanta similarly indicated that another factor they must integrate in the GEAR calculation will be the comparatively long gestation periods of geothermal and hydro plants, since it could take 5-7 years before these installations would reach commercial operations.

In the case of impoundment hydro, the chief regulator qualified that the tricky part is on the construction of the dam facilities.

One key consideration, she pointed out, is whether a government support will be needed since most of the existing facilities of such kind have been those that were still built by state-run National Power Corporation.

“Most of our impoundment hydros were NPC plants originally, such that it was NPC which built the dams or NPC-IPP (independent power producer) that built the dam or NIA (National Irrigation Administration), so what we should be pondering on is: do we really need a government counterparty or government participation in at least in the impoundment part of the project,” she asserted.

At this stage, Dimalanta stated there are no specific details or information provided by the DOE yet how those considerations on investments shall be tackled in the calculation of the GEAR prices.

“Hopefully, we get to discuss these things first with the DOE before we do the pricing – the pricing will be a result of such decisions that will be guided by the DOE,” she stressed.