- Trading of RE certificates or carbon credits will soon thrive as added income-generating opportunity for RE and other clean energy investors in the Philippines.
Energy companies are calling on relevant government agencies to prevent “double counting” once carbon trading for renewable energy (RE) and other clean energy technologies are implemented in the country.
“We just need to be careful about double counting because we shouldn’t double count,” Eric Francia, president and CEO of ACEN Corporation of the Ayala group has noted.
Double counting refers to the act of reckoning the same carbon offset or emissions credit twice. Carbon credits could be a revenue-source for corporations because they are compensated or paid for the resulting carbon emissions’ reduction that they could generate from their assets or operations.
The Ayala energy firm already gained wide experience when it comes to trading the “green attributes” of its renewable energy (RE) capacities in its key offshore markets of Vietnam and Australia, but this particular market mechanism has yet to start in the Philippines.
Francia qualified that double counting must be avoided not just in the RE certificates linked to Renewable Portfolio Standards’ (RPS) compliance of the mandated participants and the trading that must be done via the RE market, but also on the plan of other government agencies to issue carbon trading certificates, such as the mechanism being proposed by the Department of Environment and Natural Resources.
“For the Philippines, the new avenue there first and foremost is the RE market because any renewable energy plant in the Philippines that’s built after the RE Law should qualify for a REC or renewable energy certificate,” he said.
Francia expounded that for carbon emissions’ reduction already factored in into the RE capacities awarded by the Department of Energy (DOE) under the Green Energy Auction (GEA), their corresponding RE certificates shall no longer be traded in the RE Market. Instead, these must be surrendered to the National Transmission Corporation (TransCo) as administrator of the fund that will be paying the contracted-capacities of the GEA-qualified RE developers.
The ACEN executive specified that the same RE certificates may not also be traded internationally because that will similarly redound to “double counting”, and that must not be allowed under government policies.
However, Francia indicated that if a particular RE plant is trading its capacity in the spot market under a “merchant market” arrangement, then the owner of the facility can still trade the “green attributes” of the facility for carbon credits while earning separately on offering the plant’s capacity as energy into the spot market.
That set-up is allowed even in the Australian energy market, he stressed, because the asset does not have GEA-underpinned contract or other supply arrangements with RPS-mandated participants like the distribution utilities (DUs) and the retail electricity suppliers (RES), therefore, the green credits of that facility has not been committed or counted yet in the carbon emissions reduction targeted in the country.
“The other way for us is: I can choose to sell it (capacity) to the spot market; what I’m selling to the spot market is just the energy, I’m not selling the green attribute, so I will now get certificates for the green attribute of my plant,” he explained.
Francia indicated that the “green attributes” of RE plants in Australia have been proving to be a lucrative market. Based on estimates, a power producer can fetch revenue of P3.50 per kilowatt hour (kWh) equivalent for energy traded in the spot market. The “green attribute” or RE certificates linked to the same plant could also yield revenues equivalent to P2.40 per kWh.
He cited that “if you look at the spot market for renewable energy certificates in Australia, it’s now trading at close to 60 Australian dollars per megawatt-hour, so in kilowatt-hour translation, that’s like P2.40 per kWh – that’s the value of RE certificate in Australia. Then the spot market value there is: 70-80 Australian dollars, so that’s P3.50 per kwh, so if you add the P2.40 per kwh, that will be roughly P6.00 per kWh, so that’s a high value.”
He reiterated that “the value of green attributes of RE plants in Australia is really high, because there’s massive demand,” with him emphasizing that for big corporations wanting to buy renewables or RE certificates in that country, they can only buy from RE developments that are based in Australia, they cannot purchase from offshore RE developments.
