Green energy auction seen starting next year

By Adam J. Ang – August 9, 2020 | 6:27 pm
from Business World

THE Department of Energy (DoE) hopes to hold the Philippines’ first renewable energy auction next year once the volume which all power utilities intend to procure is determined.

In July, the department published a circular on the policy governing the conduct of the green energy auction, helping electricity providers comply with the Renewable Portfolio Standards (RPS).

“We are now consolidating requirements ng mga DUs (distribution utilities) and trying to account ano ‘yung (what is the) volume na (that) they’re looking at buying… because that will be the volume that will be covered by the auction,” Energy Assistant Secretary Redentor E. Delola said in a recent DoE virtual briefing.

The requirements review will also determine the types of renewables to be sourced through bidding.

Once this is completed, annual auctions will follow. “The intent is to hold the first auction by next year,” he told BusinessWorld via e-mail.

With both RPS rules for on-grid and off-grid areas in full effect this year, electricity providers are now required to source a portion of their supply from renewable energy developers. They can do this through the green energy auction.

An electronic process, the auction will involve two types of contract: supply-only, where the implementation agreement is awarded to bidders and those whose projects are covered by renewable energy contracts with the government; and integrated OCSP (open and competitive selection process)-supply, where government service contracts are awarded together with the implementation agreement. 

RPS-compliant power providers are all deemed enrolled in the auction, except for those that opt out of the event and those with no legal, technical, and financial capacity to join.

Renewable energy suppliers qualifying for the auction will offer all or some of their capacity. The policy requires that bid prices not exceed the reserve price set by the Energy Regulatory Commission (ERC), which will submit the reserve price confidentially to the DoE before the auction.

The auction rules, including the bidding platform, and implementation deal are yet to be drafted.

Initially, the program intends to pool 2,000 MW of renewable capacity for auction. However, this may change based on the supply requirements of power utilities, according to Mr. Delola.

Also, there may also be changes to the required incremental percentage of contracted clean energy set by the DoE to meet the target 35% share of renewables in the generation mix over the next decade. At present, power providers are required to distribute clean power that is at least 1% of their total yearly demand volume in a decade.

The RPS Composite Team led by Mr. Delola will submit its report on the policy compliance of power providers to the DoE and ERC by Sept. 30.