Feed-in-tariffs on renewable energy seen to benefit consumers

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02:59 AM October 22nd, 2011

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By: Amy R. Remo, October 22nd, 2011 02:59 AM

The controversial feed-in-tariff rates may be more beneficial for consumers in the long run as these will insulate them from the continued spikes in the prices of coal, according to World Bank investment arm International Finance Corp.

“People look at the feed-in-tariff as a cost but it should also be looked at as a differential. Right now renewable energy is expensive, but over time that may not be the case,” IFC Philippines resident representative Jesse O. Ang told reporters.

“Because coal and oil prices will go up and the FIT is set, eventually, the FIT will become not just a negative differential but a positive differential. Renewable energy will become cheaper than fossil fuels,” Ang said.

FIT rates referred to the guaranteed price at which RE developers will be paid for the energy that they will produce. It is a mechanism that is awaited by developers as the rates that will be set will determine the viability of their projects.

However, certain quarters raised fear that this mechanism might raise further jack up the cost of electricity in the country via a universal levy called FIT-allowance. At present, the petition for the implementation of the FIT rates remained pending at the Energy Regulatory Commission.

Based on the petition, the FIT-allowance was estimated at about 10.50 centavos per kilowatt-hour.

According to Ang, the IFC is willing to help finance some of the renewable energy projects. However, he admitted that it might be constrained by the final FIT rates that would be issued.

“We’ve been talking to renewable energy players and we’re certainly interested in helping them, but everybody’s waiting for the FIT rates. The sooner they can decide on the FIT at whatever form, the better,” Ang further said.

National Renewable Energy Board (NREB) Chair Pedro Maniego Jr. recently said the use of these clean resources for power generation could even result in as much as P130 billion in net savings over a 20-year period, despite the imposition of FIT rates and the collection of FIT-allowance.

Maniego earlier said the implementation of the FIT rates would benefit the consumers in the form of reduced average power rates, as the so-called avoided cost would be higher than the proposed FIT rates.

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