Higher feed-in tariff rates for renewable energy approved

MANILA, Philippines—In an effort to boost energy investments, the National Renewable Energy Board has approved higher feed-in-tariff (FIT) rates for renewable energy projects, a move that will, however, burden all power consumers with an additional universal levy of 12.57 centavos a kilowatt-hour.

“Rates increased slightly from previous rates based on more information from developers,” said NREB head Pedro Maniego Jr., who deferred to the Energy Regulatory Commission for the release of specific FIT rates for each resource, namely wind, hydro, ocean, biomass and solar.

Maniego added that the NREB, which is mandated by law to draft the recommended FIT rates and other necessary mechanisms specified under the Renewable Energy Law, was set to submit on Monday its petition to the ERC, in time for the deadline imposed on the body. The ERC is tasked to study the rates and their impact on electricity bills and to either approve or disapprove the proposal.

Maniego added that the basis for the universal levy called FIT-allowance was still 830 megawatts, which represented the total capacity of renewable energy facilities that would be allowed to be constructed within a three-year period.

Still, Maniego pointed out that the NREB FIT-allowance proposal of 12.57 centavos a kWh was much lower than the industry proposal of 16.45 centavos. Once approved, the FIT-allowance will be implemented starting 2014, when all the expected renewable energy facilities will have started operations.

However, local renewable energy developers were still dissatisfied with the NREB petition and even warned of pulling out their investments unless the government gave them a more lucrative FIT rate or installation target.

The FIT rates were meant to assure renewable energy developers of future cash flow as electricity end-users would be charged fixed amounts to cover the production of energy from renewable sources. With these rates in place, utilities can spread the cost of clean power among their customers. The system is thus expected to encourage investors to go into renewable energy development and production as it ensures stable pricing.

Theresa Cruz-Capellan, president of the Philippine Solar Power Alliance (PSPA), noted that the “NREB petition was disappointing to local investors and embarrassing to the international community” considering that the Philippines was the first in Southeast Asia to pass the landmark Renewable Energy Act of 2008.

Capellan explained that developers were willing to be granted lower FIT rates provided that they be allowed to build enough capacities that could give them “economies of scale.”