All systems go for renewable energy

MANILA, Philippines—The National Renewable Energy Board has finally filed a petition recommending the feed-in-tariff rates for each resource—a move that will jumpstart the drafting of all other incentives provided under the Renewable Energy Law.

According to NREB head Pedro Maniego Jr., solar developers and ocean energy project proponents will enjoy the highest FIT rates of P17.95 per kilowatt-hour and P17.65 per kWh, respectively, based on the petition filed with the Energy Regulatory Commission on Monday.

Investors in wind development will be given a FIT rate of P10.37 per kWh; for biomass, P7 per kWh; and for hydro, P6.15 per kWh, Maniego said in an interview.

He also said that the installation targets remained the same, totaling 830 megawatts. Of the total capacity, the hydro and biomass sectors will be allowed to put up facilities that can generate a total of 500 MW or 250 MW each; wind, 220 MW; solar 100 MW; and ocean, 10 MW.

Based on conservative estimates, Maniego said the additional universal levy (also called FIT-allowance) to be charged to all power consumers connected to the grid will be 12.57 centavos per kWh—that is if developers are able to meet the installation targets and if the P4.50 per kWh average generation cost will not balloon over the next three years due to higher fuel prices.

“If installation targets are not reached and if average generation cost increases faster than inflation, then the impact of FIT rates on the FIT-allowance would be much lower,” he explained.

Once approved, the FIT-allowance will be implemented starting 2014, when all the expected renewable energy facilities will have started operations.

Maniego, however, stressed that the installation targets were not intended to put a cap or limit on the number of generating renewable energy facilities that will be put up and on the capacities that these can produce.

“Under the FIT rules, it is primarily a trigger for ERC to review and adjust the FITs. This is to prevent over-installation should the FIT prove to be too attractive. In the case of solar, it doesn’t mean that no more service contracts would be approved once the 100-MW target is reached. ERC, in consultation with NREB and Department of Energy, will need to evaluate if a downward adjustment of the FIT is necessary before approving additional installation targets,” Maniego added.

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 production as it ensures stable pricing.

Local renewable energy developers earlier expressed dissatisfaction 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.