Renewable energy seen costing more

Consumers may have to pay more for renewable energy (RE) once regulators update the Feed-in-Tariff Allowance (FIT-All), which serves as an incentives pool for developers.

Ongoing discussions between the Energy Regulatory Commission (ERC), FIT fund administrator National Transmission Corp. (Transco), and other stakeholders have so far yielded that the combined FIT-All rate for 2014 and 2015 may turn out to be P0.08 per kilowatt-hour (kWh), or twice the provisional rate of P0.04 per kWh.

Transco submitted to the ERC last August 24 an updated estimate of the FIT-All, based on the approved capacities of RE developers, among others. The ERC ordered Transco to recompute the rate back in July.

The FIT is the per kilowatt-hour rate guaranteed to renewable energy developers to ensure the viability of their projects. Consumers will then have to shoulder the tariff through a new line item, called the FIT-All, on their electricity bills.

Justifying the P0.08/kWh FIT-All rate, the state firm said, “[we] would like to emphasize that the above computation considers a collection period of 12 months. However, the provisionally approved FIT-All of P0.0406/kWh has already been implemented for about seven months.”

Consumers began paying for the new line item on their electricity bills in February.

Several factors affect the computation of the FIT-All. Among them are the pre-approved FIT rates for solar, wind, run-of-river hydro, and biomass and the capacity deemed by the Department of Energy (DOE) and ERC to be eligible for such incentives.

There are now more projects eligible for the original FIT rates than initially thought. The installation target for solar power, for example, is 50 megawatts (MW). Department of Energy data showed 108 MW have qualified to date. On wind power, meanwhile, the installation target for the original rate was set at 200 MW, but 249 MW are now deemed eligible.

The first batch of FIT rates, approved inJuly 2012, covered run-of-river hydro (P5.90/kWh) for an installation target of 250 megawatts (MW), biomass (P6.63/kWh) for 250 MW, wind (P8.53/kWh) for 200 MW, and solar (P9.68/kWh) for 50 MW. The total installation cap is 750 MW.

Under the FIT scheme, renewable energy developers will be able to dispatch the capacity of their projects for as long as they get a premium for a period of 20 years.

There is also an ongoing push for a new round of FIT rates for solar and wind energies. The ERC recently expanded the solar power capacity under FIT to 500 MW, from the original 50 MW, but at a lower rate of P8.69 per kWh than the initial rate of P9.68 per kWh.

The National Renewable Energy Board has also proposed a FIT rate of P7.93 per kWh for the next batch of wind power capacity. It initially proposed a second-batch rate of P8.49 per kWh.

Industry sources assured discussions are still ongoing and there are efforts to bring down the cost of RE for the sake of consumers. There are also parties seeking transparency on the eligibility of companies to claim incentives.

The installation targets are the ceilings for each type of renewable energy, such as solar, wind, biomass and mini-hydro that may qualify for FIT incentives. The DOE set the cap to ensure the security of the power grid and stability of electricity rates, given the intermittent and high cost of power generation from such sources compared to conventional plants.