Feed-in tariffs likened to take or pay deals

Energy Secretary Jose Rene D. Almendras has admitted that the much-debated feed-in-tariff is akin to the “take-or-pay” contract, as it will assure renewable energy developers of a fixed rate over the next 20 years.

This, Almendras said, was the reason why the government is being careful in the issuance of FIT rates to ensure that these will not further burden consumers.

“I want to be careful with implementation of the Renewable Energy Law, because (FIT) takes the form of take or pay. With FIT, you will set the rate over the next 20 years. So if a generator gets FIT certification and it says he is entitled to FIT, assuming FIT has been set at P17 or P18 per kilowatt-hour, literally we’re saying that for the next 20 years, whatever megawatt he generates, he will be entitled to [be paid that amount],” he said.

“Effectively, that’s saying for as long as he generates it, we will have to buy it from him because in the order of priority, electricity generated from renewable energy sources will be classified as a ’must dispatch,’” Almendras added.

FIT rates refer to the guaranteed price at which RE developers will be paid for the energy that they will produce.