Gov’t to review price caps for green energy auction | Inquirer Business

Gov’t to review price caps for green energy auction

MANILA  -The Energy Regulatory Commission (ERC) will decide on the new price cap for the unsubscribed power generation capacity under the last round of green energy bidding.

Several factors will be taken into account before coming up with the new Green Energy Auction Reserve (GEAR) price or the maximum price offer in the auction of renewable energy capacity via the Green Energy Auction (GEA) program.

“Part of the consideration for setting the GEAR price is the date when the investment decision is made, what is the risk-free rate, interest rate… during the time the investment decision is made,” ERC Chair Monalisa Dimalanta said.


If the Department of Energy (DOE) would push through with another round of auction, this is something the ERC would revisit, according to the ERC chief.


Dimalanta said while the ERC had determined the GEAR price per type of technology, they were looking at setting price ceilings depending on the capacity.

“Maybe we tried differentiated [pricing] based on technology but maybe we can differentiate further based on size also to be fair,” she said.

“If the unsubscribed capacities will be auctioned by the end of the year or early next year, definitely the rates will be different [as well as] the factors to be taken into consideration for the investment decision,” she added.

The ERC will also come up with new rates for other renewable sources: geothermal and impoundment hydropower as both have significant front-end costs or charges that are paid before such projects begin.

“The biggest investment in geothermal is really in the exploration part, looking for that and drilling the wells and looking for the viable steam volume. For impoundment hydro, it’s building the dam facilities,” Dimalanta said.

“Hopefully, we get to discuss all these things first with the DOE before we do the pricing. The pricing will be a result of all these decisions,” she added.


Last week, the DOE declared a total of 105 winning bids following the conclusion of GEA-2 covering renewable projects with a total capacity of 3,440.756 megawatts (MW).

The contracted capacity, however, is only equivalent to 29.7 percent of the 11,600 MW offered by the DOE to renewable energy developers.

The projects will be undertaken between 2024 and 2026 at competitive rates lower than or equivalent to the price ceilings set by the ERC.

The ERC set the GEAR price for ground-mounted solar at P4.4043 per kilowatt-hour; rooftop solar, P4.8783 per kWh; floating solar, P5.3948 per kWh; onshore wind, P5.8481 per kWh; biomass, P5.4024 per kWh and biomass waste-to-energy, P6.2682 per kWh. INQ


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ERC sets price caps on renewable energy sources

TAGS: auction, Department of Energy, green energy, price ceiling

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