Renewable energy players want the government to tweak the auction design for every renewable energy technology, saying the current one-size-fits-all approach will only push away interested investors.
At an ING Philippines forum on Monday, SunAsia Energy president and CEO Maria Theresa Cruz-Capellan said the Department of Energy (DOE) must craft a “more sophisticated” design for its Green Energy Auction (GEA) program to cater to complicated technologies other than solar and wind.
“Gas and pump storage, and even geothermal need a special kind of auction design because it is not the same as solar and wind … That kind of a market mechanism [requires] a more specific function design,” she said.
“I think this is the challenge for us in designing the auction to fit the technology, to fit the kind of green technology that we would like to introduce for the brands to reach our decarbonization target,” the executive added.
According to Capellan, the accompanying issues of traditional solar and wind facilities have already been identified, having existed for so long now in different locations across the country.
On the other hand, floating solar projects still encounter problems with transmission, mooring and bank financing, she added. Geothermal, meanwhile, involves drilling costs while natural gas currently needs to import fuel.
The official, who leads a massive floating solar project on Laguna Lake, noted the second GEA round has already raised “red flags.”
Conducted in 2023, the auction received a total of 3,580.76 megawatts (MW) in committed capacities, way below the 11,600-MW capacity on offer as incentives set by the Energy Regulatory Commission were perceived to be low.
This was echoed by First Gen Corp. vice president Carlos Lorenzo Vega, saying the second auction had “a huge gap.”
“And to me, that in itself is a signal, and that signal should be properly interpreted by our policymakers, the rule makers, such that if there are 8 gigawatts, or it’s undersubscribed by 8 gigawatts, then there’s something wrong with the price signal being set up,” Vega said.
“You can imagine that if we were to develop our geothermal projects and we were looking at [GEA], the price signal has to be correct,” he added.
Capellan said that an auction design adjusted to different power sources could “allow leaders in the energy sector to participate actively and see the signals as correct.”