ERC approves rates for renewable energy
The Energy Regulatory Commission issued Friday the much-awaited feed-in-tariff (FIT) rates for four renewable energy resources, eliciting a mix of relief and disappointment among local energy developers.
In a statement, the ERC said it approved a FIT rate of P9.68 a kilowatt-hour for solar; P8.53 a kWh for wind; P6.63 a kWh for biomass and P5.90 a kWh for hydropower projects. The commission, however, deferred fixing the FIT rates for Ocean Thermal Energy Conversion (Otec) resource for further study and data gathering.
The issuance of the FIT rates has been deemed crucial in boosting the local renewable energy industry as this would provide developers an incentive with the assurance of fixed cashflow for their power projects over the next 20 years.
However, the approved FIT rates were much lower than what was petitioned by the National Renewable Energy Board in May last year, which then sought a P17.95-a-kWh rate for solar; P10.37 for wind; P7 kWh for biomass, and P6.15 for hydro resources.
“The ERC [has] lowered the FIT [rates] to cushion the impact of implementing the FIT incentive mechanism under the Renewable Energy Act on electricity rates while still being sufficient enough to attract new investments in renewable energy. This is win-win for all,” explained ERC executive director Francis Saturnino Juan.
Juan added that the approved FIT rates would be subjected to a review and readjustment (whether it will be increased or decreased) by the ERC after the initial three-year implementation of these rates. The new FIT rates, however, will not be applicable for projects that will be put up during the first three years of implementation.
The Department of Energy, for its part, has expressed appreciation to the ERC for issuing the FIT rates at the soonest possible time.
“We are fully aware of the tedious task and the challenges of the commission in ensuring a balanced view to be able to serve the needs of all stakeholders regarding the rates. We are thankful for their effort and we hope that all other stakeholders continue to cooperate with everyone to be able to establish a competitive and dynamic power market that is envisioned to benefit all,” the DOE said in a statement issued Friday.
The issuance also brought relief to some local renewable energy developers who have been putting off their projects while they await the final rates.
While many were thankful that the FIT rates were finally out, some developers lamented that such rates, which were lower than expected, may prove to be a challenging framework for them to work with, given the high costs required to roll out their power projects. Many of them, who have been polled by the Inquirer, have said that they now have to go back to their drawing boards to reassess the economic viability of their projects.
Theresa Cruz-Capellan, founder of Philippine Solar Power Alliance, noted that they have yet to see how the industry players would react given the FIT rate for solar. The key now was for players, particularly in the solar group, to be able to achieve margins so they could build power facilities at that cost.
JJ Samuel A. Soriano, president of the local unit of Dutch-based Sunconnex Projects BV, added that they have yet to study the considerations of the ERC in arriving at this FIT for solar so they could assess if it would still be financially feasible to construct and operate.
“In a way, the solar sector has just been killed in our country. It’s a pity since solar is the fastest RE to be deployed and can serve a very useful purpose in our country’s energy mix,” added Marco Prieto Delgado, company managing director of Energy Logics Philippines Inc.
