RE charges, power rates seen to go down

The additional charges to be passed on to consumers for the use of clean energy sources may likely go down in five years’ time, according to local renewable energy developers, who also expect a reduction in power rates over the long term.

Aloysius L. Santos, vice president for sustainability and energy efficiency at First Gen Corp., said that with the feed-in-tariff allowance (FIT-ALL), consumers would be shielded from the adverse effects of future oil price increases.

Santos explained that the cost of power generated by nonrenewable energy sources would increase over the long term as global prices of coal and fuel remained vulnerable to market forces.

But while the feed-in-tariff rates are locked to assure developers of fixed cash flows, the FIT-ALL will be adjusted yearly for foreign exchange movements and consumer price index, including the so-called “avoided cost” of P4.50 per kilowatt-hour (kWh) from fuel and coal fired power generation.

Santos estimates that this P4.50 per kWh is expected to increase to as much as P12 per kWh, if not higher, in 20 years’ time.

“The more we get renewable energy projects to come in, then the cost will go down. In effect, over a long period of time, renewable energy will lower the rates,” Santos explained.

Authorities have been pushing for the use of renewable energy sources such as solar power, ocean, wind, biomass and hydropower.