DoE steps up pace of RE contracts awarding

The Department of Energy (DoE) has resumed the signing and awarding of renewable energy service contracts, following the adoption of a new set of terms that will help ensure the delivery of commitments by project proponents.

This move should be a welcome development to developers, who have been wanting to grab a share of the country’s growing renewable energy industry.

Energy Undersecretary Jose M. Layug Jr. said in a briefing that he had endorsed at least five service contracts for hydropower projects, which are already up “for signing” by Energy Secretary Jose Rene D. Almendras.

“We are moving the signing of RE contracts. Last May, we said we were anticipating the awarding of 61 contracts, so from now, we will release the signing slowly, batch by batch,” Layug said.

Apart from these five contracts for hydropower projects, the DoE had lined up eight wind and solar renewable energy service contracts for signing.

These eight alone are expected to bring in initial investments of up to $82 million (roughly P3.5 billion) within two years.

A government source earlier said that investments from two solar RE contracts are seen to reach $20.531 million (around P882 million), while the six pending wind contracts are expected to generate $61.488 million (about P2.6 billion).

Data from the DoE showed that to date, the government has already awarded 236 renewable energy service contracts since the passage of the Renewable Energy Act in 2006.

The proposed clean energy projects, most of which are for “grid-use,” are expected to generate as much as 2,800 megawatts should these proceed toward the construction and commissioning stages.

There are, meanwhile, 406 pending project applications before the DoE, half of which are for hydropower projects.

All pending RE contract applications have a potential combined capacity of over 6,000 MW.

Based on the government’s National Renewable Energy Plan, it targets to increase the RE-based power capacity of the country to as much as 15,236.3 megawatts by 2030.

The country’s RE-level capacity currently stands at 5,369 MW.

“For a country reliant on imported energy sources, these developments signal a fairly dramatic shift towards greater energy independence. With the utilization of RE sources finally gaining more interest, the department needs only to entice more investors in the country to harness the vast resources that it already has,” the DoE has said.

The RE sector, however, faces considerable challenges as some quarters have been vocal in their stand against the feed-in-tariff (FIT) mechanism, under which developers are assured of fixed rates over the next 20 years. Groups claimed that the FIT rates will only further jack up the country’s electricity prices, which are already said to be the highest in Asia.