3rd Green Energy Auction postponed

INQUIRER FILE PHOTO

The government’s third Green Energy Auction (GEA 3), through which it will bid out geothermal and pumped-storage hydropower capacities, will be delayed by at least two months as the Energy Regulatory Commission (ERC) seeks to finalize the pricing mechanism with the Department of Energy (DOE).

Monalisa Dimalanta, chair of the ERC, last week explained that GEA 3, which was originally scheduled this month, may be conducted in the first quarter of 2024.

To recall, the ERC previously announced that it would remove price caps for GEA 3, as stakeholders noted that the caps prescribed during the second round held in July were “too low,” resulting in a low turnout.

Higher prices

Removing the Green Energy Auction Reserve (Gear) prices will require the ERC to review the proposed prices after the bidding is conducted.

This will allow investors to offer geothermal and pumped-storage hydro technologies at higher prices, although it will be up to the regulator to approve the offers.

According to Dimalanta, the ERC already discussed the pricing parameters in detail with the DOE. She did not disclose the specific guidelines but explained that they wanted to be “as clear as possible that whatever rates [bidders] won will still be subject to review.”

Limited players

“For geothermal and pumped-storage hydro, there are only limited players so there’s really no auction to speak of,” Dimalanta told reporters when asked about removing Gear prices for other technologies, such as solar power.

“For solar, there are so many players so it’s really a prime condition for an auction with a set tariff,” she added.

GEA was first conducted in 2022 to provide an additional market for clean energy in the Philippines through competitive electronic bidding.

In July, the DOE auctioned off 11,600 MW of renewable energy capacities, particularly for ground-mounted and rooftop solar, onshore wind, biomass and waste-to-energy, that must be available in the next three years.

However, the agency received only 3,580.76 MW of committed capacities.

Developers had pointed to the low Gear prices as among the main reasons why they were discouraged from participating in the auction, noting that some technologies had higher development costs. GEA 2 Gear prices ranged from P4.4043 per kilowatt-hour (kWh) to P6.2683 per kWh.

The DOE plans to bid out the remaining GEA 2 capacities next year. INQ