DOE to terminate half of renewable energy firm’s service contracts
Department of Energy facade Images from DOE / FILE
MANILA, Philippines – Twenty one, or half, of the total 42 service contracts awarded by the Department of Energy (DOE) to renewable energy (RE) firm Solar Philippines are being terminated, according to a DOE official.
Energy Undersecretary Rowena Cristina Guevara made this disclosure in the Senate last Wednesday during a hearing for the DOE budget.
Senate President Pro Tempore Jinggoy Estrada raised concern over the failure of Solar Philippines to fulfill its commitments under the service contracts that the DOE gave the pioneering RE company.
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“Twenty one of the contracts are already being processed for termination because they are not able to deliver the scheduled targets of the work program,” Guevara said at the hearing.
Article continues after this advertisementEstrada said a total of 473 service contracts had been awarded to various renewable energy companies to build solar farms as of last March. These were supposedly for 32,359 megawatts of RE supply.
Article continues after this advertisementThe senator said that of the 10,000 megawatts committed by Solar Philippines and its affiliates, only 174.41 megawatts, or two percent, have been completed and started commercial operations.
“The vast majority of the total commitment have not yet entered the development stage and remain in various phases of pre-development. How will this affect the department’s targets?” Estrada asked at the hearing. These included the Iba-Palawig project, Iba-Palawig 2 project, and San Marcelino phase 3 project.
Guevara said the most challenging part of solar power projects, however, is land acquisition which was the main reason being given by RE companies, including Solar Philippines, in delays in delivery of energy targets.
“Previously, possessory rights were not required when we issued service contracts. However, under the new guidelines, developers must have possessory rights before service contracts are granted,” she said.
Estrada took note of Solar Philippines in particular and asked why it’s taking the company too long to comply with the terms of its service contracts compared with other developers.
“You know, my conclusion is that while other project developers take an average of around two to three years to develop solar power projects, Solar Philippines and its affiliates have taken more than three years to even take its projects to development phase and much longer for actual construction,” the senator said.
Guevara said of 32,359 megawatts covered by service contracts, other developers have already fully developed or are in development of 22,000 megawatts of capacity.
“The remaining 10,000 megawatts depend on Solar Philippines, which could significantly compromise the DOE’s ability to meet its commitment to transitioning to renewable energy. I hope you seriously consider this matter,” Estrada said.
Senators Pia Cayetano and Sherwin Gatchalian echoed the sentiments of Estrada, questioning delays in the commitments stated in service contracts.
Guevara said the DOE would issue new sets of terms of reference for its succeeding green energy auctions with the performance of RE developers as qualifying conditions.
“We are going to be issuing the terms of reference soon. The performance or non-performance of projects will be included,” Guevara said at the budget hearing.
