EDC to start wind power project this year

Exec says venture in Ilocos Norte ‘fully funded’

By: Amy R. Remo
Philippine Daily Inquirer

9:33 pm | Sunday, June 26th, 2011

HOPEFUL. Energy Development Corp. is waiting for the issuance of the feed-in-tariff rates before it starts this year its 86-megawatt wind power project in Ilocos Norte.

Energy Development Corp., the country’s biggest producer of geothermal energy, may finally start within the year its planned 86-megawatt wind power project in Burgos, Ilocos Norte, as it anticipates the issuance of the much-awaited feed-in-tariff rates.

“Should the feed-in-tariff rate for wind gets approved, we will move on the Burgos project immediately. All we’re waiting for is the final FIT rates—the project is pretty much good to go,” said EDC president Richard B. Tantoco.

“The Burgos wind farm project is a fully funded business plan, so we’re good [in terms of financing],” Tantoco added.

While he did not disclose investment figures for the planned wind farm, Tantoco said that EDC might need to infuse roughly $2.5 million to $3 million to produce a megawatt of wind power. This means that for an 86-MW portfolio, the Lopez affiliate needs to invest as much as $258 million, or about P11 billion.

Should the wind power project be pursued this year, EDC has already earmarked P4.4 billion to fund the project development costs of the Burgos farm. The amount formed 39 percent of the P12 billion in capital expenditure budget of EDC for 2011.

The much-awaited FIT rates are expected to be issued within the year after the National Renewable Energy Board (NREB) submitted its recommendations to the Energy Regulatory Commission last May 16. The FIT rates will assure renewable energy developers of future cash flow as electricity end-users will be charged fixed amounts to cover the production of energy from renewable sources.

The ERC, for its part, said it was still waiting for more data from the Department of Energy before it could launch a full review of the NREB proposal. It would take about 90 days to study a proposal before a decision could be rendered.

According to the NREB petition, solar developers and ocean energy project proponents would enjoy the highest FIT rates of P17.95 a kilowatt-hour and P17.65 a kWh, respectively. Investors in wind development would be given a FIT rate of P10.37 a kWh; for biomass, P7 a kWh; and for hydro, P6.15 a kWh.

Based on these FIT rates, the estimated additional universal levy (also called FIT-allowance) to be collected from all power consumers connected to the grid will be 12.57 centavos a kWh—that is, if developers are able to meet the installation targets and if the P4.50-a-kWh average generation cost will not balloon over the next three years due to higher fuel prices.

The Burgos wind power project is among the projects that EDC expects to help shore up its attributable generating capacity by 38 percent to 1,542 MW from the current 1,116 MW over a five-year period starting 2011.