Developers slam government suspension, review of RE policy

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WEDNESDAY, 25 APRIL 2012 20:21 PAUL ANTHONY A. ISLA / REPORTER

Renewable -energy (RE) developers are up in arms against the government’s decision to suspend and review its RE policy and consider the option of bidding out RE projects. 

In a position paper, the RE developers said bidding out RE installation target instead of having an Energy Regulatory Commission (ERC)-approved feed-in tariff (FIT) rates would violate the central tenets of the rule of law, stand in the way of progress, and send a chilling message to RE investors and lenders that the regulatory and legal framework they rely on could be changed in mid-stream. 

“This could result in the failure of the Renewable Energy Act and the withdrawal of confidence in the Philippines as an investment venue, the prejudicial effects of which will be limited to the fledging RE sector,” the group said. 

“The Renewable Energy Act of 2008 provides for the FIT to be used by the government and that it is designed to encourage rapid and sustained investments in RE. And such an objective is not achieved by a bidding system, the narrow and singular objective of which is to secure the lowest price,” the RE developers further said. 

 The FIT refers to a guaranteed rate given to RE developers for their output for a certain period of time.   They said the establishment of the FIT system has already been long delayed and has pushed back investment and implementation targets and discouraged a lot of investors. 

“Investors want consistency, predictability and transparency in the rule of law. These same qualities are also characteristics of the FIT system, where the financial viability of RE projects hinges on the stability and transparency of the regulatory mechanisms for the determination and payment of the FIT allows lenders and investors of RE projects to place their confidence and allow the construction of RE capacities,” the group said.   

Sen. Serge Osmeña earlier proposed that a competitive bidding for prices be initiated instead of the FIT having been set by the ERC. 

The paper was signed by the Biomass Renewable Energy Alliance Inc., Philippine Solar Power Alliance, Philippine Association of Small Scale Hydro Developers, Bell Pirie Power Corp., and the Wind Energy Developers Association of the Philippines Inc.  The developers added that the law’s aim is not merely to derive the lowest possible rates, which is achieved by the exercise of the ERC of its function to establish rates, but to accelerate the development of emerging RE resources.     source