Just In Case Of Oversubscription
By MYRNA M. VELASCO
July 11, 2012, 5:18pm
MANILA, Philippines – The Department of Energy (DOE) is eyeing at least four options on how to award the renewable energy (RE) installations to prospective developers in case project proposals would exceed the targeted installations.
Energy Undersecretary Jay Layug indicated that the right “to proceed with project implementation” may be bestowed on developers either by: a) equal allocation; b) bidding; c) ‘talk among yourselves’; or, d) first-come, first-served basis.
Since interests on renewable energy projects have been overwhelming, there would definitely be an “oversubscription”, hence, the line-up of construction of the facilities must be efficiently managed.
“We’re looking at several criteria in case of oversubscription,” he said; noting that this will be incorporated in the eligibility criteria that will soon be issued by the department.
Layug explained that if bidding will be the option on project selection, the feed-in-tariff (FIT) shall be treated as the price ceiling. Nevertheless, the department must carefully scrutinize the declaration of commerciality of the project sponsors.
Of all the project award alternatives being espoused by the DoE, it has been the competitive bidding that stirred intense debate among industry players and other affected stakeholders.
For the “equal allocation option,” the FIT will be divided evenly among several qualified project developers.
For the energy department, it noted that the state of readiness on implementations will be the defining measure in the proposed ‘eligibility criteria’.
Layug said they are now crafting the measures on the award of capacity installations given the much-anticipated issuance of the FIT rates by the Energy Regulatory Commission. A total of 760 megawatts of RE capacity will be awarded to project developers; which will the entitle them to FIT as investment incentive.
The establishment of the ‘eligibility criteria’ is one major course of action being awaited from the energy department. Until that is issued, the investment plans of most RE companies would continue hanging in the air.
The energy department is seen facing hurdles in the awarding of the RE allocations since displacement of interested parties without clear explanation or guidelines, will definitely draw some protests.
The DOE said it must have a way to assess the project sponsors’ “ability to proceed with construction of the facility without delays,” due to factors such as lack of key pre-development milestones.
The project preparations must be evaluated on the basis of availability of financing package, permits, transmission line interconnection, feasibility studies, grid impact study (GIS) and other technical issues.
Layug further explained that “the eligibility criteria will be based on standards set out in the RE Law plus any other additional conditions as may be internally agreed within the DOE.”
The enticement for RE project developments in the Philippines just progressed substantially when the law providing for the investment incentives was passed three years ago. This has also drawn the attention of most foreign investors. source
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