Business World Online
Posted on July 19, 2015 08:47:00 PM
By Claire-Ann M. C. Feliciano, Senior Reporter
THE DEPARTMENT of Energy (DoE) said it plans to implement an auction process for future renewable power projects to be enrolled under the feed-in tariff (FIT) scheme.
The DoE, in a circular dated June 26 and published on Saturday, said: “Upon the full subscription of the existing FIT installation targets, the succeeding rounds for the installation targets for FIT-eligible resources shall be made through an auction system to be adopted by the DoE.”
The move away from quotas to an auction system, which carries the prospect of corresponding changes to pricing, points to a more market-oriented approach to determining who gets to build renewable energy (RE) projects as the technologies mature and the need for subsidies diminishes.
The auctions will replace the current system, which involves filling FIT quota allocations for the various forms of RE on a first-come, first-served basis. The department then adjusts the quotas to take in more applicants with a view towards maintaining at least a 30% share of renewables in the installed base of power-generating facilities.
FIT is a form of incentive for renewables developers, entitling them to premium rates for 20 years in exchange for pioneering the development of the industry in the Philippines and helping ensure a degree of energy sustainability, security and independence.
The circular cited the 2014 power statistics showing that RE currently accounts for 32.87% of the country’s total installed power capacity. The rest are powered by coal, natural gas and diesel.
The DoE described its policy stance as a “wholistic implementation of the FIT system” and other pertinent provisions of the Republic Act No. 9513 or the Renewable Energy Act of 2008 and its implementing rules and regulations.
The DoE’s installation targets originally allocated 250 megawatts (MW) each for run-of-river hydro and biomass projects; wind, 200 MW; and solar, 50 MW.
Original rates, approved in July 2012, were P5.90 per kilowatt-hour (/kWh) for run-of-river hydro; P6.63/kWh for biomass; P8.53/kWh for wind; and P9.68/kWh for solar.
The DoE has since increased the installation target for solar to 500 MW, which led to a lowered FIT rate of P8.69/kWh. The allocation for wind was also raised to 400 MW but a review of the proposed new rate of P7.93/kWh is still ongoing.
The auction for the installation targets, the DoE said, “may only be made upon the issuance and implementation of the Must Dispatch Implementing Rules and Regulations.”
The circular will be in effect 15 days upon publication.
Officials from the DoE were not immediately available when asked for details of the new scheme over the weekend.
National Renewable Energy Board (NREB) Chairman Pedro H. Maniego, meanwhile, said the Energy Regulatory Commission (ERC) needs to amend existing rules before the new policy is adopted.
“Any changes in FIT rules, which will affect the FIT rates, must be approved by ERC in consultation with NREB,” Mr. Maniego said in a text message when sought for comment.
Asked if this will eventually benefit electricity end users in terms of lower FIT rates, Mr. Maniego said: “Auction has both advantages and disadvantages.”
He said implementation of an auction system for the FIT must be harmonized with current rules, which are promulgated and approved by the ERC.
“The impact on RE development and prices needs comprehensive studies, consultations, and hearings,” Mr. Maniego said.
The FIT rates are paid for by all electricity end users as FIT-Allowance (FIT-All) -- a separate line component in the power bills. Since February, consumers have been paying P0.0406/kWh FIT-All. source
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