Wednesday, June 21, 2017

First Gen: Our hydro projects are under government review

By Lenie Lectura -  May 11, 2017

FIRST Gen Corp. said its hydro-power projects are under review mainly due to the government’s unclear policy direction on incentives.
“Our hydro-platform pipeline of projects is currently being reviewed given the policy stance of government of not providing feed-in-tariff [FiT] incentives,” First Gen President Francis Giles Puno said in his report delivered during the company’s annual stockholders’ meeting.
The FiT is an incentive in the form of a guaranteed power rate given to renewable-energy (RE) producers for 20 years.
The Energy Regulatory Commission (ERC), in its March 2017 order, issued the digressed FiT rates to cover January to December 2017 for run-of-river (ROR) hydro plants, from P5.9 to P5.8705 per kilowatt-hour (kWh), and biomass plant, from P6.63 to P6.5969 per kWh.
The ERC said there are only four hydro plants issued certificates of endorsement by the Department of Energy as of May 9. Of the 250-megawatt (MW) installation target for ROR hydro, only 28.7 MW was subscribed, leaving 221.3 MW of unsubscribed capacity.
“If anything, we feel renewable-energy sources, like hydro, with its lengthy development and construction phase, will require assurance of a market,” Puno said. First Gen was looking at expanding its greenfield operations in Mindanao by developing three ROR hydroelectric power plants with a combined  generation capacity of 95 MW, namely, the 32-MW Bubunawan and the 33-MW Tagaloan plants in Bukidnon, and the 30-MW Puyo plant in Agusan del Norte.
The Lopez-led firm acquired three new concessions last year.  These are the 175-MW Binongan-Tineg in Abra, the 160-MW Cagayan 1N in Bukidnon, and the 17.5-MW Cateel in Davao Oriental.
“But the pronouncement of the Department of Energy is unclear to us. Because hydro FiT is not fully taken up, so the whole idea was to be able to construct the hydroelectric plants that we have been developing and for the unutilized portion of the FiT be allocated,” Puno said.
Because there is a chunk of unutilized capacity in the first round of FiT for hydro power, Puno said the government must realize hydro-power development is actually a long gestation period, given the fact hydro-power prospects are located in remote areas.
“Hydro takes long and you have to assure investors there will be a market for that electricity. In order for us to go ahead, we have to be assured that there is a market. And so, until that clarification is there, then we’re slowing down what should be an accelerated development, but once it’s clear, then we will proceed because we have also acquired quite a number of new concessions,” Puno said.
First Gen, he said, is a “believer in hydro” and the government should be strongly promoting it “because from an inclusive growth perspective, that’s a very inclusive growth program to support development in remote areas”.
Similar to geothermal, once properly built, Puno said these assets can operate for several decades and provide competitively priced electricity to consumers. They also have the added benefit of helping provide investments in the remote areas of the country where investments are needed the most.
“Ironically and frustratingly, it appears our country promotes the development and job creation in remote coal mines in other countries like Indonesia, rather than develop clean renewable sources like hydro that can create more employment in remote areas of our country,” Puno said.

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