DOE may not extend ‘degressed’ FiT rates for hydro and biomass projects

By Lenie Lectura - October 24, 2017

https://businessmirror.com.ph/doe-may-not-extend-degressed-fit-rates-for-hydro-and-biomass-projects/

THE Department of Energy (DOE) is not inclined to extend the implementation of the “degressed” feed-in-tariff (FIT) rates for hydro and biomass power projects.

Energy Secretary Alfonso G. Cusi said FiT rates for the two renewable-energy (RE) sources “will end December this year,” and said he does not mind if many will disagree with his opinion.

It can be recalled that the Energy Regulatory Commission (ERC) has lowered the FiT rates for hydro and biomass power projects with commercial operations set anytime from January to December 2017.

The degressed FiT rates are P5.8705 per kilowatt-hour (kWh) for hydro and P6.5969 per kWh for biomass. The approved rates are lower compared to the July 2012 FiT rates of P5.90 per kWh for hydro and P6.63 per kWh for biomass.

“FiT rates for run-of-river hydro and biomass shall be degressed at a rate of 0.05 percent for the period January to December 2017, which is two years from the January 2015 FiT effectivity,” an earlier ruling from the ERC stated. The said FiT rates were based on installation ceilings set by the DOE. The ERC is the agency that sets the FiT rates.

Under the FiT rules, the eligible RE plants shall be entitled to such degressed FiTs corresponding to the year when they started commercial operation. The ERC may approve a different digression rate for different technologies.

This rule, the ERC said, is meant to encourage the RE producers to invest at the initial stage and hasten deployment of RE.

The FiT is basically an incentive in the form of guaranteed power rate given to RE producers for 20 years. However, consumers are the ones who shoulder the FiT-All, a separate line component in the power bills.

“You know, based on our per capita, it is difficult for us to provide subsidy or even FiT. As much as possible, we want to bring down our energy tariff. The consumers are the ones who shoulder the FiT”, Cusi said.