MANILA, Philippines—The Energy Regulatory Commission is mulling over the approval of feed-in-tariff (FIT) rates of each renewable energy source separately—some earlier than others—to allow developers to move forward with their proposed power projects.
According to ERC executive director Francis Saturnino Juan, it would be possible for the commission to approve FIT rates of each renewable energy source—one at a time—to help investors get financial closing for their projects.
Juan explained that by having a feed-in-tariff rate in place, project proponents would be able to justify to banks, financial institutions and their investors the feasibility of their respective power projects.
This is the reason why the FIT measure is among the most awaited mechanism under the Renewable Energy Law because it will determine the economic and financial viability of the projects.
Under the FIT system, renewable energy developers are assured of future cash flows, as electricity end-users will be charged fixed amounts to cover production of energy from renewable sources. With this in place, utilities can spread the cost of clean power among its customers.
The system is also expected to encourage investors to go into renewable energy development and production as it ensures stable pricing.
Juan clarified, however, that while the FIT rates could be approved, project proponents would have to wait for the ERC’s go signal before the rates can be implemented.
The main purpose of granting FIT rate approvals is to assure investors of adequate returns for their projects, he added.
The FIT mechanism, along with other incentives and schemes provided for under the Renewable Energy Law, should have been put in place last year but was delayed due to a number of factors, most notable of which was the change in the administration.
This meant that the National Renewable Energy Board, the recommendatory body for such incentives, had to be reconstituted.
The NREB, according to Juan, is expected to submit its recommendations by March this year. Under the newly formulated 2011 Renewable Energy Plan, however, the NREB is given a bigger leeway until the second quarter this year to submit its proposals.
Juan earlier assured power consumers that the ERC has put in place the necessary mechanisms to cushion the possible increases in electricity prices, once the FIT rates are implemented.
“The accomplishment of (the country’s) renewable energy objectives will definitely cost the government and consumers. Given the current state of development of most of these renewable energy technologies, it may not come cheap. The challenge, therefore, is to keep the costs at a level that is affordable, if not acceptable,” Juan explained.
The FIT design adopted by the ERC addresses the cost and pricing barrier to developing renewable energy without being too costly for consumers, said Juan.
“First is that (the FIT) mandates the equal burden sharing of all on-grid electricity consumers, regardless of the grid or area where they may be connected to. The result is that everyone pays the same extra cost in support of the (country’s) objectives and with everyone paying it, additional imposition is kept at a minimum,” Juan said.
According to ERC executive director Francis Saturnino Juan, it would be possible for the commission to approve FIT rates of each renewable energy source—one at a time—to help investors get financial closing for their projects.
Juan explained that by having a feed-in-tariff rate in place, project proponents would be able to justify to banks, financial institutions and their investors the feasibility of their respective power projects.
This is the reason why the FIT measure is among the most awaited mechanism under the Renewable Energy Law because it will determine the economic and financial viability of the projects.
Under the FIT system, renewable energy developers are assured of future cash flows, as electricity end-users will be charged fixed amounts to cover production of energy from renewable sources. With this in place, utilities can spread the cost of clean power among its customers.
The system is also expected to encourage investors to go into renewable energy development and production as it ensures stable pricing.
Juan clarified, however, that while the FIT rates could be approved, project proponents would have to wait for the ERC’s go signal before the rates can be implemented.
The main purpose of granting FIT rate approvals is to assure investors of adequate returns for their projects, he added.
The FIT mechanism, along with other incentives and schemes provided for under the Renewable Energy Law, should have been put in place last year but was delayed due to a number of factors, most notable of which was the change in the administration.
This meant that the National Renewable Energy Board, the recommendatory body for such incentives, had to be reconstituted.
The NREB, according to Juan, is expected to submit its recommendations by March this year. Under the newly formulated 2011 Renewable Energy Plan, however, the NREB is given a bigger leeway until the second quarter this year to submit its proposals.
Juan earlier assured power consumers that the ERC has put in place the necessary mechanisms to cushion the possible increases in electricity prices, once the FIT rates are implemented.
“The accomplishment of (the country’s) renewable energy objectives will definitely cost the government and consumers. Given the current state of development of most of these renewable energy technologies, it may not come cheap. The challenge, therefore, is to keep the costs at a level that is affordable, if not acceptable,” Juan explained.
The FIT design adopted by the ERC addresses the cost and pricing barrier to developing renewable energy without being too costly for consumers, said Juan.
“First is that (the FIT) mandates the equal burden sharing of all on-grid electricity consumers, regardless of the grid or area where they may be connected to. The result is that everyone pays the same extra cost in support of the (country’s) objectives and with everyone paying it, additional imposition is kept at a minimum,” Juan said.
No comments:
Post a Comment