Proponents say RE to bring down electricity rates

Published : Thursday, September 15, 2011 00:00 Written by : EUAN PAOLO C. ANONUEVO


PROPONENTS of renewable energy said green power sources would help reduce and not increase electricity rates in the country.


In a media briefing, Aloysius Santos, First Gen Corp. vice president, said projections made by the National Renewable Energy Board’s technical working group showed that RE projects could displace costlier power plants that jack up prices of electricity at the Wholesale Electricity Spot Market.


”This has been seen and verified in other countries like Germany and Denmark where there are spot markets and RE projects. That stresses the importance of getting to RE now,” he said.


In the WESM, power companies offer their excess generating capacity, with the lowest price offers getting priority dispatch. The market price paid to generators is based on the last offer that meets the demand.


Based on the NREB’s simulations using the WESM’s February 2010 billing of around P9.80 per kilowatt-hour, 200 megawatts of generation from RE could have already reduced this amount by P3.00 per kilowatt-hour, which is valued at P1.20 billion based on consumption for the period.


For customers of Manila Electric Co., this would have redounded to a decrease of more than a peso per kilowatt-hour in their bills. The latter sourced 17 percent of the electricity it distributed to customers during the said month from the WESM.


Santos said that such a reduction would offset the tariff incentive for RE projects that consumers would pay for in their electricity bills.


The Renewable Energy Act of 2008 mandates the establishment of a feed-in-tariff for qualified RE projects. The incentive provides guaranteed rates over a period of time for green power developers.


Consumers would have to shoulder a P0.12 per kilowatt-hour increase in power rates should regulators approve the FIT. The WESM’s February 2010 billing was the highest since the market opened in 2006. Prices at the spot market had spiked after a number of power plants shut down amid increased demand spurred by the summer heat.