DOE Modifies FIT Availment Rules

Manila Bulletin

By Myrna M. Velasco

February 12, 2013, 5:01pm

The Department of Energy (DOE) is technically modifying the rules for the availment of feed-in-tariffs (FIT) by renewable energy (RE) developers, with it giving default advantage to projects which will be ahead in reaching commercial operations.

Energy Secretary Carlos Jericho L. Petilla noted that the department will no longer award the installations prior to the construction of the plants.

Instead, the “first-to-reach finish line projects” will corner the FIT incentives up to the quota set per technology in the installations targets. That will be 200 megawatts for wind; 50MW for solar; 250MW for hydro and 250MW for biomass.

“That’s our way to get rid of the flippers… if you are serious, then show it to us that you can construct your project without guaranteed FIT,” Petilla stressed.

The real race on FIT availments, he said, will start when the project is already completed and the capacity is ready for synchronization into the grid. This, in effect, tosses development risk to the project proponents.

In the case of wind and solar which have “oversubscriptions”, he noted that the department would be willing to award the FIT incentive to a “single developer” for each technology.

For example, if the developer of a wind project has 200-megawatt capacity and will be certified as the first to reach commercial operation, it will be guaranteed to corner all of the FIT incentives for that technology, leaving no room anymore for the others even if they would finish second or third in the implementation phases. The same applies to a prospective solar developer.

“If you construct and reach commercial operation, the DOE will validate your capacity. If it can certify that you have 200MW, then you get the FIT,” he explained.

For the other developers, Petilla noted that “they can still construct, but once the quota is filled up, they have to take their own market risk or find their own capacity buyer.”

It remains to be seen if the adamant stance of the DOE into guaranteeing FIT availments pre-construction will sit well with the lenders; or if this policy will spell disaster for the government’s RE development path.   source