FIT’s ‘indivisibility rule’ up for revision

by Myrna Velasco April 19, 2016
http://www.mb.com.ph/fits-indivisibility-rule-up-for-revision/

The two government agencies involved in the award of feed-in-tariff (FIT) incentives for renewable energy (RE) projects have agreed in principle on propounded modifications on the subsidy’s indivisibility rule.

Energy Regulatory Commission chairman Jose Vicente B. Salazar indicated that they already had initial discussions with the Department of Energy on the rule change, because of the cost impact of any addition in capacity installations to the consumers.

ERC Commissioner Alfredo J. Non added that “in other countries, they have consciously promoted RE but they were conscious that the price will be higher. But we are more conscious about the price, so there’s a seeming conflict between RE and then the impact of it on the consumers.”

With that as a predicament, the ERC mulls that part of the balancing act would be to firmly stick with the prescribed installation target so there shall be no surprises in the consumers’ electric bills.

Prevailing rule on indivisibility encourages FIT award beyond the cap, because it tends to absorb the entire capacity of the last plant that will complete the prescribed installation ceiling.

For example, if the last plant to complete the 500MW installation cap in solar is at 100MW; and the remaining capacity to be plugged will just be 10MW, then the FIT-incentivized capacity for that technology could go as high as 190MW.

Energy Secretary Zenaida Y. Monsada has acknowledged proposals of revising the ‘indivisibility rule’, but she emphasized that if there is anything firmed up, it shall be prospective in application.

“Yes, but it will be for future projects. And that has to be announced before we make the rules. We can no longer apply that in the ongoing race, it has to be prospective,” she stressed.

It has been hinted that solar cap following this FIT contracting round may hit as high as 530-540 megawatts, depending on the final projects that shall be granted with certificates of endorsement.

The DOE will issue the FIT-COE which will then be the solar developer’s ticket to formally apply for FIT incentives with the ERC.

The second wave race will add up capacity of roughly 450MW to the FIT-underpinned solar projects. But developments had been brisk that total installations reached about 900 megawatts.