DOE, NREB told to conduct deeper study on green energy tariff program

By Lenie Lectura - July 5, 2019

https://businessmirror.com.ph/2019/07/05/doe-nreb-told-to-conduct-deeper-study-on-green-energy-tariff-program/

Sen. Sherwin T. Gatchalian on Thursday urged the National Renewable Energy Board (NREB) and the Department of Energy (DOE) to conduct more studies on the planned green energy tariff program.

“The DOE and NREB must conduct a careful study on the program, especially when it comes to the implementation of the green energy tariff rate, taking into consideration the declining costs of RE [renewable energy] technologies,” the senator said.

He added: “Will this new tariff require subsidy and, if so, how much will the rate effect on consumers be? These are some of the things that the DOE need to thoroughly study before they push through with the plan.”

Further studies, he added, would ensure success and prevent any unnecessary pass-on charges to consumers.

Energy Secretary Alfonso Cusi said earlier that his office and NREB are crafting a new program that seeks to build an RE portfolio of 2,000 megawatts (MW) in 10 years.

“We want to build 2,000 MW of RE in 10 years. DOE has already asked NREB to review the concept of giving an allocation to RE. DOE will make a green energy tariff rate that will be auctioned among them. We will put a ceiling and then compete sila sa rates pababaan [on who could come up with the lowest rates]. It’s not per technology, but rather per type of power if peaking or mid-merit,” explained Cusi.

NREB is the advisory body tasked by the law to recommend policies, rules and standards to govern the implementation of the law, which granted fiscal and nonfiscal incentives to RE projects.

Growing the RE sector is a crucial factor for the Philippines to achieve energy security by 2040. Gatchalian said the DOE and NREB collaboration is a welcome development, “putting [DOE] on track of its energy direction.”

The senator recalled that during the last committee hearing on energy security, the DOE painted a grim picture that the share of renewables in the country’s energy mix is projected to drop to 17 percent in 2040, from 36 percent in 2017, under its business-as-usual scenario.

“Hopefully, through the new DOE and NREB proposal to build an RE portfolio of 2,000 MW by offering a green energy tariff, we will be able to grow the share of renewables in our energy mix,” said Gatchalian.

The proposed RE capacity auction veers away from the feed-in-tariff (FiT) program, a system that provides guaranteed payments in the form of power rates given to RE developers for 20 years.

FiT is basically an incentive in the form of fixed rate per kilowatt- hour (kWh) for emerging power sources such as solar, wind, biomass and hydro. It was meant to encourage RE developers to invest at the initial stage and hasten deployment of RE.

However, the consumers are the ones who shoulder the FiT rate via a uniform charge per kWh.  At present, 22 centavos per kWh is being collected from consumers.