DOE seeks stakeholders’ comments on proposed green energy pricing rules

By Lenie Lectura - April 1, 2020
https://businessmirror.com.ph/2020/04/01/doe-seeks-stakeholders-comments-on-proposed-green-energy-pricing-rules/

The Department of Energy (DOE) is soliciting comments from industry stakeholders on the proposed rules governing the Green Energy Pricing Program (GEPP), which seeks to promote the utilization of renewable energy (RE) in the country.

In a notice posted on its web site, “the DOE, through the Renewable Energy Management Bureau, solicits comments and inputs on the draft Department Circular entitled, “Promulgating the Rules and Guidelines Governing the Green Energy Auction Program [GEAP] in the Philippines.”

“All interested individuals and RE stakeholders may send comments until 12:00 noon, 03 April 2020,” the agency said.

Under the GEPP, interested RE developers could offer their capacity and allocate the capacity to the distribution utilities (DUs) that are required to purchase RE as mandated by the RPS (Renewable Portfolio Standards).

The DOE will facilitate the procurement of supply from RE projects by the DUs and retail electricity suppliers (RES) through a competitive process for their long-term power supply requirements.

“In order to provide more avenue for compliance by mandated participants in meeting their RPS requirements and bolster the DOE’s efforts in promoting the utilization of indigenous and environment-friendly energy resources to meet the nationally set NREP [National Renewable Energy Program] targets, there is a need to explore and pursue new and supplemental programs to support increased investment in new RE projects,” the draft rules stated.

Under the NREP 2011-2030, the DOE is targeting to triple the existing RE capacity of 5,438 megawatt in 2010 to 15,304 MW by 2030. Beyond 2030, the government wants the target capacity increase to 20,000 MW by 2040.

However, the installed capacity as of end-2018 is lower than the target capacity by 3,608 MW, with the share of RE in the country’s generation supply mix reduced to less than 24 percent.

Given this, the DOE deemed it necessary to come up with a new RE program which, it claimed, veers away from the feed-in-tariff (FiT) program.

FiT is a system that provides guaranteed payments in the form of power rates given to RE developers for 20 years. Consumers are paying for the RE developers’ incentives.

The draft rules basically provide rules governing the green energy tariff and green energy auction.

The green energy tariff would “provide price signals on the commercial value of electricity generated from RE facilities.” This component deals with the tariff and the price cap to be determined by the Energy Regulatory Commission (ERC).

Meanwhile, the green energy auction would facilitate supply contracting by qualified suppliers with eligible customers under a competitive process.

Earlier, Energy Secretary Alfonso G. Cusi proposed a plan to bid out 2,000 MW of RE capacity as part of the proposed GEPP.

Cusi had said the rates “shouldn’t be expensive than what we are paying right now.”

The energy chief was referring to the following FiT rates: P9.68 per kilowatt-hour and P8.69 per kWh under the FiT-Solar 1 and 2; P8.53 per kWh and P7.4 per kWh under the FiT-Wind 1 and 2; P6.63 per kWh for biomass; and P5.9 per kWh for ROR (run-of-river) hydro.

The ERC earlier issued a degressed FiT rate of P5.8705 per kWh and P6.5969 per kWh for hydro and biomass plants, respectively.