The Energy Regulatory Commission (ERC) said the planned incentivized rates under the proposed Green Energy Pricing Program (GEPP) need to be updated to reflect the price drop brought about by new technologies in renewable energy (RE).
Under the GEPP announced by Department of Energy (DOE) last year, a special rate for 2,000 megawatts (MW) worth of new renewable energy projects will be introduced to entice more RE investors to put up additional capacities.
Sharon Montañer, ERC’s chief energy regulation officer of the renewable energy division, said DOE wants GEPP incentive rates to be capped based on the degressed feed-in-tariff (FIT) rates as of 2012, rates deemed to be high.
Degressed FIT rates are the lowered premiums being implemented for qualified RE sources under FIT. At present, only run-of-river hydro and biomass power plants have degressed FIT rates as the initial quota of incentivized capacities for the technologies were not hit for the first two years of FIT’s implementation.
Montañer said only selected RE technologies have degressed FIT rates while others do not have any FIT rate at all.
“We will have to do our own study first before we can (say anything) about the applicable rates (for GEPP). The DOE also wants such rates to be pre-approved and we do not want it that much. This is just a draft from the DOE so we will submit first our position paper,” Montañer added.
Degressed FIT rates of run-of-river hydro plants are at P5.8705 per kwh while biomass power plants’ reduced premium are at P6.5969 per kwh.
However, solar and wind power plants do not have degressed FIT rates while geothermal and large hydro power plants do not have any FIT rates at all.
DOE Secretary Alfonso Cusi earlier said preferential rates under GEPP will be auctioned off to power plants based on their ability to run power, either as peaking or mid-merit capacity.
Plants considered peaking are those which can run without a long startup period but can only generate power for a short time while mid-merit power plants are those that can adjust output as demand for electricity fluctuates throughout the day.
A ceiling rate will be implemented but players will have to compete and offer the lowest rate in order to secure the incentive. Developers will also not be given a deadline to fill up the entire allocated capacity.
Only 2,000 MW were allocated so as not to affect stability of available supply in the country especially that most RE plants are using intermittent fuel sources.
According to data from the DOE, as of end-2018, RE power plants comprised of resources utilizing geothermal, hydro, biomass, solar and wind, contributed 7,227 MW of installed capacity or 30.3 percent of the entire power mix.
