The development of local renewable energy (RE) projects is expected to further improve as the Energy Regulatory Commission (ERC) set the Green Energy Auction reserve (GEAR) prices for solar, wind, biomass and run-of-river hydro technologies.
The reserve prices will be the ceiling price for the first round of the Green Energy Auction program (GEAP) to be conducted by the Department of Energy (DOE) in which interested RE producers will compete for incentivized fixed power rates by offering their lowest price for a certain capacity.
ERC decided that GEAR prices for the first round of auction under the GEAP are P3.6779 per kilowatt hour (kWh) for solar, P6.0584 per kWh for wind, P5.0797 per kWh for biomass and P5.4913 per kWh for run-of-river hydro.
Prior to this, ERC’s preliminary ceiling rates as of March were P3.6248 per kWh for solar, P5.2887 per kWh for wind, P5.5480 per kWh for biomass and P5.8705 per kWh for run-of-river hydro.
“We have set the GEAR prices for each type of technology consistent with the notice of auction of the DOE setting the auction capacities on a per technology basis and using the discounted cash flow model with 46 parameters and assumptions for each technology,” Agnes Devanadera, ERC chairperson, said in a statement.
According to the ERC, the approved GEAR prices considered stakeholders’ comments, inputs and concerns before and after the public consultation held last month.
It added that the financial model used does not allow any escalation or adjustment due to changes in foreign exchange and inflation, thus prices are fixed during the whole life of the projects.
The regulatory body said the GEAR prices set are lower or within the range of recent power supply agreements for newly constructed plants or plants that are ongoing construction, taking into consideration approved rates and the escalation or adjustment provisions.
“In the determination of a representative project and the computation of the GEAR prices, the Commission was guided by the principle of efficiency and international benchmarks to ensure that only the cost of efficient plants will be passed on to consumers,” Devanadera said.
The ERC, in accordance with the Electric Power Industry Reform Act, allows the recovery of prudent and reasonable economic costs incurred, consistent with the declared policy to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability, in order to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market.
As of end-2021, the country’s total installed on-grid capacity of RE was at 7,913 megawatts (MW) equivalent to 29.5 percent of the mix, while total installed off-grid capacity stood at 51.89 MW or 8.2 percent of the mix. – Jed Macapagal
