Renewable energy (RE) stakeholders said the Department of Energy’s (DOE) decision to terminate contracts of non-compliant RE projects will free up limited grid access to legitimate players.
But Theresa Cruz-Capellan, Sun Asia Energy chief executive officer, said some entities must be held accountable if the cause of delay or failure of the project is beyond the proponent’s control.
Sun Asia in engaged in the development of floating solar projects.
At least 105 RE projects, most of which were awarded in 2017 and 2019, face possible termination due to non-compliance with project timelines.
“I agree (with the move of) the DOE to review and clean out non-performing contracts. This will free up grid access and allow serious developers to implement projects. But, there has to be some parameters on the performance review particularly the delays or lack of action on the part of government agencies that prevent contracts from progressing. Accountability has to be clearly established,” Capellan said.
Meanwhile, Jose Layug Jr., president of Developers of Renewable Energy for AdvanceMent Inc., said private sector appreciates DOE’s decision but said government must have a definite criteria for termination.
Layug, who leads an umbrella organization of all RE associations in the Philippines, said the DOE should terminate only those contracts that are underperforming in pre-development and permit acquisition, as well as those that show no activity at all.
He said other issues to consider are insufficient transmission capacity on targeted commercial operations date as well as acts of force majeure. In these cases, their RE contract terms can be adjusted instead of terminated.
Layug said the government must “treat service contracts as primarily a platform to study the feasibility/availability of the particular RE resource and therefore assist the private investors in their efforts to build the RE plant.”
For Emmanuel Rubio, Meralco PowerGen Corp. president and chief executive officer, the DOE’s move is a welcome development but said the next step should be to determine the replacement of the “void” created by the terminations.
“…if (proponents) don’t deliver on these projects, these are capacities that are needed by the grid. Now that they have been terminated, the next move for DOE is to revisit how they’re going to fill this up, this void,” Rubio said.
Rubio said the DOE may also revisit pricing for its RE incentives to further attract needed investments.
Most of the RE contracts facing termination have cited failure to secure possessory rights or system impact studies (SIS) as the reason for project delay.
SIS determine the effects of a proposed power project to customer connections in a grid and ascertain if adjustments in the system are needed such as additional transmission lines, transformers or substations.
Of the 105 RE project contracts lined up for termination, 88 are either delayed in their pre-development timeline or not progressing at all. Of the 88, 53 are solar, 17 are hydropower, 10 are wind, five are geothermal and three are biomass.
