DOE tapping World Bank help on globally accepted tariff for renewable energy projects

MANILA, Philippines - The Department of Energy (DOE) is tapping the help of the World Bank to come up with a globally accepted feed-in tariff (FIT) and renewable portfolio standard (RPS) for renewable energy projects.

This, as Energy Secretary Jose Rene Almendras admitted that the government is still figuring out the right path towards these two new policy directions.

“The DOE is still trying to understand what the best way is for the RPS and FIT,” he said.

Almendras said they have been seeking support from all sectors, including non-government organizations (NGOs) and multilateral creditors like the World Bank, to be able to draw up the best FIT and RPS for the renewable energy sector.

“Fortunately for us, the Renewable Coalition has invited a very powerful resource person from the World Bank who has had experience on both implementation. I think we should invite her to sit with the National Renewable Energy Board (NREB) and Technical Working Group (TWG). The idea is to really try to find the best possible way to encourage the investment into RE that’s needed without overdoing it by punishing the consumers. There’s a good economic balance that’s being looked for,” he said.

The energy chief said while there are challenges along the way in formulating these two important policies for renewable energy development, the DOE has been very careful in adopting new rules for RE development.

“The NREB reconstitution took a while, we did many extra steps to consult stakeholders rather than just take it upon government to decide on who is the most fit for the board. We went through a real consultation process with the groups that were supposed to be represented. There were a lot of contentious discussions. But that’s perfectly alright, because I’d rather have those discussions than make rush decisions in certain ways,” he said.

Following the signing of the Renewable Energy Act of 2008, NREB was created with the purpose of setting the minimum percentage of generation from eligible renewable energy resources and determining which sector the RPS shall be imposed on a per grid basis.

Existing and prospective investors into RE are awaiting the proposals of NREB on the FIT and other standards to be able to determine the extent of their business plans in RE development in the Philippines.

Under the RE law, RPS would require electricity suppliers to source a certain amount of their energy supply from renewable resources such as wind, solar, hydro, ocean, geothermal and biomass.

FIT, meanwhile, offers guaranteed payments over a definite period of time to RE developers.

The two were designed to promote the development of renewable energy sources in the country, which were previously hampered by limited markets and high costs.

But with the threat of a deteriorating global environment looming over the country, government earlier set a long-term goal of sourcing majority of the country’s electricity from renewable energy sources in lieu of fossil fuel-based power sources.

“The objective was to find the most appropriate representation for each of the groups that have a stake in the NREB. Even within the NREB, under the NREB, we created subgroups of technologies to make sure each technology is heard. We’re very happy at the dynamism and the discussions that’s going on with each of these groups even if government is not there. These are mainly private sector who are operating within the subgroups within the NREB,” he said.

According to Almendras, coming up with the right FIT and RPS is a challenge for the whole industry, not only to the DOE.

“We’re also very hopeful to speed up the process is a bit challenging, because of the legal requirements. And our need to interact with agencies other than DOE, we need to acknowledge that there are delays on that side. We will push as much as we can. We will try our very best to meet those deadlines as best as we can. Those targets are very reasonable,” he said.