Philippines eyes establishment of first renewable energy market

MANILA, Philippines - The Philippines will establish the first Renewable Energy (RE) market to provide the venue for the issuance, trading and monitoring of licenses to comply with the Renewable Portfolio Standard (RPS).

The RPS refers to a market-based policy that requires electricity suppliers to source an agreed portion of their energy supply from eligible RE sources.

The purpose of the RPS is to contribute to the growth of the RE industry by diversifying energy supply and help address environmental concerns by reducing greenhouse gas emissions. This will be imposed on all electric power industry participants, serving on grid areas, on a per grid basis upon determination by the National Renewable Energy Board (NREB).

The Department of Energy (DOE) has issued a circular creating a steering committee on the establishment of the RE market. The committee is tasked to formulate and establish the framework that will govern the operation of the RE market.

To complement the DOE’s effort, the Philippine Electricity Market Corp. (PEMC), the operator of the wholesale electricity spot market or WESM, also formed a group to coordinate with the DOE steering committee.

Currently, the DOE is actively coordinating with PEMC and the National Grid Corporation of the Philippines (NGCP) in the determination of the maximum penetration limit and procedures for the qualification and registration of eligible RE facilities with intermittent RE resources.

Several discussions had been undertaken already by DOE and PEMC on the regulatory framework of the RE market, including the study of different RE market, models and trading of RE certificates.

Under the proposed RPS rules, there would be priority connections to the grid for electricity generated from emerging RE resources such as wind, solar, ocean, run-of-river hydropower and biomass power plants within the Philippines.

There would also be the priority purchase and transmission of, and payment for, such electricity by the grid system operators.

The RPS rules should determine the fixed tariff to be paid to electricity produced from each type of emerging renewable energy and the mandated number of years for the application of these rates, which shall not be less than 12 years.

Under the draft rules, the annual minimum incremental percentage of electricity sold by each mandated electric power industry participant which is required to be sourced from eligible RE resources and which shall, in no case, be less than one percent of the supplier’s annual energy demand over the next 10 years.

The rules should also see to the application of the feed-in tariff (FIT) to the emerging RE resources to be used in compliance with the RPS. Only electricity generated from the wind, solar, ocean, run-of-river hydropower and biomass power plants covered under RPS shall enjoy FIT.

Other rules and mechanisms that are deemed appropriate and necessary by the Energy Regulatory Commission (ERC), in consultation with the NREB, for the full implementation of the FIT system.