DTI bucks feed-in tariff for renewable energy

MANILA, Philippines -  The Department of Trade and Industry (DTI) said it is not keen on the feed-in tariff (FIT) in renewable energy (RE) as this will make power costs more expensive.

In a press conference late Friday afternoon, Trade Secretary Gregory L. Domingo said he is against the FIT because this will result in the trade-off of higher gas prices for millions of Filipinos.

Domingo said only a few will benefit from the FIT since the industry is only able to produce five percent of the total market requirement. He also questioned the logic behind protecting producers that only have a small capacity and are unable to meet the requirements of the consumers.

“It is hard to give protection to an industry that meets only five percent of the requirement,” Domingo told reporters. “The trade-off will be an increase in the price of gas for millions.”

Domingo said this will further increase the prices of oil which are already high.

Likewise, he said there are significant implications on the competitiveness of doing business in the Philippines if a wrong decision regarding the tariff will be made.

Domingo stressed this does not mean that he is not supportive of renewable energy but pointed out that it is also of equal importance to watch the competitiveness of the Philippines. In the deliberations of the Energy Regulatory Commission (ERC), Domingo said they should consider that the Philippines already have the highest electricity cost in the world. “If it is set at a very high level, we will be more uncompetitive.”

Earlier, National Renewable Energy Board (NREB) chairman Pete H. Maniego Jr. said electricity rates will further go up because the proposed FIT rates for renewable energy technologies, particularly for solar at more than P17 per kilowatt-hour, are higher than what ASEAN neighbors like Thailand and Malaysia have been paying for.

Maniego said the computed FIT rates for renewable energy installations in the Philippines are more expensive than the two neighboring countries, stressing that “the main source of the higher FITs is the cost of money.” Thailand and Malaysia are the first two countries in the region with policies on FIT rates as well as licensing system for RE investments.

The other major factors, Maniego pointed out, are the value-added tax (VAT) on imported equipment and higher feedstock cost for biomass. “Generally, it is the higher cost of doing business in the country,” he added.

The NREB made new revisions on installation targets, giving higher preference to non-intermittent hydro and biomass at 250 megawatts each; while slashing capacity installations for intermittent solar and wind at 100 and 220 MW.This slightly reduced the target to 830 MW from the initially proposed 860 MW.