ERC issues preliminary green energy auction price

MANILA, Philippines — The Energy Regulatory Commission (ERC) has issued a preliminary price cap for the country’s first green energy auction program (GEAP).

ERC is seeking comments for the preliminary green energy auction reserve (GEAR) price it set – P3.6248 per kilowatt-hour for solar, P5.2887 per kwh for wind, P5.548 per kwh for biomass and P5.8705 per kwh for run-of-river hydro.

Interested parties were given until March 30 to submit their comments on the preliminary prices.

The ERC has set a public consultation for the preliminary GEAR prices on April 1.

“All comments, written or oral, received by the Commission shall form part of the records of this rule-making proceeding and shall be considered in the finalization of the resolution,” the ERC said in a notice.

The preliminary prices are lower than the rates under the feed-in tariff (FIT) system, which was scrapped by the Department of Energy (DOE) since it adds burden to consumers and runs against the agency’s goal of bringing down the power rates.

The solar GEAR price of P3.6248 per kwh – which is not subject to any adjustment or escalation – is P5.0652 per kwh lower than the P8.69 per kwh rate second round solar FIT rate.

It is also lower than the solar rates in the recently approved solar power supply agreements, except for the one offered by Solar Philippines Tarlac Corp., which has an approved rate of P2.9999 per kwh but is subject to annual escalation.

The solar GEAR price is comparable with the typical global levelized cost of electricity for solar as reported by the International Renewable Energy Agency and REN21 Renewables Now13 at P2.8075 per kwh.

For wind, the P5.2887 per kwh GEAR price is lower by P2.1113 per kwh than the P7.40 per kwh second round wind FIT rate.

The biomass GEAR price of P5.548 per kwh is P0.642 per kwh lower than the P6.19 per kwh second round biomass FIT rate.

As for run-of-river hydro, the ERC decided to adopt the P5.8705 per kwh rate – the same as the degressed FIT rate for run-of-river hydro – as it recognizes the challenges in developing this kind of power projects.

“Moreover, the Commission finds no significant changes in the cost of project development, including no significant improvement in the conditions and challenges encountered by ROR hydro proponents,” the ERC said.

Despite being extended for the third time, the 250-MW allocation set in the FIT regime has not yet been fully subscribed with 98.887 MW remaining, which is “indicative of a number of issues, including numerous challenges faced by project developers in the development and implementation of ROR hydro projects,” the power regulator said.

The issuance of the final GEAR price will commence the country’s first GEAP.

In January, the DOE started inviting power developers to bid for 2,000 megawatts of renewable energy ot RE capacity.

The agency set an installation target of 1,400 MW in Luzon, broken down into 900 MW of solar, 360 MW of wind, MW of hydropower and 60 MW of biomass.

Around  400 MW RE capacity will be bid out in Visayas, with solar taking up 260 MW, biomass with 120 MW and wind with 20 MW.

In Mindanao, 200 MW of RE capacity will be auctioned off, of which 100 MW is solar, and 50 MW each for hydropower and biomass.

The GEAP was originally slated for a June 2021 launch but was deferred as the DOE revised the auction design due to a reduction in demand because of the COVID-19 pandemic.

The new GEAP design would be like the FIT system, but the rates would be determined through competitive bidding.