Hydropower developers seeking higher FIT rates

MANILA, Philippines — Hydropower developers are pressing the government to implement higher feed-in tariff (FIT) rates for run-of-river (ROR) projects to attract fresh capital and fully unlock the technology’s untapped potential.

Philhydro Association Inc. president Gertrude Roque told reporters yesterday that the Energy Regulatory Commission’s proposed rates for ROR hydro under the FIT program’s fourth round (FIT4) were around P6.30 per kilowatt-hour (kWh).

But Roque was quick to point out that investors need a more “reasonable” and realistic rate, one that reflects the true cost of developing and operating ROR hydro projects.

“The reality is that we’re not just producing power, but we are also taking care of the watershed and the infrastructure that we contribute to the countryside,” Roque said on the sidelines of the 2025 Philippine Hydro Summit and Exhibition.

Launched in 2008, the FIT program offers guaranteed fixed payments to renewable energy developers, ensuring long-term revenue certainty for projects completed before designated capacity quotas are reached.

At present, FIT rates for ROR hydro range from P5.90 to P5.99 per kWh depending on the project’s completion date.

For FIT4, the Department of Energy (DOE) intends to allocate an additional 100 megawatts of capacity for ROR hydro alongside a balance of 13.711 MW from a previous allocation.

In determining the final rate for FIT4, Philhydro has proposed the use of the actual average capacity factor in the computation. This means the pricing should reflect the plant’s actual electricity output over a specific period rather than relying on estimated production.

The group has also urged the government to include a contingency cost in the pricing to shield hydro projects from “constant exposure to weather cycles, climate change and natural disaster.”

As of October, the DOE had awarded 404 hydropower service contracts with a total potential capacity of more than 14,500 MW.

“Hydropower is more than just a part of our energy mix; it is a national imperative that underpins a successful energy transition,” Energy Secretary Sharon Garin said in a speech delivered by DOE director Ruby de Guzman.

Garin also reaffirmed the DOE’s commitment to strengthening policy certainty to accelerate hydropower development and encourage more investments in the sector.