ERC raises ceiling price for offshore wind auction

MANILA, Philippines — The Energy Regulatory Commission (ERC) has raised the ceiling price for the country’s first offshore wind auction to P11 per kiloWatt-hour, higher than the initially floated P10.3859 per kWh.

The higher cap gives developers participating in the government’s fifth green energy auction round (GEA-5) greater pricing flexibility, potentially boosting project bankability and attracting stronger investor interest.

On the flip side, this could result in higher electricity costs for consumers, who bear much of the burden of the Philippines’ energy transition push.

Over the weekend, the ERC said the revision from the preliminary rate was primarily due to the updated capacity factor and the added costs of port rental, fishery compensation and land acquisition or rental.

Ports are vital for offshore wind development, as they serve as logistical and operational hubs for construction, assembly and maintenance.

The regulator also factored in inflation and foreign exchange assumptions while trimming certain components, including the cost of equity and decommissioning.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said approving a higher price cap makes GEA-5 “more attractive” for new renewable energy investments.

“But this would mean some increase in electricity prices for consumers,” he added.

For GEA-5, the Department of Energy targets 3,300 megawatts of capacity for delivery from 2028 to 2030 in a bid to generate the first kWh of offshore wind power before President Marcos ends his term.

Winning bidders will deliver power supply for 20 years, with green energy tariff (GET) payments beginning upon project commissioning and registration with the electricity spot market.

GET, or the price a winning project gets based on its auction bid, is passed on to consumers through the GEA-Allowance, an additional charge on their electricity bills.