Consumers save nearly P100 billion from RE switch – think tank

Over a two-year period

MANILA, Philippines —  Renewable energy projects backed by the feed-in tariff (FIT) mechanism have delivered close to P100 billion in electricity cost savings in just two years, according to a think tank.

In an analysis released yesterday, the Institute for Climate and Sustainable Cities (ICSC) said FIT-eligible projects brought down power costs by P0.3916 per kilowatt-hour (kWh) in 2024 and 2025.

The savings exceeded the recently increased FIT allowance (FIT-All) of P0.3359 per kWh approved by the Energy Regulatory Commission starting this month.

At the spot market, the ICSC said the P99.2 billion saved over two years is already nearly half of the P220.5 billion consumers have paid through FIT-All since collections began in 2015.

Total market savings, the think tank noted, could have been considerably higher if the impact of FIT-backed projects had been tracked cumulatively since 2015.

FIT-All is a uniform charge imposed on all on-grid electricity consumers to fund payments to qualified RE plants such as solar, wind and small hydro facilities. All FIT-eligible projects are entitled to the incentive for up to 20 years.

“The sharp decline in renewable energy costs over the past decade shows that sustained policy support, when paired with competition, can turn emerging technologies into affordable and competitive sources of electricity,” ICSC senior policy adviser Pedro Maniego said.

To estimate the FIT mechanism’s net economic benefit, the ICSC compared spot market savings attributable to FIT-supported projects with the payments they received under the scheme.

The per-kWh savings, meanwhile, were calculated by dividing the net market savings by overall electricity consumption.

In 2014, solar projects supported under the FIT scheme were priced at around P9.68 per kWh. Twelve years later, new solar projects are being contracted at just P3 to P4 per kWh, ICSC data showed.

“The priority now is to build on these gains by expanding renewable energy so more consumers can benefit from lower-cost electricity and reduced exposure to fuel price volatility,” Maniego said.

Beyond the FIT scheme, the ICSC said the government’s green energy auction (GEA) rounds have also helped drive competition and bring down power prices.

Winning GEA projects receive guaranteed payments for the electricity they generate through GEA-All, another charge collected from consumers through their power bills.

For now, however, consumers are only being charged FIT-All, as the collection of GEA-All has been suspended for the rest of the year.

“Ultimately, FIT-All and GEA-All should be assessed based on their net value to consumers: whether they contribute to a more affordable and reliable electricity system over time,” the think tank said.