Biomass association worried ERC changing the rules in FiT review

By Victor V. Saulon – December 19, 2019 | 10:37
from Business Mirror


BIOMASS power plant developers have turned to the National Renewable Energy Board (NREB) for support in view of the move from the Energy Regulatory Commission (ERC) to review the feed-in tariff (FiT) rate for energy produced by biomass facilities.

“ERC is reviewing the adjustments,” said Don Mario Y. Dia, president of the Biomass Renewable Energy Alliance, Inc. (BREA), in a briefing with reporters Thursday.

He said the changes being reviewed by the regulator include the existing rates and the feed-in tariff for biomass, or the guaranteed rate awarded to renewable energy developers that managed to finish their projects in a race that ended in 2017, but was extended until end-2019.

“When we had a forum at the ERC, the review that they’re trying to do is bringing down the rates when in fact dapat pataas siya dahil magdadagdag ka ng (it should increase because you have to add) CPI (consumer price index) (and) foreign exchange risk,” he said.

Biomass energy projects use agricultural waste to produce energy. The DoE has also classified waste-to-energy projects under biomass development, thus widening the sector’s scope.

Biomass development is among renewable energy technologies for which the DoE had set an installation target in a race to complete a project and qualify under the feed-in tariff program, an incentive scheme that grants priority connections to the grid, priority purchase and transmission of, and payment for, electricity generated.

Under the rules, eligible RE developers are guaranteed a rate for 20 years for each kilowatt they produce. For biomass developers, the rate was set at P6.63 per kilowatt-hour (kWh). The rate was degressed to P6.5969 per kWh for 2017, when the scheme was supposed to end.

But on Feb. 23, 2018, the Department of Energy endorsed to the ERC the extension of the biomass installation target for two years — from Dec. 31, 2017 until Dec. 31, 2019 — or upon successful commissioning of projects covering the unsubscribed balance of their respective 250-megawatt (MW) installation targets, whichever comes first.

At that time, up 170.33 MW had been taken up and considered FiT-eligible by the DoE, leaving developers in a race to complete their projects ahead of the others before the end-2019 deadline.

For 2018 and 2019, the degressed rates for biomass are P6.5639 per kWh and P6.5310 per kWh, respectively.

Mr. Dia said the ERC wants the rates to be further reduced, aside from the required degression under the rules.

Asked by how much the reduction will be, he said: “We don’t know… They’re-interpreting the rules.”

He said he had written NREB seeking its support in view of the ERC’s plan.

In his letter, he said in the context of the FiT for which the Renewable Energy Act of 2008 mandates a minimum of 12 years and an actual term of 20 years, the nominal equity return calculated by the FiT model adopted by ERC “is subject to inflation that will serve to diminish the actual/real return.”

He said NREB has not yet responded to the letter dated Dec. 16.

“But we’re continually discussing, talking to (NREB) Chairman Mona (Monalisa C. Dimalanta), she’s very receptive, maski siya nagulat din (even she was surprised),” he said.