Cap on solar projects to drive away investors

by Lenie Lectura, 19 July 2015
from BusinessMirror

THE Philippine Solar Power Alliance (PSPA) is opposed to the proposal raised by the National Renewable Energy Board (NREB) to put a cap on the capacity of solar projects, saying this will only discourage investors.

“I have never seen any installation target in the whole world that caps a per-project size. We will have to find the commercial basis for such, because sometimes your environment does not allow you to recover your cost at 50 megawatts [MW] because you have to understand that solar is resource based. So, if the resources are like, for example, the terrain, you have to cover more, as much as possible, to generate, and putting a cap per project is not really something that one should think about,” said Tetchi Cruz-Capellan, PSPA founder.

Last week NREB Chairman Pedro Maniego proposed a cap of 50 MW for every solar project and 100 MW for every wind project so the feed-in tariff scheme could accommodate as many projects as it can.

At present, there is no limit as to how big or small any of the renewable-energy (RE) projects should be. It is the sole discretion of the RE developers to develop as many RE projects as they can with no cap on capacity.

Aside from wind and solar, RE also includes biomass, geothermal, ocean and hydro. Maniego said though that the cap proposal is only for solar and wind-power projects.

“We want to spread the projects over a wide number and to also increase the people who can pursue the technology later on,” Maniego said.

There is a 500-MW allocation cap for all solar projects and 400 MW for all wind-power projects. “There is an existing allocation of 500 MW in solar. Now, if you put a 50-MW cap on per solar project then there will be 10 solar projects. This is what other countries are doing. They don’t want to limit the participants to a small number,” Maniego said.

The NREB is the body tasked by the Renewable Energy Act of 2008 to recommend policies, rules and standards to govern the implementation of the law, which granted fiscal and nonfiscal incentives to RE projects.

But Capellan said a more effective way to encourage investors is to increase the target installation of RE projects, particularly for solar, to 2 MW.

“The way to spread is to increase the targe. Now, putting a cap, I think, doesn’t have a basis because it kills the investment climate. So I think what you really need to promote is a climate conducive to investment,” Capellan said.

Maniego said the 15-man board would still deliberate on this. “This is still subject to discussion. Once we have decided on this and approved by the board then we will submit it to the DOE [Department of Energy]. The NREB is just a recommendatory body.”