DOE, NREB crafting new RE portfolio in 10 years

By Lenie Lectura – July 2, 2019
from Business Mirror

IN a bid to spur the development and use of renewable energy (RE) in the country, the Department of Energy (DOE) and the National Renewable Energy Board (NREB) are crafting a new program that seeks to build an RE portfolio of 2,000 megawatts (MW) in 10 years.

“We want to build 2,000 MW of RE in 10 years. DOE has already asked NREB to review the concept of giving an allocation to RE.  DOE will make a green energy tariff rate that will be auctioned among them. We will put a ceiling and then they will compete on the rates. The lowest rates will win. It’s not per technology, but rather per type of technology, if peaking or mid-merit,” explained Energy Secretary Alfonso G. Cusi.

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

Cusi said the NREB will further study this and is expected to submit a report. “We will finalize the policy after NREB has submitted its recommendation. Ang gagawin lang ng DOE is to allocate 2,000 MW in order to develop the RE industry.”

The proposed RE capacity auction veers away from the feed-in-tariff (FiT) program, a system that provides guaranteed payments in the form of power rates given to RE developers for 20 years.

“We are coming up with a green energy rate. This rate will be the present avoided cost of generation. How much is that, don’t ask me…It shouldn’t be expensive than what we are paying right now,” said Cusi.

The FiT era is over and Cusi has openly expressed this in the past. “It is now a question of how we can foster a RE industry that is competitive and affordable,” he said.

FiT is basically an incentive in the form of fixed rate per kilowatt hour (kWh) for emerging power sources, such as solar, wind, biomass and hydro. It was meant to encourage RE developers to invest at the initial stage and hasten deployment of RE.

The FiT rates are P9.68 per kWh and P8.69 per kWh under the FiT-Solar 1 and 2; P8.53 per kWh and P7.4 per kWh under the FiT-Wind 1 and 2; P6.63 per kWh for biomass; and P5.9 per kWh for ROR (run-of-river) hydro.

The ERC earlier issued a degressed FiT rate of P5.8705 per kWh  and P6.5969 per kWh for hydro and biomass plants, respectively.

The assumption was that the dispatch of RE would result in lower costs for consumers. The irony, however, is that consumers are the ones who shoulder the FiT rate via a uniform charge per kWh.  At present, 22 centavos per kWh is being collected from consumers. However, the power generated from these technologies, particularly solar, now cost as low as P3 per kWh compared to the FiT rate of over P9 per kWh that was first offered in 2012. The P3/kw tariff is more than three times lower than the FiT rate that was considered under the past administrations. The agency wants to avoid providing subsidy when its thrust is to bring down electricity rates.