DOE to issue circular on FIT perks termination

By Myrna M. Velasco – December 11, 2017, 10:00 PM
from Manila Bulletin

Energy Secretary Alfonso G. Cusi will be issuing a Circular before yearend to officially terminate the feed-in-tariff (FIT) incentive for any new set of renewable energy (RE) installations.

He emphasized this to the media after re-stating his unyielding stance that the subsidy phase leaning on FIT as subsidy to RE installations is now a ‘dead proposition.’

“The FIT era is over. It is now a question of how we can foster a RE industry that is competitive and affordable, as an alternative to conventional energy,” he declared last week in an energy forum.

Nevertheless, the level of FIT incentives for ongoing hydro and biomass projects would be something that the department has yet to review. But for any new installations even on these technologies, as well as ocean thermal energy conversion (OTEC) ventures, FIT will no longer be there to underpin their developments.

The Circular, he said, will also serve as guide to banks and other lending institutions when it comes to financing recourse on RE projects.

“For the banking community because there might be some new RE projects asking for FIT, I just want to be very clear that FIT will no longer be there,” the energy chief stressed.

He emphasized that project developers can already take more strategic and prudent investment approaches, as “the technology is available and the markets are awash with green’ financing.”

Cusi added that power project developments, primarily new entrants, must strive for tariff proposition at least within the spot market-competitive rates of R3.00 per kilowatt hour, the same cost level that has been ushering tough competition in the retail segment of the restructured electricity sector.

He assailed that in the FIT regime, subsidy levels came on almost three times than actual market rates, with the highest subsidy level at R9.68 per kilowatt hour (kWh) for solar in the first wave of installations.

Cusi vented that “renewable energy needs to be a commercially viable option that is able to stand on its two feet without the crutches of subsidies as well as being an affordable solution for consumers.”

The DOE chief sounded off that he expects sustained capital flow for RE investments, but these must already be underpinned by alternative incentive schemes such as the Renewable Portfolio Standards (RPS) and Green Energy Option (GEOP), being the next set of policy enforcements in the sector.

“To continue the growth of the renewable energy sector, the DOE is laying down sound policies, including the implementation of RPS and GEOP,” he reiterated.

These two policy paradigms, however, would only turn ‘operationally viable’ upon the setting up of the propounded Renewable Energy (RE) Market, to which policy framers assessed to just be on line by year 2019.