FIT rates for new solar projects trimmed

by Riza T. Olchondra, 04 May 2015
from Philippine Daily Inquirer

REGULATORS have set lower incentives for the next batch of power projects that will qualify for the expanded solar power installation capacity under the Feed-in-Tariff (FIT) scheme.

Outgoing Energy Secretary Carlos Jericho L. Petilla said in an interview that 70 megawatts qualified for the original solar FIT rate of P9.68 per kilowatt-hour. A lower rate of P8.69 per kWh will apply to the next 71MW to 500MW.

“The original FIT capacity for solar was filled up but it’s not possible to chop up the capacity of the last project to get in so there is actually 70MW covered by the first solar rate,” Petilla said. “Since we expanded the capacity to 500MW, the rest, or 71MW to 500MW, will be covered by the new FIT rate for solar.”

Petilla said that since there is already increased investments in solar power, it only makes sense to lower the incentives offered for this segment of the renewable energy (RE) industry.

In a resolution dated March 27, 2015, the Energy Regulatory Commission (ERC) approved the proposed expansion of FIT solar capacity to 500MW from the original 50MW.

The National Renewable Energy Board (NREB) had proposed a new solar FIT rate of P9.10 per kWh, saying that a few cost assumptions have changed for solar power projects.

Among them are lower overall project cost, expected increase in plant efficiencies due to advances in technology and increased materials supply, lower prevailing interest rates, and a slightly stronger dollar.

However, ERC set a lower rate than the one proposed by NREB, citing its own assumptions based on NREB’s presentations and comparative studies.

To avoid impairing acquired rights under the previous FIT regime for solar, ERC said the new solar FIT rate of P8.69 per kWh shall apply prospectively until the 500MW is all availed of or until March 15, 2016, whichever comes first.

On May 27, 2014, NREB endorsed the DOE certification dated April 30, 2014, revising the installation target for solar energy generation under the FIT system from 50MW to 500MW.

The DOE certification said that such revised installation target shall be valid upon full subscription or until March 15, 2016, whichever comes first.

“To align the same with the DOE’s certification dated April 30, 2014, the new solar FIT shall be valid until March 15, 2016,” the ERC said in its resolution.

FIT is only applicable to the corresponding installation targets: In July 2012, the ERC approved FIT rates for run-of-river hydro (P5.90 per kWh) for an installation target of 250 megawatts, biomass (P6.63/kWh) for 250MW, solar (P9.68/kWh) for 50 MW and wind (P8.53/kWh) for 200MW.

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