Gov’t to bid out off-grids, unserved areas to third party investors

By Myrna M. Velasco – December 22, 2018, 10:00 PM
from Manila Bulletin

The government, through the Department of Energy and its attached agencies, will bid out several off-grids and unserved areas next year that it can open to qualifying third party (QTP) investors.

Fuentebella

Felix William B. Fuentebella

“We will bid out many unserved and underserved areas,” Energy Undersecretary Felix William Fuentebella said. Many of these unelectrified jurisdictions, he said, are at off-grids or island-provinces.

In the forthcoming auction of these areas to willing third party investors, however, the energy official qualified that they will no longer be entitled to subsidies or the universal charge for missionary electrification (UCME) incentive that is collected from all ratepayers.

Fuentebella emphasized that one intent on investor-enticements in these areas will be deployment of more innovative and cleaner energy technologies – including installation of hybrid solutions leaning on renewable energy (RE) sources.

Based on previous studies carried out, shifting to hybrid technologies at off-grid areas alone will save billions worth of subsidies, which in turn, could redound as cost savings to consumers.

For instance, in the Small Power Utilities Group (SPUG) domain of state-run National Power Corporation, about P2.5 billion worth of cost savings had been penciled in by the European Union (EU) – if hybrid deployments could be instituted, even if it is just in five major islands of the country alone.

That was part of the major findings of a study undertaken by the EU-funded Access to Sustainable Energy Program (EU-ASEP), which has also been piloting hybridization solution in a number of key islands in the Philippines.

“Hybridization, in combination with properly maintained generator-sets (gensets) will enable NPC to save around P2.25 billion annually,” the energy department has noted previously.

Via the ASEP undertaking, the EU has allocated a grant of more than P3.0 billion, primarily “to assist the Philippine government in meeting the rural electrification targets through renewable energy and energy efficiency.”

Dr. Christoph Menke, the strategic advisor of the EU-ASEP, indicated their study “shows that there will be an estimated P1.00/kWh cost reduction if NPC adopts a solar hybridization of its large-scale power plants.”

And in the mini-grid areas served by the state-run power firm, the optimal utilization of diesel gensets could yield savings of as much as P2.25 billion, or an equivalent of P4.50 per kWh.

Menke opined that the cost reduction “will help bring down the electricity bills of consumers.”

He explained that a hybrid mini-grid “combines at least two different kinds of technologies for power generation and distributes the electricity to several consumers through an independent grid.” This could come in the form of a mixed renewable energy resource to that of traditional power plant technology such as diesel gensets.

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