Gov’t urged to tap green climate fund for FIT-All subsidy

By Myrna M. Velasco – May 21, 2017, 10:01 PM

from Manila Bulletin

In lieu of continuous pass-on to consumers of the feed-in-tariff allowance (FIT-All) via the electric bills, Senate Committee on Energy Chairman Sherwin T. Gatchalian has recommended that government taps into the “Green Climate Fund” to defray subsidies to renewable energy (RE) projects.

The South Korea-headquartered Green Climate Fund was institutionalized within the parameters set by the United Nations Framework Convention on Climate Change (UNFCCC) – primarily underpinned by the $100-billion funding being mobilized by advanced economies to support climate change mitigation and adaptation initiatives of developing countries.

The fund had already bankrolled and financially backed low-emission and climate-resilient projects and programs – including RE project installations in many least developed countries (LDCs); small island developing states (SIDS); as well as African states.

While there are initiatives from FIT administrator National Transmission Corporation (TransCo) to tap zero-interest loan to plug collection deficiency in the FIT-All charges, Gatchalian opined that such step may just entail delaying the bad news when it comes to eventual cost impact on the consumers’ pockets.

“The intention to cushion the impact of the FIT-All is very noble, however, loans will still be chargeable to all of us through the budget and the GAA (General Appropriations Act),” he said.

His proposal then would be for the government to alternatively explore that the FIT “can possibly be financed through other international fund, such as the Green Climate Fund.”

Post the FIT subsidy regime, the lawmaker is likewise propounding a reverse auction paradigm for the next round of projects – primarily for the more aggressive developments on solar and wind farm installations.

“Many advanced countries have already transitioned to the reverse auction strategy to take into account the massive decrease in the cost of RE technologies,” Gatchalian said.

He expounded that “this can be executed in the Philippines so the consumers will not carry the burden of excessive FIT.”

Categorically, many of the country’s RE project developers are now primed for an auction process – either via the proposed competitive selection process (CSP) or any other form of bidding that could be anchored on the Renewable Portfolio Standards (RPS) – as the next enticement scheme to capital flows in the sector.

In a reverse auction, project developers will have to compete for prices at which they are willing to sell their generated electricity. In many RE markets, that often resulted in lower costs and better services for consumers.