NREB mulls subsidy scheme for ‘stranded’ solar capacity

By Myrna M. Velasco – May 12, 2017, 10:00 PM

from Manila Bulletin

Beyond the regime of feed-in-tariff (FIT) system for emerging renewable energy technologies, the National Renewable Energy Board (NREB) asserted that it will be sorting out a new subsidy scheme to incentivize the 360 megawatts of ‘stranded solar capacity’ that were left out in the second wave FIT race.

In an interview with reporters, NREB Chairman Jose M. Layug Jr. said they are contemplating on a subsidy scheme based on marginal cost to underpin the revenue stream of these solar projects so they will not take that utmost risk of shutting down their operations.

Layug noted that since Energy Secretary Alfonso G. Cusi already set out declarations that there would be no more third round of FIT incentives for solar and wind, NREB would need to hammer out an incentive option that will be on such semblance but will not necessarily revolve around the FIT concept.

“One is maybe let’s look at the marginal cost – in other words, what would be that price that would enable them (solar developers) to continue to operate. So there will be some number crunching with the RE developers and see what we can propose to the Secretary, endorse it and see whether he will consider,” the NREB chair said.

He added “it may be in another form of FIT, although it’s not a FIT, that’s one option – we’re not sure yet, it is something that will have to be discussed at the NREB level.’

Layug emphasized though that “it (proposed subsidy scheme) is run like a FIT except that it’s not the ERC (Energy Regulatory Commission) that dictates the price but done through competition,” by way of an auction process that maybe administered with the approval of the Department of Energy.

When pressed by reporters if the new form of subsidy would be parallel to a FIT scheme in another form and name, his curt reply was “possibly,” but he emphasized that would still be subject to the discussion of the newly convened NREB Board.

As to the final form of the proposed incentive system, he stressed that “the technical secretariat is currently gathering all samples of what they have done in other jurisdictions – or maybe a marginal cost or depending what the spot price would be – if it goes higher or lower or a certain price, maybe there is “an other” to that marginal cost, there are many ways to skin a new cat.”

Layug noted that under the FIT Rules, they have been seeing an opening on the packaging of a new incentive policy by next year that will first and foremost incentivize the solar capacities of which margins are decimated by plummeting prices in the Wholesale Electricity Spot Market.

“If you look at the rules, we have a three-year period for the first FIT rules which ends this year. Definitely it is subject for review in 2018,” he expounded.