Policy clarity sought on extended FIT for hydro projects

By Myrna M. Velasco – Updated May 14, 2018, 3:27 PM
from Manila Bulletin

Given the four to five-year-long gestation for most hydropower projects, industry players are asking clarity from the Department of Energy (DOE) as to the application of the extended feed-in-tariff (FIT) for the technology, especially with pronouncements that the winding up date for the subsidy will be year 2019.

“In the case of hydro, I don’t know whether the race applies to hydro because of the long-term gestation…construction will not end by next year, it takes 3-4 years,” First Gen President Francis Giles B. Puno has noted.

The Lopez firm has several run-of-river hydro power projects that had already started, but timeline-wise, executives indicated that construction can’t certainly be finished by 2019.

That then poses a big question whether such ongoing projects could still avail of the extended FIT if their construction completion will go beyond next year.

“If it (FIT policy) is clear then we would proceed. Otherwise, it’s not okay for us to proceed because construction will take time,” Puno stressed.

He asserted that hydro “is a very important resource for the country and yet it’s unclear as to whether or not we would be given FIT for a long-term investment.”

Puno qualified they would also need to give prime consideration to the concern of creditors “if it is bankable – that there would be feed-in tariff at the end of the construction phase. We don’t want to wake up in the end and then we’ll discover that we’ll get nothing.”

The DOE recently extended the degressed FIT rates for run-of-river hydro and biomass projects – but it has calculatedly laid down that these shall only cover projects with completion until next year.

The degressed subsidy rate for hydro projects had been pegged at P5.8705 per kilowatt hour (kWh) from the first round race of P5.90 per kWh; while for biomass, it was reduced to P6.5969 per kWh from P6.63 per kWh.

The installation caps for hydro and biomass at 250 megawatts each were also relatively under-subscribed compared to other FIT-underpinned technologies like wind and solar.