RE developers soak up P2-B FIT-All

by Myrna Velasco – January 17, 2016

from Manila Bulletin

At least P2-billion worth of feed-in-tariff allowance (FIT-All) collections from Filipino consumers was paid to renewable energy (RE) developers, according to the Energy Regulatory Commission (ERC).

The P2 billion, it was noted, only accounted for the FIT differential and not the full revenues soaked up by the RE developers. It accounts for the cost difference between the actual payments made to qualified RE projects vis-à-vis the reference market costs on a given year.

In essence, it is the “subsidy portion” being shouldered by Filipino consumers guaranteeing the RE businesses’ financial survival.

If full revenues are shown, it was noted that the RE developers’ take would be substantially higher.

It has been emphasized though that from the initially approved FIT-All of P0.0406 per kilowatt hour (kWh), they still incurred under-recoveries thus they have been intending to recover that in the next round of adjustment.

aThe ERC noted that in the pending application of FIT administrator the National Transmission Corporation (TransCo), it factored in the calculated under-recoveries, hence, the amount climbed to P0.1025 per kWh for year 2016.

As culled from the actual filing, TransCo stipulated that “by the end of 2015, it is estimated that the FIT-All Fund will have a deficit in terms of collection vis-à-vis payables of P1,835,907,894.13, hence, an under-recovery.”

The total FIT differential, as explained further, represents the difference between “the forecast applicable FIT rate (on a certain year) that each eligible RE plant is forecasted to receive for each kWh delivered; and the forecast applicable cost recovery rate as determined under the guidelines multiplied by the projected annual energy generation from eligible RE plant (on a certain year).”

The regulatory body, in a presentation to the media, has qualified that the adjusted FIT-All charge being sought is lower compared to the estimates anchored on the Department of Energy’s (DOE) projections on additional installations which could have climbed to P0.1470 per kWh.

The projects covered in the calculation include those that already have “ongoing construction and have reached at least 80-percent electromechanical completion, thus, are almost sure to operate within the period under consideration, if not already operating to-date.”

With the setting up of the FIT-All Trust Fund with the Land Bank of the Philippines (LBP), TransCo will also be paying a fixed fee of P720,000 per annum plus some variable components.

Additionally, the disbursement allowance or the service fee of Land Bank primarily for year 2016 will amount to P1.054 million.