Stakeholders express diverse views on grant of FiT rate perk

by Lenie Lectura – June 14, 2016 0 37

from Business Mirror

The incentive given to renewable-energy (RE) developers in the form of feed-in tariff (FiT) rates is necessary to spur RE investments in the country, but this should be implemented for a few years only and not for 20 years, as the law states.

“I don’t like [FiT]. We need it in the beginning for the RE industry to grow, but then we don’t need it anymore. It gives the wrong incentives,” said Tor Stokke, SN Power Philippines country director, during Tuesday’s seminar on RE in Makati City.

Under the FiT, RE developers will dispatch the capacity of their projects to the grid at a premium rate for a period of 20 years. RE includes wind, run-of-river hydro, solar, geothermal and biomass.

SN Power, a global industrial investor in the power and energy markets, entered the Philippine market in 2006 via a 50-50 joint-venture partnership with AboitizPower. The joint venture, SN Power Aboitiz (SNAP) operates three hydropower projects in North Luzon.

“I don’t like it to be 20 years. It’s a very long time. I think the government should revisit to make it shorter—five years, at the most,” Stokke said in an interview after the seminar.

Under the FiT system, qualified developers of emerging RE sources are offered on a fixed rate per kilowatt hour (kWh) of their exported electricity to the distribution or transmission network.  This scheme excludes the energy utilized from RE plants eligible for own use.

The approved FiT rate for wind and solar, for the second batch, now stands at P7.40 per kWh and P8.69/kWh, respectively.

For hydro and biomass, the approved FiT rates are P5.90 per kWh and P6.63 per kWh.

The said FiT rates are based on installation ceilings set by the Department of Energy (DOE). The Energy Regulatory Commission (ERC) is the agency that sets the FIT rates.

Consumers are the ones who shoulder the FiT allowance, a separate line component in the power bills. They pay P0.1240 per kWh.

For Alternergy, a wind-power developer, the country’s RE industry has immensely grown because of FiT. “It’s a solution to a problem,” said Knud Hedeager, the company’s chief operating officer.

He acknowledged, though, that someday RE rates, even without FiT, would go down in the future. “We are not yet there, meaning below the market rate. FiT is here now just to fill up the void so this industry won’t stop,” Hedeager said.

Solar Philippines President Leandro Leviste, for his part, said it is “unlikely “that there would be a next round of FiT rates and allocation, particularly for wind and solar, because “more stakeholders are investing now in lowering their costs.”

Last week the National Renewable Energy Board (NREB) submitted its recommendation to the DOE to increase the capacity allocation for solar- and wind-power projects under the FiT scheme by 500 megawatt (MW) more for both.

“Our recommendation are really to the DOE and next installation target for wind and solar, although they have not approved it, but its roughly 500 MW for wind and 500 MW for solar,” NREB Chairman Pete Maniego had said.

The DOE increased last year the FiT installation target for wind from 200 MW in the first round to 400 MW in the second round.