Expert: ‘Optimal rates’ will make GEA more attractive

By Lenie Lectura @llectura

“Ultimately, price is the most significant factor in endeavors like this (Ge A), so it should be set at a level that is most optimal to all stakeholders,” said lawyer Jose M. l ayug Jr., co-chairman of the european Chamber of Commerce’s Renewable energy and energy ef ficiency Committee.

l ayug issued the statement following the low turnout of bidders. “We laud the efforts of the DOe [Department of energy] and eRC [energy Regulatory Commission] in the aggressive transition to renewables with the ambitious R e [renewable energy] installation targets. While the DOe did not meet its aspiration in this round, it would be good to review and assess several factors that yielded such results.”

The Ge A Program 2 generated 3,580.76 megawatts (MW) of R e ca- pacities that are committed for delivery from 2024 to 2026. The numbers are way below the 11,600MW offered by the DOe T he DOe cited supply limitation, low incentives, delay in the conduct of grid impact studies, and the cost of financial guarantees as some of the reasons for low investor turnout.

In setting the Green energy Auction Reserve (Ge A R) prices for each R e technology, l ayug said the DOe and the eRC should re-consider the possible risk of financial losses that potential bidders may be exposed to. It would also be helpful if the rates are relative to the price levels in the Wholesale electricity Spot Market and the retail market.

Moreover, the agencies should also consider the practical period needed by the R e developers to suf- ficiently prepare for the bids, among others.

“Ultimately, price is the most significant factor in endeavors like this, so it should be set at a level that is most optimal to all stakeholders,” said l ayug, a former DOe Undersecretary and National Renewable energy Board chairman.

“We have seen such experience during the FIT [Feed-in-Tariff] regime. But we fully support the DOe and eRC in their continuing efforts to push for more R e capacities. The private sector hopes to continue to collaborate with the government to ensure maximum utilization of renewable energy resources.”

The eRC has set a Ge A R price of P4.4043 per kWh for ground-mounted solar, P4.8738 per kWh for the rooftop solar, P5.3948 per kWh for the floating solar, P5.8481 per kWh for onshore wind, P5.4024 per kWh for biomass and P6.2683 per kWh for the biomass waste-to-energy.

According to the Philippine Solar and Storage energy Alliance (PSSeA), the rates do not reflect the realities of the current demand and supply of electricity in the country, nor is it encouraging R e developers to build.

“The framework of the auction is to set a price cap and bid below the price cap. It seems, however, that the regulators are setting a floor price.

Secondly, the developers have repeatedly made representations to the eRC on the parameters of the tariff structure. In the case of solar, PSSe A submitted studies and actual references that can form part in designing green tariff. Unfortunately, these parameters failed to convince eRC,” said PSSe A Chairman Tetchi Capellan.

“We believe that for the industry to deliver the ambitious target of the President there has to be an honest-to-goodness realization of the current market prices. Without this, future Ge A will fail to entice developers.”

DO e Undersecretary Rowena Guevara had said a review will be conducted to assess what improvements need to be done. “We will review, and we will also have discussions with the auction participants.”

Alternergy Group, meanwhile, said that it would support the review.

It is also encouraging R e industry players to join in this dialogue to address earlier concerns to ensure that the project capacities offered are delivered according to more realistic timelines and within “competitive power rates.”