MANILA, Philippines – The Energy Regulatory Commission (ERC) has set the cap rate for the first round of the Green Energy Auction Program (GEAP) next month.
The IER has released Green Energy Auction Reserve (GEAR) prices for solar, wind, biomass, biomass and river-running water technologies, which will serve as the maximum price for the first round of GEAP to be conducted by the Department of Energy (DOE).
Approved by the commission en banc on Thursday, the GEAR set price for solar was at P3.6779 per kilowatt-hour (kWh), wind at P6.0584 per kilowatt-hour, and biomass at P5.0797 per kilowatt-hour. , and river runoff is hydro at P5.4913 per kWh.
The GEAR price for solar and wind energy is above the initial maximum price of P3.6248 per kWh and P5.2887 per kWh, respectively, issued in March.
Meanwhile, the final rice biomass cover and river runoff water are lower compared to the initial rates of 5.548 P per kWh and 5.8705 P per kWh, respectively.
“We have set GEAR prices for each type of technology consistent with the DOE’s auction notice outlining auction capabilities on a per-technology basis, and using a discounted cash flow model with 46 parameters and assumptions for each technology,” ERC President and CEO Agnes Devanadera said.
The ERC said the approved GEAR pricing takes into account stakeholder feedback, input and concerns before and after last month’s public consultation.
With the release of GEAR prices, the Department of Energy can now move forward with the schedule of GEAP activities, which includes a pre-bid conference on or before June 1, holding an auction for 2,000 megawatts on or before June 17 and an award notification by June 24.
Last January, the Department of Energy began inviting energy developers last January to bid for 2,000 megawatts of renewable energy (RE) under GEAP.
On a region-by-region basis, the agency will offer 1,400 MW in Luzon, 400 MW in the Visayas and 200 MW in Mindanao.
ERC is mandated, as mandated under Section 25 of the Electric Power Industry Reform Act (EPIRA), to allow for the recovery of prudent and reasonable economic costs incurred, consistent with the stated policy of ensuring transparent and reasonable prices for electricity in a system of free and fair competition and full public accountability, in order to achieve the Greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market.
The financial model used by the Authority does not allow for any escalation or adjustment due to changes in foreign exchange and inflation, therefore, GEAR rates are fixed for the life of the project.
Furthermore, the GEAR rates set by the Commission are below or within the scope of recent Power Supply Agreements (PSA) for newly constructed plants or plants still under construction, taking into account the approved rates and escalation/modification provisions of such PSAs.
“In defining a representative project and calculating prices for gear and supply equipment, the commission was guided by the efficiency principle and international standards to ensure that only the cost of efficient plants would be passed on to consumers,” Devanadera said.
The Renewable Energy Action Plan (GEAP) will be implemented to support the government’s drive to accelerate the development of renewable energy systems, including the promotion and commercialization of their applications.
It will support and facilitate the compliance of industry players with the Revolving Portfolio Standards (RPS) rules.
RPS is a mechanism under the Renewable Energy Act 2008 whereby distribution utilities (DUs), electric cooperatives (ECs), and retail electricity suppliers (RES) are designated to source a percentage of their electricity requirements from renewables. Currently, the RPS level is currently set at one percent through 2022.
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