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Priority sought for ‘stranded’ projects as DoE prepares auction for green energy

“Solar will once again dominate the auction market.” — Theresa C. Capellan, SunAsia Energy, Inc. president and CEO — BW FILE PHOTO

By Angelica Y. Yang

THE Energy department’s plan to start bidding out the supply of renewable energy (RE) to consumers who prefer “green” sources should give priority to projects that failed to secure a guaranteed power rate under the feed-in tariff (FiT) system, the head of an industry association said.

“Priority should be given to those stranded under FiT… It’s not mentioned clearly that it’s like that (in the green energy auction’s guidelines),” Don Mario Y. Dia, president of Biomass Renewable Energy Alliance, Inc., told BusinessWorld.

Under the Department of Energy’s (DoE) green energy auction, which is set to start this year, qualified renewable energy developers can offer to supply a specified volume of electricity generated from their facilities. The suppliers are chosen through a competitive process or auction. In turn, eligible customers enjoy electricity prices below market values.

In July, the DoE issued a circular detailing the guidelines governing the green energy auction, helping power providers comply with their commitment under the renewable portfolio standards (RPS) program, a market-based policy that requires distribution utilities to source an agreed portion of their supply from eligible RE facilities.

In the circular, the DoE said that RE projects eligible to participate in the RPS are allowed to enter the green energy auction “without prejudice to specific qualifications for suppliers in each round.”

Eligible RE facilities under RPS rules for on-grid areas are biomass, wind, solar, hydro, ocean, geothermal, and waste-to-energy plants. They must have been commercially operating after the Renewable Energy Act of 2008 was enacted.

Mr. Dia, however, said that the green energy auction’s guidelines seemed to favor solar over other RE technologies.

“Even for solar, it appears that ‘the GEAC (green energy auction committee) favors solar rather than others, if you read through the guidelines. The RE projects will compete. How can biomass compete in that auction? There should be a price mechanism that will be palatable for both (solar and biomass),” Mr. Dia said in a mix of English and Tagalog in a phone interview on Dec. 29.

He added that the auction should be “open to all” RE technologies. Mr. Dia is also the president of the Confederation of Solar Developers of the Philippines, Inc.

Theresa “Tetchi” C. Capellan, SunAsia Energy, Inc. president and chief executive officer, said in a Viber interview that solar had a history of capturing a huge slice of the RE market because it is “fast to install, competitively priced, and modular.”

“During the FiT regime, solar consumed its allocation in no time while biomass and hydro took two more years to develop and used its allocation,” Ms. Capellan said.

The FiT scheme for solar, which ended in March 2016, saw an installation target of 500 megawatts (MW) oversubscribed by around 360 MW.

Last month, the DoE granted another deadline extension for FiT applications for developers of run-of-river hydropower projects. The department said that it would continue to receive applications until the 250-megawatt installation target is completed.

“My forecast is that solar will once again dominate the auction market. The trend will be the same as the FiT roll out where solar will be ahead of the pack,” Ms. Capellan said on Jan. 8.

In August last year, the DoE said that the auction intended to pool an initial 2,000 MW of renewable energy capacity, but this may change based on the supply requirements of power utilities.

While Ms. Capellan described the planned auction as an “excellent statement of the government’s commitment to promote renewables”, the solar developer said that its details still needed to be ironed out and clarified.

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