Feed-in tariff seen to generate P129.8-B savings over 20 years

MANILA, Philippines - The proposed feed-in-tariff (FIT) will generate net savings of P129.8 billion over its initial 20-year period, a top official of the National Renewable Energy Board (NREB) said.

The NREB is created under the Renewable Energy Act of 2008 to oversee the smooth implementation of the law.

NREB chairman Pete Maniego said this rate to be paid for the use of renewable energy (RE) would eventually be lower than that of conventional power sources.

“In all the hoopla against renewable energy because of its alleged higher price against fossil fuel power plants, those opposing the FIT consistently fail to mention that coal power rates are already much higher than those of hydro and biomass power,” he said.

He noted that most of the wind power plants would go into commercial operation by 2014 to 2015. By then, the proposed FIT for wind is projected to be lower than coal rates. 

“Even the much denigrated solar would reach parity with coal in less than six years, allowing for the six percent degression per annum,” he said.

He said historically, electricity rates in Luzon increased by 11.3 percent annually in the past seven years. With the stranded costs and the higher tariff of the new coal plants, the avoided costs could be expected to increase at a much faster rate than 7.5 percent a year.

He said in three years’ time, RE is expected to help bring down power rates.

“If the basis of the avoided cost is the coal tariff, then the RE sources would actually reduce power costs by P6.2 billion starting in 2014,” he said.

Over the 20-year FIT period, the savings would amount to a staggering P809 billion. The coal tariff used in the calculation was not only based on the rate of P8.30 per kilowatt-hour, but on an assumed lower rate of P6.50 per kwh for another coal plant.

The RE Law mandates the establishment of the FIT, which guarantees RE investors’ investments through fixed rates that would be shouldered by consumers over a set period of time. The incentive aims to draw investors into putting up RE projects, whose electricity production are intermittent and are capital intensive compared with conventional power plants.

The regulators are currently completing public and industry consultations on the FIT, which is being opposed by the industry groups for its alleged upward impact on electricity rates.