Revisions in green energy auctions pushed amid ‘red flags’

MANILA, Philippines —  Renewable energy (RE) developers are calling for improvements in the government’s green energy auction (GEA) program, sounding the alarm about the issues in the previous round.

At an energy forum organized by ING Philippines, SunAsia Energy president and CEO Maria Theresa Capellan said there should be a “more sophisticated auction design” to cater to all technologies.

“Gas, pump storage and even geothermal need a special kind of auction design because they are not the same as solar and wind. That kind of market mechanism (requires) a more specific function design,” Capellan said.

According to Capellan, the second round of GEA raised “red flags,” given the low turnout of subscribed capacity.

For GEA-2 last year, the Department of Energy (DOE) only secured a total committed capacity of 3,580.76 megawatts, falling short of the 11,600-MW target.

Capellan, who leads the construction of a massive floating solar project on Laguna Lake, said revising GEA parameters would allow more energy players to “participate actively and see the signals as correct.”

Among the cited reasons for the disappointing turnout of GEA-2 are transmission woes and lower reserve prices on offer.

Citing issues in the previous auction round, First Gen vice president Carlos Lorenzo Vega said policymakers should interpret these signals properly as the government gears up for the upcoming GEA rounds.

The DOE plans to conduct two more auction rounds as early as October this year.

Impounding hydro, pumped-storage hydro, run-of-river hydro and geothermal contracts will be offered in GEA-3, while GEA-4 will involve RE projects with energy storage system components.

“If we were to develop our geothermal projects and we were looking at the GEA program, the price signal has to be correct. The price signal has to be balanced,” Vega said.

First Gen, through Energy Development Corp., is investing P29.3 billion to develop and activate four geothermal and three battery energy storage system projects by the end of this year.

The GEA program is designed to trigger the expansion of the country’s RE capacity to support the country’s target of increasing the share of renewables in the energy mix to 35 percent by 2030 and 50 percent by 2040.

The first GEA round took place in June 2022, attracting a total of 1,996.3-MW of RE projects comprising ground-mounted solar, onshore wind, hydro and biomass.