ERC sets initial GEA pricing guidelines

MANILA, Philippines — The Energy Regulatory Commission (ERC) has issued the preliminary pricing guidelines for technologies ineligible for the feed-in tariff (FIT) in the upcoming green energy auction (GEA) round.

For GEA-3, the government will offer impounding hydro, pumped-storage hydro, run-of-river (ROR) hydro and geothermal contracts with a combined capacity of 4,399 megawatts.

Except ROR hydro, all other technologies are not eligible for FIT, a policy that offers “guaranteed payments on a fixed rate per kilowatt hour for emerging renewable energy (RE) sources, excluding any generation for own use.”

As such, the ERC is seeking comments from industry stakeholders regarding the draft price determination methodology (PDM) for the non-FIT-eligible RE technologies.

Under the proposed PDM, non-FIT-eligible RE facilities will undergo a two-point evaluation to assess the “reasonableness and prudency of the price offer.”

The project development cost, net capacity factor and weighted average cost of capital components of each bid will be evaluated first to determine if they meet the minimum score requirements.

A weighted scoring system, meanwhile, will be used in the second part of the evaluation, with each parameter assigned a predetermined weight depending on its impact on the tariff.

“A total score of 90 percent is required to pass the evaluation, ensuring that all critical parameters are prioritized and comply with,” the power regulator said.

Further, price offers that pass the evaluation will be endorsed by the ERC to the Department of Energy for confirmation of the winning bidder.

Winning bidders should then ensure that their non-FIT-eligible RE facilities operate within the parameters approved by the commission.

In a notice dated Oct. 31, the ERC said all interested parties may submit their comments about the draft PDM until Nov. 15.

“All comments received by the commission within the prescribed period shall form part of the records of this rule-making proceeding and shall be considered in the finalization of the PDM for non-FIT-eligible RE technologies in the GEA program,” it added.

Earlier, Sen. Pia Cayetano urged the ERC to finalize the pricing mechanisms for GEA-3 for the bidding round to move forward this year.

“I hope we can get that done. I understand there are things that have to be done on the side of the ERC as well,” said Cayetano, who also chairs the Senate committee on energy.

Previously, Energy Undersecretary Rowena Cristina Guevara assured lawmakers that GEA-3 will be completed before the end of the year.

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