DOE defers 3rd green energy auction

MANILA, Philippines — The Department of Energy (DOE) is pushing back the third green energy auction (GEA-3) round to 2025, failing to deliver its commitment to complete the bidding process this year.

Speaking at the Energy Investment Forum 2024 on Thursday, DOE Undersecretary Felix William Fuentebella said the auction round is postponed to January next year.

For GEA-3, the government plans to offer impounding hydro, pumped-storage hydro, run-of-river hydro and geothermal contracts with a combined capacity of 4,475 megawatts (MW).

The DOE earlier assured lawmakers that GEA-3 would be completed before the end of the year.

However, for the bidding round to proceed, the Energy Regulatory Commission (ERC) should set first the final pricing guidelines, or the parameters that will determine the “reasonableness and prudency of the price offer.”

“The ERC’s issuance of the PDM (price determination methodology) will coincide with the holidays,” said DOE Assistant Secretary Mylene Capongcol, explaining the reason for GEA-3’s delay.

Sought for comment, ERC chairperson and CEO Monalisa Dimalanta said in a Viber message to reporters that the postponement of the auction round is “realistic.”

But Dimalanta said the country’s power sector watchdog is targeting to release the final PDM later this month.

In October, Sen. Pia Cayetano called on the ERC to finalize GEA-3’s pricing mechanisms, noting that many investors were awaiting the launch of the auction round.

“That is one of the priorities that I think we need to do, because in everything, the goal is to make the shift to renewables, and this is directly related to that,” said Cayetano, who chairs the Senate committee on energy.

Through GEA-3, the government aims to ensure a transparent and competitive selection of renewable energy (RE) facilities as the country sees power demand growing by six percent annually until 2028.

Of the total offered capacity, pumped-storage hydro will account for the bulk or 4,000 MW, followed by impounding hydro (300 MW), geothermal (100 MW) and run-of-river hydro (75 MW).

Except run-of-river hydro, all other technologies are not eligible for the feed-in tariff, a policy that offers guaranteed payments on a fixed rate per kilowatt hour for emerging RE resources, excluding any generation for own use.

Apart from GEA-3, the DOE also plans to conduct the fourth and fifth rounds of the auction round next year.

GEA-4 will involve over 8,200 MW worth of RE projects with energy storage system components, while GEA-5 will consist of an unspecified volume of offshore wind projects.

The DOE, Capongcol said, is looking to issue the notice of auction and the terms of reference for GEA-4 this month.

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.