July 30, 2012

Phillippines ERC releases feed-in-tariff rates for renewable energy

The Energy Regulatory Commission on Friday approved the long-awaited feed-in tariffs (FIT) for renewable energy sources, a move expected to encourage investors in the industry.

Investors in hydro energy will get a FIT rate of P5.90/kWh, while those for biomass will get P6.63/kWh; for wind - P8.53/kWh and for solar P9.68/kWh. No FIT for ocean thermal energy conversion resource was set, pending further study.

The Renewable  Energy Act of 2008 (RE Act) mandated FITs for wind, solar, run-of-river hydro,  biomass and ocean resources, to encourage developers to invest in the renewable energy industry.
"The ERCs lowered FITs will definitely cushion the impact of implementing the FIT incentive mechanism under the RE Act on the electricity rates, while still being sufficient enough to attract new investments in renewable energy.  This is win-win for all," ERC executive director Francis Saturnino Juan said.

However, the ERC-approved FITs are lower than those proposed by the National Renewable Energy Board (NREB) last year. The proposal was P6.15/kWh for hydro; P7/kWh for biomass; P10.37/kWh for wind and P17.95/kWh for solar.

"The ERC arrived at FITs substantially lower than NREB's proposed FITs for wind and solar after it updated  the construction costs of the representative plants for these technologies to reflect the downward market trend of the costs of putting up these plants. It also adopted higher capacity factors for these plants to ensure that only the more efficient  plants will enjoy the FIT incentive," it said, in a statement.

The approved FITs will be subject to review and readjustment after the initial implementation of 3 eyars or when the installation targets for each technology has been met.

The ERC said the FITs will be lowered to encourage developers to invest at the initial stage and hasten the deployment of renewable energy, as well as avoid giving them substantial windfall when the technologies have significant cost reductions in the future.

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