Winner | Asian Digital Media Awards 2020

Renewable energy to cost an average of P11.82/kWh

The proposed feed-in tariff (FIT) rates for renewable energy filed by the National Renewable Energy Board (NREB) with the Energy Regulatory Commission (ERC) on Monday are on the average P1.24 a kilowatt-hour lower than those sought by renewable energy technology developers.

The NREB’s proposed rates are P6.15 per kWh for hydro, P7 for biomass, P10.37 for wind, P17.65 for ocean energy, and P17.95 for solar, according to Saturnino Juan, executive director of the ERC.

The rates sought by renewable energy developers are: P7.40 for hydro, P8.22 for biomass, P11.29 for wind, P18.52 per kwh for ocean, and P19.87 for solar.

For comparison, the current generation charge of Manila Electric Co. is P5 per kWh.

The average rate submitted by NREB is P11.82 per kWh against the developers’ P13.06.

But since the share of renewable energy in the three-year period covered by the NREB-proposed rates is expected to be at most 10 percent of the total energy mix, the additional penalty on all consumers for the use of renewable energy is placed at P1.25 to P1.50 per kWh. This is known as the FIT allowance (FIT-All).

Even before NREB’s submission of the proposed rates to the ERC, renewable energy developers were saying the rates were too low to attract investments into new technologies.

Energy Secretary Jose Rene Almendras said the FIT rates were determined by a technical study done by the NREB. He said “social and economic considerations” were taken in the computation of the FIT.

He said that it would be disadvantageous for consumers to put in place a high FIT rate to subsidize a technology that could prove to be cheaper in a few years time.

“Why are you so hot?” Almendras asked developers. “Why are you forcing the issue in making the investments now. If you are confident about your technology and the technological advancements, then you have no timeline to worry about.”

“Because what should happen as I’ve said from the very beginning is you do it in chunks that the people can afford. Social and economic considerations have to be put in place. Now if you’re forcing a technology that is antiquated, that will soon be overrun by developments in the technology, then you have a lot to worry about,” he added.

The FITs are the guaranteed price at which renewable energy developers will be paid for the energy that they will produce and inject into the transmission or distribution system.

FIT-All, meanwhile, is a uniform pesos per kilowatt hour charge paid by electricity consumers to subsidize the FIT. The implementation of the FIT-All is similar to that of the present Universal Charge.

Some renewable energy developers were also complaining about the installation targets proposed by the renewable energy board. They said technologies such as solar should have been given a higher installation target.

The proposed renewable energy installation targets for the next three years by the NREB are 250 megawatts for small hydroelectric power, 250 MW for biomass, 100 MW for solar energy, 220 MW for wind energy, and 10 MW for ocean power technology.

In contrast, renewable energy developers are proposing installation targets for the next three years of 235 MW for solar, 340 MW for wind, 170 MW for biomass, 148 MW for hydro, and 10 MW for ocean energy technology.

Almendras said targets were set to prevent renewable energy from causing problems to the grid. Renewable energy causes problems to the transmission networks in other countries due to the intermittent nature of the power source.

“Even if you force a number that is not technically done, you’re going to crash the system. I do not want to be the secretary of energy who wants to crash the grid. So, therefore, there is a technical reason for that,” he said.

“Whether you’re embedded or in the grid, when you are contributing electricity to a wire, and you suddenly put that off and the demand for that is already there, something is going to happen to the network. It’s going to crash,” he added.

Almendras said the Philippines should learn from the experiences of other countries that have cut back on the development of renewable energy.

“The whole world has learned from the experience of the first countries that have implemented it, who all cut back in the implementation. I am doing my job as the secretary of energy,” he said.

“I am being accused of being anti-renewable. No, on the contrary, I am doing this because I don’t want the Filipino people to hate renewable energy because of the cost impact it will have on them,” he added.

Thanks for reading to the end of this story!

We would be grateful if you would consider joining as a member of The EB Circle. This helps to keep our stories and resources free for all, and it also supports independent journalism dedicated to sustainable development. For a small donation of S$60 a year, your help would make such a big difference.

Find out more and join The EB Circle

blog comments powered by Disqus

Most popular

View all news

Industry Spotlight

View all

Feature Series

View all
Asia Pacific's Hub For Collaboration On Sustainable Development
An Eco-Business initiative
The SDG Co