The Philippines’ Energy Regulatory Commission finally issued a set of feed-in tariff rules on Friday, which will help facilitate the development of renewable energy in the country and inject more investments in the industry.
The rules will regulate the feed-in tariff system, an incentive program under the Renewable Energy Act of 2008 that aims to accelerate the establishment of renewable energy resources such as wind, solar, large hydro, biomass and ocean power in the country.
The tariff system will also require the National Grid Corporation of the Philippines (N.G.C.P.), who operates and maintains the Philippine transmission network via the National Transmission Corporation, and other distribution utilities to incorporate renewable energy into their power networks.
The tariffs will be applicable for 20 years, which will start once the renewable energy projects start commercial operations.
All renewable energy projects should be issued a certificate of compliance that authorizes them to operate as a feed-in tariff-eligible plant to avail of the incentive.
The initial proposal will incorporate a peso per kilowatt-hour tariff allowance as a charge in the electric bills for 15 years, according to the local newspaper Manila Bulletin. However, this was stretched longer so the resulting levelized cost to end-user will be lower.
The estimated tariff will range from 7 Philippine pesos ($0.15) to 25 Philippine pesos per kWh. Solar will carry the highest tariff, while wind will have an average tariff of 12 Philippine pesos to 15 Philippine pesos per kWh.
The tariff is subjected to periodic change based on forecasted revenues for the expected deliveries of eligible renewable energy plants, applicable feed-in tariffs and N.G.C.P.’s administration costs.
The tariff will also be adjusted to account for the inflation of foreign exchange rate fluctuations. In addition, it will be subjected to a 2 percent annual degression for its whole duration to encourage renewable energy developers to invest at the initial change and speed up development.
The commission will review and readjust the tariff system in certain situations, such as when installation targets are already completed or when significant cost changes have been made.
However, readjusted tariffs will only be applicable to new renewable energy developers.
The feed-in tariff system will be established after the National Renewable Energy Board and the commission submit its proposed tariffs, which should be linked to the installation targets of each clean technology and the timeframe to achieve these targets.
“We anticipate that renewable energy projects will be more bankable, as these projects’ future cash flows are not only made easily determinable, but are also fixed and assured,” said Francis Saturnino Juan, executive director of the regulatory commission.