• Subsidy currently twice the cost of regular power

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    THE National Energy Renewable Board (NERB) is considering lowering the Feed-in-Tariff (FIT) rate for new solar projects.

    The feed-in tariff is the price set by the government for a number of years to assure investors in renewable energy that profits will be sustained and they can get back their investments.

    The government, through the Energy Regulatory Commission (ERC) has approved the initial FIT rate of P9.68 per kilowatt-hour (kWh) for the first 50MW of solar power installations.

    The FIT rate or subsidy is almost double the P5.53 KWH charged by Manila Electric Co. for subsidized consumers or those using less than 200KW per month.

    Energy produced above 50MW up to 450 MW would likely be given P8.95 per KWH.

    According to NERB Vice Chairman Ernesto Pantangco “there was a very strong resistance on that price because of so many developments ever since the FIT was submitted.

    The oppositors pointed out that the P9.10 per kWh is not acceptable rate because the 500MW target can be hit in two years, he said.

    During the hearing at the Energy Regulatory Commission (ERC), Pantangco said some groups were pushing that the FIT rate for the second phase solar be further lowered.

    “We did mention a price of maybe something that could be considered by the developers and ERC in their deliberations is something like P8.95,” he said.

    “And therefore, the challenge now is for us to determine what will be a mutually acceptable feed in tariff.

    He pointed out that although the NERB wanted to lure investors for solar projects, it should also consider the impact of high subsidy rates to the consumers.

    “We want to encourage but at the same time, we want to temper the impact to consumers,” he said.

    The FIT is a policy mechanism designed to accelerate investment in renewable energy technologies by giving incentives to RE players.

    Renewable energy developers under the FIT system will be paid in full for their actual electricity generation based on the fixed tariff approved for them.

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    1 Comment

    1. PPAs in the US, Dubai, India are currently being signed at US$ 0.05-6/KWH on unsubsidized contracts with 25 year likespan. This is P 2.2 – 2.65 / KWh.
      Because the negotiations dragged on so long (from 2008-2013) the P 9.68 FIT rate for the first 50MW plants is high. The proposed rates are still way too high – a solar company can make a good ROI on a 50MW plant with a PPA price of P 5 /KWh, given that financing costs are higher here than other countries.
      Whatever PPA price is agreed, distribution and other costs of approx. P 5/KWh will have to be added for the final consumer