06 AUGUST 2011
BOI nixes tariff perks for renewable energy projects
MANILA, Philippines - Trade Undersecretary and Board of Investments (BOI) managing director Cristino Panlilio has urged the government to reconsider the granting of tariff incentives to renewable energy (RE) projects due to the possible increase in the country’s electricity rates.
Panlilio said the Philippines can ill afford an increase in electricity rates with the implementation of the feed-in-tariff (FIT) for RE projects as it may turn off investors.
“It (RE) is a very exotic idea, for now,” he said. “And here I am trying to invite investors, manufacturers, especially those who use a lot of energy, I think it is understandable for me to say to postpone that.”
The Renewable Energy Act of 2008 mandates the establishment of a feed-in-tariff for qualified RE projects. The incentive basically provides guaranteed rates over a period of time for green power developers that would be shouldered by consumers.
The law aims to spur the development of RE generating facilities, which have been hampered by high investment costs and limited markets compared with power plants that run on fossil fuels.
It is projected that consumers would have to shoulder a 12-centavo per kilowatthour (kwh) increase in power rates should the FIT, which is currently undergoing public consultations, be approved by regulators.
“It’s still an additional cost. I’m sure there would be an impact likewise in transmission cost,” Panlilio said, referring to additional costs consumers would have to shoulder for the needed transmission lines that would connect RE projects to the country’s power grid.
Instead of the FIT, government would be better off waiting for RE technology to evolve and bring down investment costs, Panlilio said.
“In the long run, we may see it more affordable or closer to the current cost of other more traditional sources of fuel. Every year, the cost of solar farming facilities are going down,” he said during the Philippines Power & Infrastructure Funding Roundtable Forum 2011 held Wednesday.
Earlier, the Philippine Chamber of Commerce and Industry (PCCI) also raised concerns over the increase in electricity rates to accommodate RE projects.
Based on the Department of Energy’s registration and accreditation report, applications for biomass, geothermal, hydropower, ocean, solar and wind power projects with a total potential generating capacity of nearly 6,000-megawatts (MW) have yet to be approved by the government.
The pending contracts are on top of the contracts it approved since the passage of the Renewable Energy Act of 2008, which have a 3,000-MW combined potential generating capacity once put up.
Last June, the National Renewable Energy Board (NREB) submitted the recommended FIT rates to the Energy Regulatory Commission (ERC).
For solar power, the recommended rate was P17.95 per kwh, ocean power (P17.65/kwh), wind power (P10.37/kwh), biomass (P7/kwh) and hydro (P6.15/kwh).
For the installation targets approved by NREB, there will be a total of 830 MW worth of renewable energy to be developed. The appropriation of each sector are: hydro (250 MW), biomass (250bMW), wind (220 MW), solar (100 MW) and ocean (10 MW).
Also included is an additional universal levy (FIT-allowance) of P12.57/kwh which will be charged to all power consumers connected to the grid if the RE developers are able to meet their installation targets and if the P4.50/kwh average generation cost will not increase over the span of three years due to an increase in fuel prices.
If approved by the ERC, the FIT allowance will be implemented by 2014
Read article source in The Philippine Star, August 6, 2011