09 OCTOBER 2012
FIT-Allowance Cut To P0.05/kwh
MANILA, Philippines — With the lower feed-in-tariff (FIT) charges approved by the Energy Regulatory Commission (ERC), the resulting FIT-Allowance to be reflected in consumers’ electric bills will be slashed to less than P0.05 per kilowatt-hour (kwh) from what was previously calculated at P0.10 per kwh.
Based on two-case assumptions drawn up by technical working group of the National Renewable Energy Board (NREB), the FIT-All when passed on in the bills by 2015 may range from P0.036 per kwh to P0.048 per kwh. That is expected going down to P0.026 per kwh-P0.042 per kwh by 2016 and P0.016-P0.035 per kwh by 2017.
The ERC-approved FIT rates were: P5.90 per kwh for run-of-river hydro; P6.63 per kwh for biomass; P9.68 per kwh for solar; and P8.53 per kwh for wind.
Grid parity is seen achieved either within seven or nine years depending on which case assumption would prevail. The NREB made initial calculations based on the reduced FIT rates, although it will either be the National Grid Corporation of the Philippines (NGCP) or the National Transmission Corporation (TransCo) which will eventually file the FIT-ALL petition with the ERC.
The NREB also emphasized that “the administrative charges and working capital allowance are not yet included in the simulation as TransCo still needs to work on the numbers.”
The average grid price used as reference in the simulation was at P5.00 per kwh and the average cost of the renewable energy (RE) installations has been benchmarked against coal’s new entrant facility at P6.61 per kwh.
The base annual energy demand applied in the calculation was year 2010 at 67,743,000 megawatt hours and set allowance for a compounded annual growth rate (CAGR) of 4.0-percent. Local consumer price index (CPI) was assumed to have 5.0-percent annual adjustment; while foreign exchange rate had been set at P43 to the US dollar.
2015 or the third year is seen as the initial target for the full implementation of the FIT-All, giving all RE developers the leeway to plan and move ahead with their project implementations.
For years one and two, the FIT-ALL impact is seen very minimal yet at less than P0.01 per kwh because the only installation coming on-line could be the 50 megawatts from solar developers plus another 50MW from biomass. Year 3 will be the time when the entire 750MW targeted installations will be integrated into the grid. In the first assumption wherein grid parity will be achieved in 7 years, it was noted that the “FIT Allowance will range from 1 to 4 centavos over 6 years, and thereafter, RE contributes to lower grid rates ranging from 1 to 12 centavos over 14 years.”
Under this scenario, NREB has noted that the “FIT Allowance will be paid only for the first 6 years totaling P8.0 billion”; and post-grid parity, RE will be contributing to the RE Fund an estimated P122 billion over 14 years.
In the second assumption, grid parity will be achieved in 9 years and the FIT-ALL impact could amount to P17 billion. From year 10, RE developers are seen contributing to lower grid rate for P70 billion over 11 years.
Read article source in Manila Bulletin