Philippines: Tariff delay causes sector uncertainty

PHILIPPINES: The Philippines' green-energy sector suffered a weeks-long setback after feed-in tariff (FIT) rates for renewables expected on March 31 were put off until this month. Construction of projects will not start until FIT rates are announced.

The delay occurred after the National Grid Corporation of the Philippines decided it needed to take a closer look at how much electricity from renewables the grid could accommodate. Philippines energy secretary Jose Rene Almendras told The Philippine Daily Inquirer that the delay had mainly to do with managing the amount of power from each renewables source at any given time, rather than with the FIT itself. Guideline rules for the FIT were issued in July by the Energy Regulatory Commission.

Findings from the study could reportedly lower the 220MW installation target for wind energy as well as ambitions for solar and other renewables.

Dynamic situation

The Wind Energy Developers Association of the Philippines (Wedap) has urged the Department of Energy (DoE) to delink the study from installation targets for wind energy. Last month, The Philippine Star reported that the government had lowered a target of installing 830MW of renewables generation capacity by 2013, including the 220MW of wind.

The target is reportedly 40% below what renewable energy developers are proposing to the DoE. Asked to comment, the DoE would say only that the situation is "highly dynamic".

According to DoE records, there are more than 40 wind projects in the Philippines that account for at least 1GW of pipeline capacity. The US National Renewable Energy Laboratory puts the potential wind capacity of the Philippines at 76GW. Wedap, however, contests this figure, saying it overstates the potential by including resources in mountains and other areas too difficult to develop. Wedap believes that between 1.5-2GW of wind resource can be developed, including the 1GW of pipeline capacity.

The organisation says that if the FIT is approved by the third quarter of 2011, implementation of at least 340MW of wind projects can begin immediately. Another 400MW are approaching financial closing in 2012-13. However, with the prospect of reduced FIT rates, Wedap has requested that the government extend the 220MW wind target from three years to five-seven years.

Speed required

The FIT delay has drawn sharp criticism. The Philippine Solar Power Association has urged the government to place higher priority on renewable energy in near-term plans rather than prolong dependence on fossil fuels.

Wedap chairman Poch Ambrosio says the FIT rates fell between the cracks after the former administration, which implemented the renewables policy and FIT rules, handed over the reins last year.

"The new administration is taking a cautious approach to ensure that further development of renewable energy sources in the Philippines is sustainable," he says.

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