Over half of RE project proposals are hydropower, bares DOE

By Ted P. Torres, The Philippine Star

Posted at Jul 22 2011 07:03 AM | Updated as of Jul 22 2011 03:03 PM

MANILA, Philippines - The Department of Energy (DOE) said it has received 30 new proposals for renewable energy (RE) projects with an aggregate capacity of almost 6,000 megawatts (MW), more than half of which are hydropower with 3,593 MW.

The other green power proposals are: 1,431 MW for wind; 537 MW for solar; 230 MW for geothermal; and 195 MW for biomass.

The largest proposal is Pan Pacific Renewable Power Phils. Corp.’s 600-MW hydroelectric power project in Apayao. Other big projects are CoastalPower Development Corp.’s 420-MW wind farm in Sorsogon; Jobin-Sqm Inc.’s 100-MW project in Zambales for solar; Eoil and Gas Co. Inc.’s 60-MW project in South Cotabato for geothermal; and Green Power Bukidnon Philippines Inc.’s 35-MW project in Bukidnon.

The pending contracts followed the inflow of contracts approved since the passage of the Renewable Energy Act of 2008, which was crafted to spur the development of such projects.

The approved projects have a combined 3,000-MW combined potential generating capacity which include contracts for the development of 797 MW of hydropower; 936 MW for wind; 31 MW for solar; 606 MW for geothermal; and 448 MW for biomass.

The country’s total power generating capacity stands at roughly 15,000 MW, with only over one-fourth consisting of RE sources.

Under the renewable energy mandate, qualified green power proponents may avail of the FIT incentive, which would be shouldered by consumers in their electricity bills, to guarantee their returns over a certain period.

Consumers, in particular, would be paying an extra line item in their bills called the FIT-Allowance where renewable energy firms would draw their respective FIT. The tariff would be set by the National Renewable Energy Board and then approved by the Energy Regulatory Commission before it is implemented.

RE proponents argued that overall rates would taper off after a brief period when consumers will pay RE companies qualified for the FIT a premium for the electricity they produce.

“The more we get renewable energy projects to come in, the cost will come down. Over a long period of time, renewable energy will lower the rates,” Aloysius Santos, First Gen Corp. vice president for sustainability and energy efficiency, said.

The incentives will spur the development of clean and indigenous energy sources, which were previously disregarded due to the high investment costs and limited markets compared with conventional power plants.

What consumers would be paying for to support these projects is the difference between the avoided cost of power generation from fossil-fired power plants and the FIT to be set by regulators.

As such, when the cost of electricity from coal and diesel plants, for example, rises above the FIT, renewable energy companies would have to refund consumers by a decrease in FIT-All charges.