DOE keeps October deadline for first green energy auction

The Department of Energy (DOE) is sticking to the October timeline for the country’s first green energy auction (GEA).

DOE is finalizing its policy on the Green Energy Auction Program (GEAP), which provides additional market options for renewable energy (RE) developers and generators and will promote a competitive setting of rates for RE supply in the country, DOE assistant secretary Redentor Delola said in a text message.

He said the agency has completed all public consultations on draft circular, “Providing the Guidelines for the Green Energy Auction Program in the Philippines.”

“We are working on the launch this month. We are finalizing the policy already so that we can issue the notice of auction as soon as possible,” Delola said.

The DOE delayed the GEA, which was originally slated in June, to late this year as it revised the auction design due to a reduction in demand because of the COVID-19 pandemic. It partnered with the US Agency for International Development (USAID) to come up with a new design for the green auction.

In the last public consultation, the DOE introduced changes in the GEAP framework to provide immediate and timely investments, support the development of, and increase access to financing for new or additional capacities under a competitive process, as well as implement programs that promote clean and sustainable environment.

The new framework takes into consideration the projected requirement capacity additions needed to achieve the RE generation target of 35 percent by 2030, the agency said.

Under the improved GEAP guidelines, the program will use “existing mechanisms that will increase the share of RE in the market, increase the available supply of power in the grid, and at the same time will increase the Renewable Portfolio Standards (RPS) allocation of the distribution utilities (DUs).”

RPS is a mechanism under the RE Act of 2008 where DUs, electric cooperatives (ECs) and retail electricity suppliers (RES) are prescribed to source a percentage of electricity requirements from RE sources. Currently, the RPS level is set at one percent until 2022.

In explaining the use of existing mechanisms, Delola said the GEAP design would be like the feed in tariff (FIT) system, but the rates would be determined through competitive bidding.

A mechanism also under the RE Act of 2008, the FIT system details perks for power developers for a period of 20 years to invest in the more expensive renewable sector.

The DOE has set specific capacity targets per RE technology which developers need to fill up through RE project developments.

This was scrapped by Energy Secretary Alfonso Cusi in 2016 since it only adds financial burden to consumers.

The DOE was urged by industry players to launch the GEA within the third quarter to get some solar projects constructed to help stave off looming brownouts in the Luzon grid during summer and the 2022 elections.

This article was originally publsihed by PhilStar.