Board backs FiT extension for biomass, river hydroelectric

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DEVELOPERS of biomass and run-of-river hydroelectric power plants have secured the endorsement of the National Renewable Energy Board (NREB) to qualify for the guaranteed rate under the feed-in-tariff (FiT) system if they finish their projects in the next three to five years.

“The board has approved that we file a request with the office of the [Department of Energy] Secretary [Alfonso G. Cusi] for the extension of FiT for biomass and run-of-river hydro,” NREB Chairman Jose M. Layug, Jr. told reporters, adding that he would formally submit the board’s recommendation next week.

“What we would recommend to the DoE is to extend the FiT but the FiT rates would have to be based on the time that the project is completed,” he said.

The FiT system offers a fixed rate for the electricity produced by developers of solar, wind, biomass and run-of-river hydro power plants to encourage investment in emerging renewable energy technologies. The first projects to be completed under a prescribed power installation target are awarded the guaranteed FiT for 20 years.

For biomass and run-of-river hydro, the installed capacities have remained below the set targets ahead of the end-2017 deadline.

“I have not officially filed it yet because I am collating the position papers,” Mr. Layug said. “Next week, I’ll send the letter.”

“I have talked to the secretary about the matter and he said: ‘I will review it.’ So, no commitment,” he said.

NREB is the policy recommendatory and monitoring body for the implementation of Republic Act No. 9513 or the Renewable Energy Act of 2008.

“The extension will have to be issued by the DoE,” he said, adding that he would recommend a period of three to five years.

As of March, seven biomass power plants had been scheduled for commissioning or completion this year, keeping them in the running for the reduced FiT rate of around P6.60 for each kilowatt-hour they export to the electricity grid.

The projects – four in Luzon and three in Mindanao – have a combined capacity of 37.1 megawatts (MW). Should they be able to start commercial operations this year, they qualify for the P6.5969 per kWh degressed FiT rate for the renewable energy.

As of end-2016, the Energy Regulatory Commission (ERC) awarded certificates of compliance to projects with a total capacity of 28.6976 MW, or way below the 250-MW installation target set by the DoE for biomass plants, which convert agricultural waste to electricity. That certificate serves as basis for the biomass developers’ collection of the guaranteed FiT.

For run-of-river hydropower, the DoE under the previous administration set a target of 250 MW with a FiT rate of P5.90 per kWh. As of May 2017, only four projects have been built with a total capacity of 28.70 MW. The rate has been degressed this year to P5.8705 per kWh as called for by the FiT rules.

“The FiT that we’re asking for the extension is the degressed FiT at the time they complete their project. That’s for ERC to determine, not NREB, not DoE. We’re not asking for FiT of this year. We’re asking that they be given that FiT when they complete their project,” Mr. Layug said.

Consumers who are supplied with power through the distribution or transmission network share in the cost of the FiT scheme in part through a uniform charge per kilowatt-hour that appears in their monthly electricity bill as “FiT-allowance.”

NREB’s recommendation offers a ray of hope for developers who are banking on the FiT to clinch funding from investors and bankers.

“Developers cannot close their financing without something sure. Their investors and the banks want something sure. And in the case of renewables, like biomass projects, they are looking for a guarantee that this is the number that’s gonna make their financial model work. The FiT comes in, great,” Poyry Energy, Inc. President Dominic M. Gemperle said.

“The biomass projects that we’re working with, they’re all on hold or progressing very slowly. They cannot finalize,” he added.

He said some clients of Poyry, a global consulting and engineering company, have not even reached the construction stage because lenders needed assurance that the project proponents would get a guaranteed payback.

Mr. Cusi has been vocal about adopting a “technology-neutral” policy that does not favor any energy resource.

On Friday, he told reporters said the was not inclined to approve an extension of the FiT system for biomass and run-of-river hydro. – Victor V. Saulon