Green energy auction pricing to involve two-stage evaluation
THE Energy Regulatory Commission (ERC) said the draft pricing rules for the upcoming green energy auction (GEA) round involve two sets of evaluations to assess the “reasonableness and prudency” of each price offer.
The regulator last week posted the draft price determination methodology (PDM) to seek comment from the public.
The ERC will set parameters for each type of renewable energy facility covered in the program. It is also required to establish “acceptable value ranges” to serve as thresholds for each parameter, and define the criteria for the weighted scoring system to be applied in its evaluation of price offers.
“Bids shall first undergo evaluation for compliance with the thresholds established for each parameter and to assess the reasonableness and prudency of the price offer,” the ERC said.
Those that meet the threshold will advance to the next stage of evaluation, which will involve two “checkpoints.”
Price offers will be first evaluated to determine whether the project development cost, net capacity factor, and weighted average cost of capital components meet the minimum score requirements for the primary parameters.
Bids that pass the initial evaluation will then be scored on each of the remaining parameters.
Next, each parameter will be assigned a predetermined weight depending on its impact on the tariff, and compliant bids will earn the corresponding score for each parameter.
“A total score of 90% is required to pass the evaluation, ensuring that all critical parameters are prioritized and complied with,” the regulator said.
Qualified bidders will be required to submit supporting documents such as a written explanation, the financial model, quotations and similar documents, and audited financial statements.
The regulator will endorse the price offers that pass evaluation to the Department of Energy (DoE) for confirmation as winning bidder.
The ERC is responsible for establishing the PDM that the bidders will adopt under the GEA program. The PDM is used to evaluate the price offered by bidders.
The GEA program is designed to increase renewable energy capacity, which will help the government meet its goal of 35% renewable energy in the power mix by 2035 and 50% by 2040.
In the last two years, the DoE conducted two GEA rounds, which generated a total of 5,306 megawatts (MW) of renewable energy commitments for delivery in 2024 to 2026.
This year, the DoE plans to auction renewable energy projects with a total capacity of 4,399 MW.
The third round of GEA will cover mostly technologies not eligible for the feed-in tariff (FIT) such as geothermal, impounding hydro, and pumped storage hydro.
It will also cater to run-of-river hydro, a FIT-eligible renewable energy technology. — Sheldeen Joy Talavera