THE MOVE by the Department of Energy (DoE) to allow full foreign ownership of biomass power plants has done little to attract more investments in projects involving the renewable energy technology, local developers said.
“Only if there is FiT (feed-in tariff),” Don Mario Y. Dia, president of Biomass Renewable Energy Alliance, Inc. (BREA), told reporters last week when asked on the impact of the DoE move.
FiT is the guaranteed rate awarded by the government agency to early movers in the renewable energy (RE) space.
Developers who build RE power plants within a set deadline receive the subsidized tariff for their output, which is usually higher than market rates.
“How can you attract foreign investors, ang titingnan nila (what they are looking for are) what are the incentives behind it,” said Mr. Dia, who is also vice-chairman of Negros Island Biomass Holdings, Inc.
The holding firm has lined up three biomass projects on Negros island for inclusion in the government’s FiT program.
Alberto R. Dalusung III, who has served as consultant for biomass projects, said foreign investors are looking for certainty.
“They look for a power supply agreement (PSA). The FiT is the power supply agreement,” he said.
PSAs are contracts between power plant developers and “off-takers” of their energy output, mostly power distribution companies. These contracts include their agreed rate for each kilowatt-hour sold.
“The companies are going elsewhere in Southeast Asia,” Mr. Dalusung added.
LOCALS LOOKING ELSEWHERE
Mr. Dia said even local companies are investing overseas in markets that are awarding feed-in tariff to developers such as Vietnam and Myanmar.
He described BREA as the most representative organization for the biomass industry.
In the Philippines, the FiT scheme for biomass has a capacity installation target of 250 megawatts. Developers were in a race to complete their projects before the end-2017 deadline to avail of the subsidized rate.
However, deadline came with the full subscription to the installation target.
This prompted the DoE to agree to the scheme’s extension to end-2019 or upon successful commissioning of projects covering the unsubscribed balance of the target, whichever comes first.
Mr. Dia said about 10 companies would go over the installation target set by the DoE.
In October, the DoE announced that it had opened biomass energy development to full foreign ownership to encourage the growth of the sector that has lured only a few investors even after the FiT scheme gave them a fixed and subsidized rate for their power output.
“In these new guidelines, we opened up the biomass sector to foreign corporations,” Marissa P. Cerezo, director at the department’s Renewable Energy Management Bureau, had said, adding that the DoE has done away with the previous 60%-40% ownership rule in favor of Filipinos.
She said the reason for allowing foreign ownership in biomass development is that the bureau believes this project does not use a natural resource, hence, no foreign ownership limit should apply.
Biomass energy projects use agricultural waste to produce energy. The DoE has also classified waste-to-energy projects under biomass development, thus widening the sector’s scope.
“We don’t have the local technology on biomass yet so with this policy opening up to foreign companies, we believe that a lot more foreign companies will engage in biomass development or waste-to-energy development,” she said. — Victor V. Saulon