The Philhydro Association Inc. is asking the Joint Congressional Power Commission (JCPC) to endorse the continuation of the feed-in tariff (FiT) for run-of-river hydropower until the original 250-megawatt (MW) installation target has been met.
“Philhydro remains concerned that the expiration of the FiT will send a strong, albeit wrong signal to current and prospective investors and stakeholders of the renewable-energy [RE] sector,” Philhydro President Jose Silvestre Natividad said.
Subscription to the FiT installation target for biomass and run-of-river hydro is set to expire by year-end.
The group’s position was in reaction to earlier pronouncements of Energy Secretary Alfonso G. Cusi, who is not keen on extending FiT allocation for biomass and run-of-river technologies.
“It’s difficult for us to be giving subsidy or FiT, especially when we want to bring down our energy tariff,” the energy chief said.
During a Senate hearing on Wednesday, Cusi said the matter is still under review. “I have to study it. We are reviewing it.”
Cusi also added the National Renewable Energy Board (NREB) has submitted its recommendation. However, he has yet to read the report. “I was told the NREB has submitted it. I have yet to read it. I think it was submitted [on Tuesday],” the energy chief said.
The NREB is the advisory body tasked with the effective implementation of RE projects in the Philippines.
Philhydro also said its members were advised by the Department of Energy (DOE) to look for off-takers because the FiT is set to expire on December 31, implying that, FiT, as a mechanism will no longer be available.
The group said this will put the projects of all run-of-river hydro developers in peril, as the financial feasibility and the investment decisions were based on the assumption that the FiT mechanism is available until the installation targets have been fully subscribed.
Based on Philhydro’s computation on the impact of all the hydro projects coming online by 2020 to the FiT allowance at the current digressed rate of P5.87 per kilowatt-hour (kWh), allowing an extension of the hydro FiT and allowing hydropower developers to complete the 250-MW installation target will only have a P0.01034 per kWh impact to the FiT-All by 2020.
The DOE commenced the awarding of hydropower service contracts in 2009. As of end-June, 445 hydro power projects have been awarded service contracts. To date, only four run-of-river hydropower facilities with a capacity of 26.6 MW have reached construction, successful commissioning and have been endorsed under the FiT system.
“Despite over 787 MW of potential hydropower capacity, only 26.6 MW have achieved commissioning,” Philhydro said. Based on its own study, the main cause for delay has been the difficulty in securing permits from various national and local government agencies, in particular, the water permit and FPIC [free and prior informed consent] with the indigenous people.
“The most of the three years allotted for the FiT installation target are already consumed by the permitting process alone,” Philhydro said.
Given the current status of the projects, time to complete the permitting requirements and construction period, Philhydro foresees a total of seven projects with potential capacity of 117.90 MW would be on stream by end 2017.
In 2018 a total of projects with a capacity of 9.7 MW would be completed.
A significant number of hydropower projects, totaling 8 projects, with potential capacity of 58.3 MW, would be completed by 2019 and another 7 projects, with potential capacity of 33.2 MW, by 2020. Including the four projects totaling 26.6 MW to date already with FIT-COE (Certificate of Endorsement), then the 250 MW installation target will be fully subscribed in 2020, according to Philhydro.