THE third round of the green energy auction (GEA-3) would be moved to early next year as the Energy Regulatory Commission (ERC) has yet to finalize the pricing mechanism for geothermal and pumped storage hydropower.
“It’s supposed to be in November but a lot has to be finalized with the DOE [Department of Energy] first. It’s likely going to be in the first quarter of next year,” said ERC Chairman Monalisa C. Dimalanta.
It is the mandate of the ERC to determine the Green Energy Auction Reserve (GEAR) prices or the maximum price offers for the GEA.
“We are now studying the pricing parameters for geothermal. Our target is within December it should be finished. It will just take a little while after that discussion with DOE,” Dimalanta said.
The ERC chief had met with DOE officials to discuss the possibility of not imposing a ceiling price for the GEA-3. Dimalanta said geothermal power and pumped-storage hydropower are technologies with front-end costs.
“We’re open to not having a GEAR for geothermal and pumped-storage hydro because we recognized the business model there is different, the funding requirements are different so it’s very hard to set out that number and make them bid,” she said. “Second, for geothermal and pumped storage hydro, there are only limited players so there’s really no auction to speak of.”
DURING the meeting, Dimalanta said the DOE had requested ERC to set the pricing parameters for geothermal and pumped storage hydropower.
“We went down to the detailed discussions on what those pricing parameters should be and what the steps should be because we want the steps laid down for the winning bidders after they get awarded. We want it to be as clear as possible that whatever rates they won will still be subject to the review,” explained Dimalanta.
For the past two rounds of GEA, the ERC imposed GEAR prices on rooftop solar, floating solar, onshore wind, biomass, waste-to-energy, and run-of-river hydro.
The first round of GEA was conducted in June last year. It generated almost 2,000MW of capacities that were committed to deliver energy from 2023 to 2025.
For the second round, the winning bids were equivalent to 3,440.756 MW of RE capacities committed for development and installation from 2024 to 2026.
Low investor turnout
The DOE earlier cited supply limitation, low incentives, delay in the conduct of grid impact studies, and the cost of financial guarantees as some of the reasons for low investor turnout during the GEA-2.
Industry stakeholders, on the other hand, argued that the GEAR prices do not reflect the realities of the current demand and supply of electricity in the country, nor is it encouraging RE developers to build.
Dimalanta said her office is open to reviewing the rates. “What our market operation service will do is to conduct another discussion with the developers and see what can be adjusted, if any. We’re also cautious about it because it may be unfair to those who have submitted bids before and took that risk of bidding at those rates.
We’re reviewing that but we’re open maybe to those capacities that absolutely did not have offers because there are no rights that will be impaired,” she explained.
The GEA program was designed to continuously trigger the increase of RE capacity in the country, which will help realize the government’s target of 35 percent RE in the energy mix by 2030 and 50 percent by 2040.
The DOE wants the GEA to be conducted on a yearly basis, in a bid to promote RE as the country’s primary source of energy.