An official of the Department of Energy (DOE) said a draft policy endorsing the continuation of the feed-in tariff (FiT) for run-of-river hydropower and biomass could be signed soon.
Energy Undersecretary Felix William B. Fuentebella said there is a “chance” that the FiT for the two renewable-energy (RE) technologies may continue until the original 250- megawatt (MW) installation target has been met, possibly in three years.
“It has not yet been signed but, yes, we are hopeful. There is a chance. We’re looking at three years or until the capacity is filled up for run-of-river hydropower and biomass. There is already a draft. Once it’s signed, I will show it,” he said.
Subscription to the FiT installation target for run-of-river hydropower and biomass expired at the end of 2017. It was also last year when Energy Secretary Alfonso G. Cusi said he is not keen on extending this policy because “it’s difficult for us to be giving subsidy or FiT, especially when we want to bring down our energy tariff.”
The Philhydro Association Inc. had said last year that its members were advised by the DOE to look for offtakers because the FiT was set to expire by December 31, 2017, implying the 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 2017, 445 hydropower 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 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 foresaw that 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 eight projects, with potential capacity of 58.3 MW, would be completed by 2019; and another seven projects, with potential capacity of 33.2 MW, by 2020.
Counting in the four projects totaling 26.6 MW to date already with FiT-Certificate of Endorsement, then the 250-MW installation target will be fully subscribed in 2020, according to Philhydro.