In a historic day for renewable energy in The Philippines, the country approved a feed-in tariff (FIT) that covers small hydro, biomass, wind, and solar. It postponed including ocean energy for further study.
The government previously announced the FIT for geothermal separately, in what it calls a “geothermal crash program.” It raised the rates to provide incentives to more than double capacity in the next few years. Geothermal supplies about 20% of the country’s electricity.
Details on the FiT
First called for in the Renewable Energy Act of 2008, the approval comes all these years later after “protracted quarrels within the government and opposition from various influential interest groups. The regulatory commission alone took more than a year to rule on the recommendations of the National Renewable Energy Board,” observes Paul Gipe of Wind-Works.
The rates are lower than the Board recommended, especially for solar, and vary only by technology – there aren’t different rates for size or other factors, making it much simpler than most FiTs.
Run-of-river hydro: 5.90 per kWh
National Renewable Energy Board Recommended Rates:
Run-of-river hydro: 6.15 (PhP/kWh)
To avoid the cost-overruns being experienced in countries like Germany, rates have been lowered based on updated construction costs – since solar is much cheaper to build now, for example, its FIT rates are much lower. Rates are also based on higher capacity factors to ensure only more efficient plants participate. They also include the cost of operating plants and a reasonable return on investment for developers.
Rates will be reviewed in three years or when installation targets for each technology are met. The FIT will be in place for 20 years but could be adjusted for new projects if there are significant changes to the cost of a technology.