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Manila Electric Co. (Meralco), the country’s biggest power distributor, has suggested to the Aquino administration not to rush the installation of expensive renewable energy facilities and the imposition of the corresponding rates and charges so as not to further burden consumers with higher electricity prices.
“The generation cost from renewable energy sources will go down over time as the technology matures, especially for solar. It will be prudent for the Philippines to just wait until the generation costs of relatively expensive RE sources come down to a level that is close to grid parity with conventional sources of generation,” Meralco told the Energy Regulatory Commission (ERC).
According to Meralco, it supports the position of the National Renewable Energy Board (NREB) to allocate higher installation targets for RE sources such as run-of-river hydropower and biomass with relatively lower generation cost as against the other RE sources.
“There is no need to rush the imposition of feed-in-tariff (FIT) rates that will burden the end users, especially for technologies with proposed FIT level twice or thrice the current conventional generation costs,” the distribution utility added.
According to Meralco, it supports the government’s direction toward a clean energy portfolio. “However, RE technologies remain today as relatively more expensive than conventional sources of energy. The entry of RE will translate to higher cost of electricity. Recent reports declare the Philippines as one of the countries with the highest power rates in the region,” Meralco noted.
“As the power sector’s front liners, directly dealing with consumers on a day-to-day basis, we are also keenly aware of the demand of our customers for affordable rates and cost-competitive service. Thus, we strongly recommend that the implementation of mechanisms that will lead to additional charges on consumers be carefully calibrated,” the power distributor explained.
The Department of Energy (DoE) also shared the view of pacing the more expensive RE technologies and even reducing to 760 megawatts the installation target or the total allowed capacity of the renewable energy facilities that would be put up in the country over the next three years.
Energy Secretary Jose Rene D. Almendras explained that the reduction from the initial target of 830 MW was based on the results of a technical study, which showed that the grids and the transmission facilities were capable of handling only an additional 760 MW.
Based on the DoE’s submission of the “revised and certified” installation targets, only 50 MW in new installations would be allowed for solar facilities; 200 MW for wind; 10 MW for ocean; 250 MW for hydro; and 250 MW for biomass.
The previous initial recommendation for installation targets was slightly higher at 100 MW for solar; 220 MW for wind; 10 MW for ocean; 250 MW for hydro; and 250 MW for biomass. These installation targets were included in the petition for feed-in-tariff rates submitted last May by the NREB to the ERC.
Almendras earlier said the government wanted to pace the more expensive renewable energy technologies to help ease the burden of the universal levy called feed-in-tariff allowance (FIT-All), which will be imposed on all electricity consumers.
Of the renewable energy technologies, solar developers and ocean energy project proponents will enjoy the highest feed-in-tariff rates of P17.95 a kilowatt-hour and P17.65 a kWh, respectively. Investors in wind development may be given a FIT rate of P10.37 a kWh; for biomass, P7 a kWh; and for hydro, P6.15 a kWh.