FIT rate cut may mean dropped solar projects
SOME SOLAR projects may be dropped as a result of the Energy Regulatory Commission’s (ERC) order to reduce rates for solar plants under the feed-in tariff (FIT) scheme, an industry group said.
Members of the Philippine Solar Power Alliance (PSPA) are opposed to the new P8.69 per kilowatt- hour (/ kWh) FIT rate for solar, down from the P9.68/ kWh set in 2012.
The adoption of the new rate came as a result of the Department of Energy’s order to increase the capacity allocation for solar to 500 MW from 50 MW under the FIT.
The FIT scheme provides that renewable energy developers be compensated at a premium rate for the electricity generated by their projects over a period of 20 years.
“Right now, we will have to run consultations with the members of PSPA but we have discussed this before and there is opposition to lowering the rate,” Tetchi C. Capellan, PSPA president, said in a phone interview when asked to comment.
“The P8.69/kWh rate that the ERC approved is not attractive for some players, particularly the small ones,” she said.
Ms. Capellan, however, clarified that “there will be always takers of the 500 MW allocated for solar” but lowering the rate “favors the big developers.”
She added: “There are small players that will definitely back out and not push through with their projects.”
Ms. Capellan noted members of PSPA will meet to formalize their stand on the ERC’s decision.
Despite the lower rate, National Renewable Energy Board (NREB), nonetheless, expects full take up of the 500 MW allocated for the solar technology.
But Chairman Pedro H. Maniego recognized that it may be hard for some developers to recover their capital investment using the recently approved FIT rate.
“Several developers who already started their solar projects using loans with higher interest rates advised me that they will find it difficult to meet their RoI (return of investment) and WACC (weighted average cost of capital) targets based on P8.69/ kWh,” Mr. Maniego said in a text message last week.
But the official said given the “stable” costs of solar technology and higher efficiencies, some developers may still proceed with their projects and try to get their plants online by next year.
NREB Vice-Chairman Ernesto B. Pantangco, for his part, said: “We will have to check reactions of solar associations on the rate and its impact on members.”
“The expectations were between P8.95/kWh to P9.10/kWh so it’s hard to gauge whether all 500 MW will be taken up at this time,” Mr. Pantangco said.
ERC Executive Director Francis Saturnino C. Juan, for his part, assured that developers who are serious about solar will go ahead with their projects.
“We’re still confident that there are others who will still build plants even with the lower rate,” Mr. Juan said via text. —