Feed-in-Tariff to lower powercost in the long-term – WWF

The government’s Feed-in-Tariff (FIT) system is well-placed to ease the high-priced electricity cost in the country over the next few years as it could prompt a shift to a greater appreciation of renewable energy (RE), of which rates could go cheaper once the bulk of the Philippine population starts using it.

Under the FIT, the government guarantees RE developers a constant generation rate per KWh over the next 20 years, with periodic reviews by the Energy Regulatory Commission (ERC) to adjust rates for foreign exchange and inflation.

In 2013, the Department of Energy (DOE) had set new criteria in giving FIT eligibility among investors wherein the first ones to fully develop their RE projects are also the only ones to get FIT allocation.

Various groups recently opposed the FIT arguing how rates might further burden consumers.

But international climate change solutions provider World Wide Fund for Nature (WWF) argued that Philippine electricity rates have historically increased faster than the FIT.

This is due mainly to the fact that 70 percent of the nation’s electricity is generated from fossil-fuels, 90 percent of which are imported at varying prices.

Moving forward, the International Energy Agency forecasts a steady increase in the cost of coal and oil over the next decade and this could mean a long-term continuous increase in the power cost if the country wouldn’t be able to grow its RE portfolio.

"Investing in RE shields us from the volatility of the fossil fuel market while taking advantage of what we have been endowed with,” said WWF-Philippines climate and energy unit head Gia Ibay over a statement.

“We are a fossil-fuel poor country," she added.

One of the country's few competitive advantageous is its vast renewable energy resources.

According to WWF, RE plants can be directly embedded into certain key areas to reduce the cost of electricity, such as eliminating the need for transmission and distribution lines to deliver electricity from power plants to households.

“The FIT paves the way for necessary RE investments. Unlike power plants which burn dirty and imported coal or oil – RE provides consistent, indigenous and clean power at a constant price for decades – especially since it has a 0 percent VAT rate. We believe that the FIT is a sound long-term investment for clean, cheap power,” Ibay said.

Currently employing three million people globally, RE also generates more jobs.

“Renewables generally provide from three to six times more jobs per unit of energy produced than either fossil-fuel or nuclear plants,” WWF global energy policy director Stephan Singer said. .