NREB qualifies cost impact of higher solar installation

NREB qualifies cost impact of higher solar installation 
by Myrna Velasco

June 19, 2014


The National Renewable Energy Board (NREB) is disputing the calculated P8-billion ‘subsidy impact’ of the proposed increase in solar technology installation to 500 megawatts (MW) from a previously-approved cap of 50MW.

NREB Chairman Pete Maniego Jr. said the level of subsidy when it comes to renewable energy (RE) technologies of which developments will be underpinned by feed-in-tariffs (FITs) must only be estimated beyond the prevailing grid rate.

“The consumers have to pay the grid rate or generation charge even if there are no RE installations,” he said, qualifying further that based on their computation, the resulting subsidy cost will be way lower than the P8 billion estimate of the Foundation for Economic Freedom (FEF), the main opposing party to the Department of Energy’s proposal to hike the installation target for solar developments.

“Assuming an average capacity factor of 50% and the high FIT-Allowance of P0.10 per kilowatt hour (kWh), the resulting FIT support for the 750MW will be a maximum of only P328.5 million per annum,” he stressed, adding that if hydro and biomass project developments will be spurred, such would have ‘cost mitigating effect’ on the overall FIT-All that will be reflected in the consumers’ bills.

In probabilities that the FIT-All will be tempered to P0.05 per kWh, Maniego noted that “the FIT support will be down to only P164.25 million per annum.”

He explained that their calculation had been juxtaposed on the clearing prices drawn from the Wholesale Electricity Spot Market (WESM), primarily on months of higher availability for solar-produced energy.

Nevertheless, Maniego emphasized that they are open to discussing and fleshing out the details of their computation vis-à-vis the figures set out by the FEF, so the consumers can be fully apprised of the cost impacts for the targeted RE installations.

And given volatile pricing in the WESM and the notoriety of energy forecasting turning out to be wrong, relevant stakeholders primarily FIT Administrator National Transmission Corporation (TransCo) had been prodded to re-study the cost impacts up to the end of the 20-year FIT subsidy before even agreeing to installation increase for specific RE technologies.

“The higher the grid rate, the lower will be the FIT-Allowance. Even assuming that the grid rate will remain fixed over the 20-year period, so that the FIT-Allowance will also remain fixed, I can’t get anywhere near the allegedly P8 billion conservative estimate of FEF… I don’t want to pre-empt TransCo, but I was assured that the FIT Allowance will be much lower than P0.10 per kWh,” Maniego said.

It is worth noting though that many power markets globally are already propping up to ‘walk away’ from FIT and other forms of RE subsidies as they predict grid parity and cost lowering for such technologies in the next 5-10 years.

Maniego said the increase in solar installation was an initiative of the DOE, a policy step that was also announced earlier by Energy Secretary Carlos Jericho Petilla.

“The 500MW came from DOE and of course, we are happy to concur. We proposed to increase both wind and solar, as these technologies have exceeded their installation targets… we actually wanted to increase the targets, but had not proposed any definite figure yet pending stakeholder consultations,” he stressed.

source: http://www.mb.com.ph/nreb-qualifies-cost-impact-of-higher-solar-installation/