The renewable energy industry has urged the government to redesign its Green Energy Auction (GEA) program and take the hint from the outcome of its latest iteration which suffered from a lack of participation.
The GEA relates to the mechanism allowing renewable energy firms to bid against each other by offering supply contracts at least cost to buyers without themselves going under. Participants also compete on the basis of reserve prices determined by the Department of Energy.
Renewable energy developers at the forum hosted by ING Philippines in Taguig City only on Monday said particular attention should be paid on how the various technologies, given the intricacies inherent in each one, are valued and priced accordingly.
Theresa Cruz-Capellan, Sun Asia Energy chief executive officer, at the sidelines of the forum, told reporters of the need for “a more sophisticated auction design” to allow for the more complex technologies such as natural gas and pump storage hydro to come out in full when power contracts are done.
Capellan said the second round of GEA already raised red flags such as the low turnout of participants or bids and thus the need to fine tune the auction rules.
She particularly noted the low turnout of bids for floating solar technology.
“There has to be a more sophisticated auction design that will allow leaders in the energy sector to participate actively and see the signals as correct. But it’s all there, the market mechanisms are all there. Each mechanism is a pathway to commercialization,” Capellan said.
Sun Asia is partnered with Blueleaf Energy PH in the 1,318-megawatt floating solar project on Laguna Lake by next year.
SunAsia said the joint venture already secured ten 25-year solar energy operating contracts with the Department of Energy.
Carlo Vega, First Gen vice president for power marketing, trading and economics, said the additional off-take mechanisms for the renewable energy industry are welcome.
“This will help in managing risks. Having said that, it is not without difficulty because you know, while it’s good to have more off-take mechanisms, the devil is really in the details,” Vega said.
Vega also noted the second GEA posted a huge shortfall as the auction attracted only 3,000 MW of bids when the target capacity was 11,000 MW.
“That in itself is a signal and that signal should be properly interpreted by our policy makers, the rule makers, such that if there’s eight gigawatts, or it’s undersubscribed by eight gigawatts, then there’s something wrong with the price signal being set up,” Vega said.
First Gen owns power units with a combined capacity of 3,668.2 MW and a portfolio using natural gas, geothermal, hydroelectric, wind and solar power technologies.
First Gen targets total capacity of 13,000 MW over the next six years and plans spending as much as $20 billion until 2030.
