The Energy Regulatory Commission (ERC) is considering the removal of price caps at the third Green Energy Auction (GEA3).
ERC chairperson Monalisa Dimalanta bared the idea at the sidelines of an offshore wind energy forum hosted by NIRAS and the Nordic Chamber of Commerce of the Philippines in Pasig City on Tuesday.
The various renewable energy developers and the banks have already been consulted as to its feasibility.
The third round of renewable energy auctions under GEA3 has been scheduled next month when geothermal, run-of-river and pump storage hydro technology proponents are expected to compete against each other for the provision of renewable energy at the least price for buyers.
Under the GEA, renewable energy proponents compete for incentivized power rates by offering a fixed price that are lower than or equal to GEA reserve (GEAR) prices set by the ERC.
The plan is under evaluation as the technologies involved are complicated and costs are front-ended, Dimalanta said.
“We’re studying if it’s possible not to put a reserve price, a GEAR, and we’ll just evaluate after the bids are submitted,” she said.
She also said the agency is considering if GEA3 can be pursued by developers offering their own bid prices.
“If I were an investor, I’d want a reserve price so I don’t have regulatory risks after but if the reserve is too low, just as some of the comments are, then maybe they’d rather have that risk, They’d rather bet on the post-bid regulatory approval than the pre-approved low price,” she said.
A firm decision is expected this October as the DOE is keen on starting the bids next month.
In the event the ceiling prices are removed and the submitted prices prove too high, the ERC will still evaluate them on a per offer basis to protect consumers.
According to Dimalanta, the agency has conducted focus group discussions with the investors also but may check with the banks as well given they finance all these projects.
Both the DOE and ERC were inclined to make adjustments given the low level of renewable energy generation available at the moment.
Only 3,440.76 megawatts (MW) from 105 projects of the 11,000 MW target RE programs with incentivized rates seen online by 2026 were awarded under GEA2.
