Introduction
The Senate has called on the Energy Regulatory Commission (ERC) to finalize the Green Energy Auction Reserve (GEAR) prices to facilitate the upcoming auction of renewable energy this year. This initiative is crucial for advancing the transition to renewable energy sources.
Senate Hearing Highlights
Key Statements from Senator Pia Cayetano
During a recent Senate hearing on the Department of Energy’s budget, Senator Pia Cayetano emphasized the urgency of finalizing GEAR prices:
“That is one of the priorities I think we need to do because in everything, the goal is to make the shift to renewables, and this is directly related to that.”
Attendance of Energy Officials
Energy Secretary Raphael Lotilla and ERC Officer in Charge and Chief Executive Officer Jesse Hermogenes Andres were present at the hearing, highlighting the government’s commitment to renewable energy initiatives.
Green Energy Auction 3 (GEA-3) Overview
Completion Timeline
The Department of Energy (DoE) assured the Senate that the third Green Energy Auction (GEA-3) would be finalized by the end of this year:
“Our target for the Green Energy Auction 3 is to finish it before the end of the year such that the pumped storage hydro, [more than] 3,000 megawatts (MW), will be able to come in five years from now,” stated Energy Undersecretary Rowena Guevara.
Importance of GEAR Prices
For GEA-3 to proceed, the ERC must release the GEAR prices, which are essential for determining the maximum price offers for the auction:
“One of the items required there would be the approved pricing methodologies with ERC. We’re coordinating that,” Lotilla added.
Investor Interest and Challenges
Demand for GEA-3
Senator Cayetano noted that many investors are eager for the third iteration of the GEA, which is crucial for attracting investments in the renewable energy sector. The DoE has conducted two previous auctions over the last two years, resulting in 5,306 MW of renewable energy commitments scheduled for delivery between 2024 and 2026.
Challenges Faced
Despite the interest, the DoE reported a commitment of only 3,580.76 MW out of the 11,600 MW offered under GEAR2. Factors contributing to the low investor turnout include:
- Supply limitations
- Low incentives
- Delays in grid impact studies
- High costs of financial guarantees
GEA-3 Technology Scope
Eligible Renewable Energy Technologies
GEA-3 will cover non-feed-in-tariff (Non-FIT) eligible renewable energy technologies, including:
- Geothermal
- Impounding Hydro
- Pumped-Storage Hydro
According to DoE Circular DC2023-10-0029, the estimated capacities for these technologies are:
- 699 MW from impounding hydro
- 3,120 MW from pumped storage hydro
- 380 MW from geothermal
Inclusion of FIT-Eligible Technologies
Additionally, GEA-3 will also include run-of-river hydro, a FIT-eligible renewable energy technology, further expanding the potential for renewable energy development.
Conclusion
The timely finalization of GEAR prices by the ERC is vital for the successful launch of the GEA-3. With significant investor interest and a clear commitment from the government, the auction promises to play a key role in advancing the Philippines’ renewable energy landscape.
