ERC sets offshore wind ceiling price at P11/kWh

THE Energy Regulatory Commission (ERC) said the ceiling price for offshore wind projects in the fifth green energy auction round (GEA-5) at P11 per kilowatt-hour (kWh).

This exceeded the preliminary rate of P10.3859 per kWh. The ERC cited revised output estimates, reflecting new project costs and changes in inflation and foreign exchange assumptions.

In a statement on Friday, the ERC said these factors were partly offset by the reduction or removal of some components, including the cost of equity and decommissioning costs.

The ERC said it will conduct additional consultations to finalize indexation, which is a one-time tariff adjustment mechanism that accounts for cost changes between project award and commercial operation.

“Stakeholder feedback will help ensure that the indexation framework reflects project cost realities while maintaining consumer protection,” the ERC said.

The ceiling price, or the green energy auction reserve (GEAR) price, serves as the maximum price in pesos per kWh that will guide bidding during the auction.

The approved GEAR price will be used for GEA-5, which targets 3,300 megawatts of fixed-bottom offshore wind capacity for delivery between 2028 and 2030.

Jose M. Layug, Jr., president of the Developers of Renewable Energy for Advancement, Inc., said the ERC has set a “judicious” GEAR price for offshore wind.

“We hope that this rate encourages bidders to participate in the auction and for the DoE to register as many serious bidders as possible for an inclusive and competitive final bid price that will benefit the consumers,” he said via Viber.

The Philippines is hoping to start generating offshore wind power by 2028, as it pushes to diversify its energy mix and reduce dependence on fossil fuels.

It expects offshore wind to play a key role in achieving the target of increasing renewable energy’s share in the power mix to 35% by 2030 and 50% by 2040.

Consumers will absorb a green energy tariff, reflected in their monthly electricity bills through the green energy auction allowance.

Winning bidders will be given a 20-year supply delivery period, with green energy tariff payments starting with commissioning and registration with the electricity spot market. — Sheldeen Joy Talavera