The Department of Energy said Friday it issued the draft guidelines for the opt-in mechanism of the Green Energy Auction Program, which aims to lessen the charges under the feed-in-tariff system by enabling direct contracting of the renewable energy portfolio standards.
The opt-in mechanism aims to decrease the applicable FIT-Allowance rate charged to end-users, meet any RPS-mandated participant supply and RPS requirements and comply with and provide further guidelines in implementing Department Circular No. DC2021-11-0036 or the GEAP Guidelines.
RPS is a policy mechanism under Republic Act No. 9513 or the Renewable Energy Act of 2008, which encourages electricity suppliers, particularly the distribution utilities, to source or produce a specified fraction of their power supply from eligible renewable energy resources.
The department increased the RE utilization percentage for on-grid areas to 2.5 percent from 1 percent.
The opt-mechanism means any distribution utility would have the option to procure from the GEAP pool of winning bidders under a particular auction round, “and thereby carve out such DU-procured volumes from the FIT-All [feed-in tariff allowance] compensation.
“The opting-in by RPS-mandated participants shall decrease the FIT-All Fund requirement, which will eventually reduce the FIT-All rate charged to end-users,” the draft circular said.
The agency said other RPS participants, such as the retail electricity suppliers and generating companies with directly connected customers, may also exercise the opt-in mechanism, subject to the approval of the DOE.
Under the circular, the DOE, through the GEA committee, will establish eligibility requirements for the opt-in participants in each auction round, including parameters such as, but not limited to, National Electrification Administration credit rating, financial ratio and form of security deposit.
An RPS participant that complies with eligibility requirements may exercise its option to opt-in by submitting a letter request to the DOE, specifying the opt-in capacity.
Upon compliance with eligibility requirements, the DOE will endorse the opt-in participant to National Transmission Corp. and the market operator.
The DOE said any DU that exercised the opt-in mechanism would be deemed compliant with the competitive selection process or bidding requirement considering the GEAP winning bids are below the Energy Regulatory Commission-set GEA Rate prices for the particular GEAP auction round.
The draft circular is subject to public consultations.
The DOE aims to conduct the GEAP by June. The agency auctioned 2,000 megawatts of renewable energy capacity in last year’s GEAP round.