The government is assuring the country’s energy security by ramping up new capacities to the electricity grid and encouraging sustainable supply, especially in the short- to medium-term period.
The Department of Energy has scheduled the third round of renewable energy auction, or GEA-3, in August this year, aimed at promoting the growth of RE as one of the country’s primary sources of energy and achieve energy security and reliance.
Launched in late 2021, the Green Energy Auction Program, or GEA-1, is part of the DOE’s initiative to attract current and incoming power players to invest in RE generation to attain its’s goal of a 35 percent RE capacity mix by 2035 and 50 percent by 2040.
It supports energy security by adding new capacities to the grid, thereby ensuring an adequate and sustainable supply of electricity, especially in the short- to medium-term.
The GEAP enhances the RE programs in general by promoting a competitive setting of rates for RE supply in the country and ensures the utilization of efficient RE technologies for low carbon shift in the energy sectors.
It is one of the best ways to accelerate the development of RE systems and the promotion and commercialization of its applications, and encourage RE private sector participation and investment.
It is intended to implement the RE Act mandate to prioritize the connection and building of RE capacity and ensure transparent and competitive selection of RE facilities to ahcieve reasonable ratets and encourage the best RE entrants into the system.
Department Circular no. DC 2021-11-0036 was released in December 2021, providing for the revised guidelines for the GEAP, which refers to the competitive process of procuring renewable energy supply.
The GEAP is meant for new and existing RE capacities duly registered with the DOE, provided such facilities have no purchase power agreement with distribution utilities or other off-takes at the time of the agreed delivery date.
Under the guidelines, the DOE will publish the notice of auction on its website and in at least one newspaper of general circulation.
The auction will indicate the coverage as the case may be, for Luzon, Visayas and Mindanao, whether per grid or as a whole, as well as the capacity and equivalent energy generation, with due consideration to interconnection limits and security of the grids.
During the auction, all qualified bidders should place their bid capacity and price offer through the electronic bidding platform operated by the DOE.
The GEA committee will rank the offers from the lowest to the highest bid price.
Other technologies
Potential RE investors are naturally pumped up with the the third round of the GEA-3 covering geothermal, impounding and run-of-over hydro and pumped-storage hydro totaling 4,399 megawatts on August 21, 2024.
The GEA-3 will specifically cater to non-feed-in-tariff (Non-FIT) eligible RE technologies, specifically geothermal, impounding hydro and pumped storage hydro as specified in Department Circular No. DC2023-10-0029. The GEA-3 will also also include run-of-river (ROR) hydro, which is a FIT-Eligible RE technology.
The estimated capacities for non-FIT eligible RE technologies involves 699 MW from impounding hydro; 3,120 MW from pumped-storage hydro; and 380 MW from geothermal.
The DOE set the target delivery commencement period (DCP) for both impounding hydro and pumped-storage hydro from 2028 to 2030 while geothermal is set from 2024 to 2030.
An estimated 200 MW of RE capacity from ROR hydro is expected to be auctioned, with a target DCP beginning 2026 to 2028.
The DOE plans to publish the notice of auction and terms of reference, and release the price determination methodology for non-FIT eligible RE technologies and the Green Energy Auction Reserve price for ROR hydro by April 29, 2024.
The notice of award for ROR hydro will be issued on Sept. 18, 2024 and that of non-FIT eligible technologies on Dec. 10, 2024.
Unsubscribed capacities
The DOE is looking at auctioning the unsubscribed 8,000 MW renewable capacity from GEAP-2 this year although no announcements has been made.
The GEAP 2 generated a total of 3,440.756 MW of RE capacities out of 11,600 MW that was auctioned for installation for the years 2024, 2025 and 2026.
More than half of the committed winning capacity are from ground-mounted solar with a total of 1,878.982 MW, while 9.390 MW, 90 MW and 1,462.384 MW are from rooftop solar, floating solar, and onshore wind, respectively.
The GEAP 2 winning bidders secured a 20-year power supply agreement with the government. The companies will be paid according to actual energy generated in accordance with the rules of the Wholesale Electricity Spot Market, the trading floor of electricity.
Meanwhile, the GEAP-1 generated competitive rates, especially for wind capacities that would redound to the benefit of consumers.
Wind projects drew competitive rates of as low at P3.8583 per kilowatt-hour (kWh) while the lowest bid for solar was at P3.40 per kWh.
The lowest bid for hydro projects stood at P5.3876 per kWh and biomass at P5.07 per kWh.