Release of third green energy auction pricing mechanisms pushed

Energy industry policymakers and regulators were urged to finalize pricing mechanisms for the third leg of the government’s green energy auction (GEA) initiative to allow it to proceed within this year.

“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. I hope we can get that done. I understand there are things that have to be done on the side of ERC as well,” Senator Pia Cayetano said at the Senate hearing on the Department of Energy (DOE)’s proposed P2.127-billion 2025 budget. 

The hearing was attended by Energy Secretary Raphael Lotilla and ERC Officer-in-Charge (OIC) and Chief Executive Officer Jesse Hermogenes Andres.

During the budget hearing, the Energy Department assured the Senate third GEA will be completed within the 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,” said Energy Undersecretary Rowena Guevara.

For the GEA-3 to proceed, the ERC should first release the pricing mechanism or the GEA reserve prices. 

The regulatory body is mandated to determine GEAR prices or the maximum price offered for the GEA.

“One of the items required there would be the approved pricing methodologies with ERC. We’re coordinating that,” Lotilla said. 

Cayetano said many investors are waiting for the third leg of the GEA, which facilitates investments in the renewable energy space. 

In the last two years, the DOE has conducted two rounds of auction which generated a total of 5,306 megawatts (MW) of RE commitments for delivery in 2024 to 2026.

The GEA-3, meanwhile, covers non-feed-in-tariff (Non-FIT) eligible renewable energy technologies like geothermal, impounding hydro and pumped-storage hydro under DOE Circular No. DC2023-10-0029.

The estimated capacities for non-FIT Eligible RE technologies are: 699 MW from impounding hydro; 3,120 MW from pumped storage hydro; and 380 MW from geothermal. 

GEA-3 will also cover run-of-river (ROR) Hydro, which is a FIT-eligible RE technology.

–VAL, GMA Integrated News