Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 234
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for their captive customers, all retail electric
suppliers for their contestable customers,
and generating companies to the extent of
their actual supply to directly connected
customers. The GEOP is an initiative allowing
end-users to source electricity from an RE
supplier as opposed to consuming whatever
is supplied by the DU.
In 2012, the ERC approved the first FiT rates
for solar, wind, biomass, and run-of-river
hydropower, marking the implementation
of the FiT program. However, its implementation was subject to installation caps and
determined on a first-come first-served
basis. This meant that priority was given to
RE developers who could demonstrate that
their project was near completion and ready
for commissioning. Once the installation
caps were fully subscribed, the FiT program
would no longer apply. Currently, all of the
installation caps of RE resources, except for
run-of-river hydropower, have been fully
subscribed and met. For wind projects, the
initial installation cap was 200 MW, which
had a corresponding FiT rate of PhP 8.53 per
kWh. The installation target was thereafter increased by another 200 MW but was
accompanied by a lower FiT rate of PhP 7.40
per kWh. Currently, there does not appear to
be any sign from policymakers of increasing
the installation caps. In fact, the FiT program
will likely be discontinued in favor of the
newly introduced Green Energy Auction Program (GEAP), which is a competitive bidding
process where RE suppliers submit bids to
55 Department of Energy, Circular No. DC 2018-02-0003.
56 Department of Energy, Circular No. DC 2021-09-0030,
57 Department of Energy, Circular No. DC 2020-07-0017.
Republic of the Philippines
supply needed RE capacities.
For RE projects that are no longer entitled
to the FiT rates and incentives, an offtake
agreement can be entered into with a distribution utility (DU) or a contestable customer. Newer RE projects may also participate
in the GEAP, which is a competitive auction
process for the procurement of RE supply.
Another option is for the RE developer to sell
its power directly to the Wholesale Electricity Spot Market (WESM).
An offtake agreement for the captive market
between an RE developer and a DU is locally
known as Renewable Energy Supply Agreement (RESA). This RESA must be registered
with the ERC. As per a 2018 DOE regulation,55
DUs are mandated to hold a competitive
selection process, via the conduct of a public bidding, before entering into any power
supply agreement (PSA) with an electricity
supplier for the captive market. This includes
RE developers.
In a subsequent regulation issued in 2021,56
the DOE allowed unsolicited proposals as an
acceptable form of public bidding. However,
if the DU contracts with the RE developer
through the GEAP, it is considered as having
complied with the competitive selection
process requirements. 57
Under the RESA template for FiT eligible
RE plants, the term of the PSA is 20 years,
counted from the commercial operations
