First Gen awaits feed-in-tariff decision on hydro projects
First Gen Corp., the power holdings company of the Lopez Group, is awaiting the government’s decision on the extension of feed-in-tariff incentives on renewable projects before proceeding with new hydropower projects.
First Gen president Francis Giles Puno said the company’s hydro power projects were “de-emphasized” amid the lack of the feed-in tariff―the fixed and assured rates granted to renewable energy technologies under the Renewable Energy Act.
“If there is an extension with the FIT and is clear, then we would proceed but otherwise, its difficult for us to proceed because construction of hydro takes time,” Puno said.
The installation target for biomass and run-of-river hydro projects expired in December, but the Energy Department granted a two-year extension or until 2019 to complete the installation of these projects.
Puno, however, said the completion of hydropower projects would require more than two years.
“It’s a very important resource for the country, and yet it’s unclear as to whether or not we would be given a feed-in-tariff for a long-term investment,” Puno said.
First Gen announced plans to develop the 30-MW Puyo hydro plant in Agusan del Norte, the 23-MW Bubunawan hydro project in Bukidnon, and the 10-MW Cabadbaran hydro project also in Agusan del Norte as early as 2013.
First Gen also secured several hydropower contracts in Mindanao, giving the company the exclusive right to develop the resources in the approved areas.
“We’ve paved the roads already. It’s short of building the tunnel itself. Because the pronouncement is unclear, it is difficult for us to proceed,” Puno said.
He said the company was seeking clarity on the extension timeline.
“Construction will not end by next year. It takes three or four years… This is different from solar. Solar can be built in a year’s time and solar deserves the race,” Puno said.
He said hydro projects had a long term gestation period compared to solar.
“And also to give our creditors assurance that it will be bankable, there will be a feed-in-tariff at the end of the construction phase…It’s not clear. Even their pronouncements of extending it is not clear. We just heard that it is extended,” Puno said.
The government set an installation target of 250 MW for run-of-river hydro and another 250 MW for biomass power projects.
Data showed that of the approved allowable capability, only about 144.8 MW of capacity were able to secure a feed-in tariff incentive for biomass and 28.6 MW for run-of-river hydro as of end December 2016.
The Energy Regulatory Commission approved a feed-in tariff rate of P5.90 per kilowatt-hour for run-of-river hydro covering an installation target of 250 MW in 2012. The regulator then reduced the run-of-river hydro feed-in tariff to P5.8705 per kWh for projects completed in January to December 2017 after reviewing and implementing the 0.5 percent digression rate.
The ERC also approved a feed-in tariff rate of P6.63 per kWh for biomass in 2012 but reduced it to P6.5969 per kWh in 2017 to reflect the digressed rate for projects completed within the year.