Renewable energy developers asked the government to come out with the “correct price signals” for the incoming Green Energy Auction Program (GEAP) 3 and 4 targeted this year.
First Gen Corp. vice president and head of power marketing, trading and economics Carlos Lorenzo Vega said during the ING Energy Forum Monday the previous GEAP was largely unsubscribed which should send a signal to policy makers.
“So FirstGen is the largest generator of geothermal energy through Energy Development Corp. But you can imagine that if we were to develop our geothermal projects, and we were looking at GEAP, the price signal has to be correct. The price signal has to be a balance,” Vega said.
“I wanted to point out that if you look at GEAP in the second round, you will see that the target was at 11,000 [megawatts], but only 3,000 subscribers. So that’s a huge gap. And to me, that in itself is a signal, and that signal should be properly interpreted by our policy makers, the rule makers… It’s under-subscribed by 8 gigawatts, then there’s something wrong with the price signal being set up,” Vega said.
SunAsia Energy Inc. president Tetchi Cruz-Capellan underscored the need for a more sophisticated auction design for GEAP.
“For example, gas and pump storage and even geothermal needs a special kind of auction design because it is not the same as solar and wind…But the thing that’s important is that the second round has raised already red flags. There has to be a more sophisticated auction design that will allow leaders in the energy sector to participate actively and see the signals as correct,” Capellan said.
She said each market mechanism such as the GEAP is a pathway to commercialization of renewable energy projects.
“Some use the reserve market, some use the bilateral, the renewable energy agreement or contract. So all of us use this different kind. But we need the GEA for specific purpose, and I think this is the challenge for us in designing the auction to fit the technology, to fit the kind of green technology that we would like to introduce for the brands to reach our decarbonization target,” Capellan said.
The Department of Energy is looking to conduct GEAP 3 late this year, which involves the auction of geothermal, impounding and run-of-over hydro and pumped-storage hydro. It will also include run-of-river (ROR) hydro, which is a FIT-eligible RE technology. The DOE is also hoping to pursue GEAP 4 this year, which would involve RE plus energy storage systems.
