The Department of Energy (DOE) plans to terminate half of the contracts it awarded to Solar Philippines, an official said Thursday.
“Ongoing process for termination of 21 contracts out of 42,” DOE Undersecretary Rowena Guevara said in a Senate hearing.
“Many possible reasons, but mainly compliance with approved work program,” Guevara said.
Guevara made the statement at the Senate finance subcommittee hearing on the agency’s budget after Senate President Pro Tempore Jinggoy Estrada raised concern over the failure of Solar Philippines to fulfill its energy commitments after getting service contracts from the government.
Estrada said 473 service contracts were awarded to various renewable energy companies to build solar farms as of March 2024 for 32,359 megawatts (MW) of renewable energy supply.
He said of the 10,000 MW committed by Solar Philippines and its affiliates, only 174.41 MW, or 2 percent, were completed or started commercial operations.
“The vast majority of the total commitment have not yet entered the development stage and remain in various phases of pre-development. How will this affect the department’s targets?” Estrada asked the DOE.
These included the Iba-Palawig project, Iba-Palawig 2 project and San Marcelino phase 3 project.
Guevara said the most challenging part of building power facilities is acquiring land, whether by lease or purchase.
“Previously, possessory rights were not required when we issued service contracts. However, under the new guidelines, developers must have possessory rights before service contracts are granted,” she said.
Estrada asked why it was taking Solar Philippines too long to comply with the terms of its service contracts compared with other developers.
“You know, my conclusion is that while other project developers take an average of around two to three years to develop solar power projects, Solar Philippines and its affiliates have taken more than three years to even take its projects to development phase and much longer for actual construction,” he said.
Guevara said of the 32,359 MW covered by service contracts, other developers already fully developed or were in development of 22,000 MW of capacity.
“The remaining 10,000 megawatts depend on Solar Philippines, which could significantly compromise the DOE’s ability to meet its commitment to transitioning to renewable energy. I hope you seriously consider this matter,” Estrada said.
Senators Pia Cayetano and Sherwin Gatchalian also echoed the sentiments of Estrada, questioning delays in the service contracts of renewable firms.
Guevara said the DOE would issue new sets of terms of reference for its succeeding green energy auctions with the performance of RE developers as qualifying conditions.
“We are going to be issuing the terms of reference soon. The performance or non-performance of projects will be included,” Guevara said at the budget hearing.
